13 April 2009 Business rural india

The Harvest Season?

There's substance to the rural story. The agro economy is on a strong pitch, but will the vote from the farms oblige?
Narendra Bisht
Village Voice
  • Agricultural growth has doubled since 2004. Rise in food production has boosted rural incomes, helped government keep prices under control.
  • A sharp 30-40% increase in the minimum support price for cereals and the Rs 70,000 cr loan waiver have made agriculture more attractive.
  • Growing industry demand for land has seen prices spiral even in rural areas, bringing overnight wealth to many villages.
  • Rural people are taking up jobs in cities, leading to a big rise in remittances to villages.
  • Growth of small enterprises created alternate income sources for most rural families.
  • NREGS has created some additional income wherever it has been implemented properly.
  • Hit by slow urban demand, companies shifting focus to capture the growth in rural markets.

***

Tracking rural India can be tricky at the best of times. As somebody put it, it’s like looking out of a passenger train window late at night wondering whether those lights shining far, far away are for real. On the eve of another general election, getting the right answer has assumed great importance. Particularly as the parallels are striking: five years ago, ‘Bharat’ rejected the NDA’s ‘India Shining’. Now, the UPA is seeking to come back to power on the plank of development across rural India. Bharat, we are told, is shining.

Just how legitimate is the UPA’s claim of rural prosperity? Is the edifice of rural growth sound enough to withstand a slowdown in urban India? Or is it just driven by the marketing campaigns of corporate India seeking to expand out of the shrinking sales graphs in urban areas? Finally, does development really matter to the Indian voter; will they reward the incumbent alliance, the state government, or the opposition?

To find out, Outlook’s correspondents journeyed around seven key states, from the rural heartlands to areas afflicted by farmer suicides. They found a mixed picture of well-being and despair. Government subsidies, doles and the UPA’s 100-day guaranteed employment programme (NREGS) have definitely made a difference from an earlier hand-to-mouth existence. In many cases, urban hunger for land has helped transform lives overnight as farmland prices have soared, particularly close to cities, highways and planned industrial belts.

On the other hand, even for all the signs of prosperity, it’s not across the board. Most agricultural economists disagree with the "hype", and warn against generalising, while also insisting that there’s substance to the rural story. S.S. Acharya of the National Academy of Agricultural Science, feels "there has been a turnaround due to government policies" and that "the farmer’s faith in agriculture has been restored". There’s no denying that higher minimum support price (MSP) from 2005 and a step up in public spending on agriculture—along with the favourable weather of course—have helped double farm growth to around three per cent. "Four consecutive years of good agriculture growth has improved incomes to a great extent," says the NCAER’s Rajesh K. Shukla.

Real Rural GDP Growth

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