The Centre needs to invest in a second Green Revolution to tackle droughts.
We are beginning to see the policy response to India’s drought unfold. The government on Thursday raised the procurement price for rice and pulses by 12 and 15 per cent, respectively, in what could be the first of a series of steps to keep hunger at bay in the countryside.
India’s wide experience with monsoon failure has yielded a formulaic response: draw down grain stocks to feed the poor, sell some of it in the open market to keep a lid on food prices, lower taxes on food imports, pay more for farm produce, and ensure availability of power for irrigation.
Since the last drought, in 2002-03, the Centre is now better equipped to arrest the associated shrinkage in agricultural incomes and jobs through a more ambitious rollout of the nationwide employment dole. Expect to see some, if not all, of these measures in the coming weeks.
The economic costs of a drought are well documented. The average drop in grain output in a drought year has been 11 per cent. The impact on growth is, of course, progressively declining as agriculture’s share in national income shrinks — it is 5 percentage points less now than in 2002-03 — and the correlation with industrial output becomes looser — at 0.15-0.25 since 2000.
Yet, independent analysts are hazarding early estimates of up to a 3 per cent decline in farm output and 1 percentage point being shaved off GDP growth this year. There is, however, no secular downtrend in the price impact. Food price inflation, already at 11 per cent, will accelerate next year as granaries are replenished at higher prices. Historically, food inflation has ratcheted up by 4 percentage points in the year after a drought.
Those four rupees in a hundred each Indian loses after a drought is, ultimately, the price the country pays for having 57 per cent of its farms depend on rainfall. Steep in a continent that accounts for 70 per cent of the world’s irrigated acreage.
For now, the government’s approach to droughts has been that of crisis management, not mitigation. This mindset, and the accompanying resource allocation, must change. The alternative is to invest in a second Green Revolution that combines technology upgrades, a shift towards more expensive but drought-resistant seeds, and rehabilitation of water delivery systems. Four severe droughts in 40 years — and one in the making — make it abundantly clear.