Come in out of the rain
It is early days to be pessimistic — rain usually picks up over the subcontinent in July and August — yet sporadic spikes in prices of vegetables are hitting the headlines.india Updated: Jul 13, 2012 01:27 IST
The monsoon is acting coy again with latest data showing rainfall deficient in 26 of the 36 subdivisions the weather office tracks by the week. It is early days to be pessimistic — rain usually picks up over the subcontinent in July and August — yet sporadic spikes in prices of vegetables are hitting the headlines. The costs of monsoon failure in India are well documented. The average drop in grain output in a drought year has been 11%. The impact on the growth of the economy is progressively declining as agriculture’s share in national income shrinks and the correlation with industrial output weakens. There is, however, no secular downtrend in the price impact. Historically, food inflation has ratcheted up by 4 percentage points in every year after a drought.
India’s experience with missing rain yields a ready policy response: draw down grain stocks to feed the poor, sell some of it in the open market to keep a lid on prices, lower taxes on food imports, pay more for farm produce, and ensure availability of power for irrigation. Essentially, however, a drought is a crisis to be managed, not mitigated. This mindset, and the accompanying resource allocations, must change. The other approach — rehabilitate water delivery systems — is our best bet against a failed monsoon. On paper, India has quadrupled its irrigated farmland since Independence and 43% of all crops are now grown with water from canals and wells. But we don’t maintain them very well. Uttar Pradesh, Andhra Pradesh, Tamil Nadu and Orissa have seen their acreage that does not depend on rain shrink since the 1980s because their canals are in disrepair. Gujarat, Haryana, Punjab, Rajasthan and Karnataka lead in overexploiting their wells. Nationally, excessive use of groundwater is growing at 5% a year, egged on by the policy of subsidising power and diesel for farmers’ water pumps.
Populist policymaking is coming in the way of India’s insurance against drought. Between 1976-80 and 2001-03 subsidies to agriculture grew from 3% of farm output to 7%. Over the same time, government investment in farming halved from 4% to 2% of agriculture GDP. Most of the subsidies are on fertilisers, power and irrigation water and these have actually contributed to the degradation of natural resources, the Planning Commission argues. Even a small cut in subsidies could free up resources to build and maintain canals and catch more of the monsoon rainwater that runs off into the sea.