1. Page 15
PAI/October – December 2000
T
he Central Government in
early August 2000
announced the New
National Agriculture Policy
envisaging more than 4 per cent
annual growth rate. The ‘rainbow
revolution’, it promises, would cover
all aspects of the farm sector. Tabled
in both Houses of Parliament on 28
July 2000, the Policy Document
talks about increased private sector
participation through contract
farming and land-leasing
arrangements. It also emphasizes
price protection for farmers to
safeguard their interests amid
removal of quantitative restrictions
on import of agriculture produce.
Addressing a Press-conference
at New Delhi, Sh. Nitish Kumar,
Union Agriculture Minister said
“Agriculture has become an
increasingly unrewarding profession
and corrective measures are the need
of the hour. This policy will help the
farm sector to meet the challenges of
economic liberalization and form
the basis of an action plan for
agricultural growth”.
The New Agriculture Policy
has involved different reactions from
various quarters. The consensus,
however, is on the point that one
vital issue that is glaringly missing
in the policy document is – time
bound, sector-specific approach of
the government to tap the potentials
in various agri-segments. The
analysis, outlook, views, etc. as
reported in major national dailies
and economic papers have been
excerpted by NCDC Bulletin,
August 2000 to provide an insight
into the issues involved and the
follow up action. Below we quote
an excerpt from the Hindu, Chennai,
1 August 2000.
The Union Cabinet took the
decision on 28 July 2000 for 100
million Indian farmers for a
National Agriculture Policy (only
coincidentally abbreviated as NAP).
Its major objectives would be
the attainment of a 4 per cent annual
growth in the agricultural sector
and enhanced levels of efficiency
of input use consistent with
environmental sustainability.
The question is not so much
about the imperative need (a) to
raise levels of productivity both in
food production and in the non-food
sector and (b) to achieve rapid
diversification of agriculture
covering horticulture and floriculture
tapping the unutilized potential, as
about the instrumentalities of policy
which are required to bring about an
agricultural transformation that
would be consistent with the fact
that around 65 per cent of the people
of India are still rooted in agriculture
and related sectors.
The reality is that there are
pronounced disparities among the
States in agricultural progress. This
makes for a certain degree of
incongruity about a National Policy
on Agriculture especially when the
formulation of such a policy is made
with little or no participation by
State Governments. Among the
major issues that need to be
addressed here is the decline in
capital formation in this sector over
the years.
According to the Central
Statistical Organisation (CSO)
estimates, gross capital formation in
agriculture has virtually remained
stagnant (at 1993 – 94 prices) at
around Rs 165 billion during the
three year period, 1996-99. The
share of public investment in
agriculture has actually come down
from 28.2 per cent in 1996-97 to
23.6 per cent in 1998-99. A point
repeatedly made in the annual
Economic Surveys of the Union
Government is that the decline in
public investment in the agricultural
sector had arisen mainly because of
the diversion of resources from
creation of assets (irrigation
capacity, water management, rural
infrastructure) into subsidies of
various kinds – food, fertilizers,
water, power and so forth.
Is this problem being
addressed by the NAP? There is a
certain formulation in the policy
document which deals with
“rationalization and transparent
pricing of inputs” for the purpose of
generating resources for agriculture.
This is all right by way of intent but
political sensitivities involved
appear too forbidding for the policy
document to spell out clearly how a
larger flow of investments could
be facilitated either through
government budgets or through the
private sector.
India: New Agriculture Policy

2. Page 16
PAI/October – December 2000
Poverty Alleviation Initiatives (PAI) is published quarterly, as an interagency endeavour to provide United Nations initiatives on
poverty alleviation in Asia and the Pacific region. The inputs for the newsletter are provided by the members of the Thematic
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Page 16
PAI/October – December 2000
PAI
The notion that the private
corporate sector can make big forays
into agriculture can never be part of
public policy in India owing to
millions of small and marginal farms
depending on tiny holdings for bare
subsistence. NAP seems to be
opening up some new avenues
for corporate involvement in
agriculture through contract farming,
a mode which has made for a
positive impact on the farming
community in the sugar sector, for
example. Consolidation of holdings
as has occurred in Punjab and
Haryana can be replicated in other
States but only on the basis of
diversification of the rural economy
and the supply of capital to farmers
to enable acquisition of marginal
holdings.
NAP envisages institutional,
legal arrangements for leasing of
private lands for cultivation and
agribusiness, which would presume
that holders of uneconomic farms
would find it prudent to engage
themselves in alternative
occupations in the rural sector rather
than migrate in large numbers to
town and cities. The fashion of the
day is a VRS policy for industrial
workers and not for the marginal
farmer!
Whatever the premises on
which a new policy for agricultural
progress is built, there is the all
too basic question which would cry
for attention. And that is the
vexatious issue of farm price support
which has come to mean “public
procurement and distribution” of
not only foodgrains but also of
commercial crops such as tobacco,
tea, coffee, and the political process
of fixing sugarcane, at the State
level.
Should agricultural policy
foster cropping preferences of big
farmers that are driven by greed
rather than by the agro-economic
realities of the region in question?
Merely saying that export
competitiveness of Indian
agriculture will be strengthened
while decisions are taken regarding
minimum support prices is no
substitute for an active policy of
identification and support for
agricultural commodities which do
have a global competitive edge. But
it is a dicey game because world
commodity markets are all too
volatile and it would be a grave error
of macro management of the
economy for the State to emerge as
the underwriter for agricultural
exporters.
The Agri-policy envisages
Rainbow Revolution
• Over 4 per cent annual
growth rate.
• Greater private sector
participation through
contract farming.
• Price protection for
farmers.
• National Agricultural
insurance scheme to be
launched.
• Dismantling of restrictions
on movement of
agricultural commodities
throughout the country.