Moving Towards an Implementable Agenda for the Rural Economy of Gujarat

Agricultural Economics Research Review 2020, 33 (Conference Number), 139-144 DOI: 10.5958/0974-0279.2020.00025.7 Moving towards an implementable agenda for the rural economy of Gujarat Munish Alagh Sardar Patel Institute of Economic and Social Research, Ahmedabad 380 054, Gujarat Email: [email protected] Abstract The farm laws enacted in 2020 plan a transformation towards modernization, but the organizational forms of the new agriculture, which are important for this transformation, will involve thinking in collectives and addressing information concerns and stakeholder requirements. These alternate paths for rural development—apart from government projects, involving huge outlays and, often, high welfare losses—will enable a movement towards the modernization of agriculture that is not biased or based on heavy expenditure on inputs. However, the scope for agricultural growth in Gujarat is constrained by the stable, unchanging village hierarchy and the hardiness and practicality of farmers. Keywords Rural economy, policies, institutions, markets JEL codes P32 The basic premise of this paper is that the performance with academics and extension officers as held at Vallabh of Gujarat’s rural sector requires last-mile delivery in Vidyanagar1 sponsored by the Government of Gujarat. terms of inputs to farmers and effective farm field There are gaps in coordination or in the flow of productivity enhancement. Such enhancement must be information among stakeholders—farmers, backed by storage, sale, trade, and transport and by government, nongovernmental organizations (NGO) growth in the non-farm sector. Such enhancement and and state agricultural universities (SAU)—but the growth will be led by implementable innovative government machinery does not provide any solutions practices suited to rural Gujarat. Cooperatives must in that direction; instead, it alludes to the government facilitate loans and insurance and identify farmers subsidy on cold storage and electricity, and holds that eligible for government support services like irrigation good infrastructure and would be a win-win proposition and technology provision. Optimal support in these for farmers. respects will obviate or minimize the requirement of top-level interventions like subsidy or price ceiling. We state the need for increasing the target group of The government machinery is often influenced by such support services, state challenges in that regard, interests and inaction. According to government and suggest solutions. Specifically, unequal distribution pamphlets, organic farming, horticulture, micro of land, water, as well as added value is deeply irrigation, etc. are good options for technological entrenched (Aubron 2015) in the state in terms of social progress and overall development of agriculture, but relations of dependency. Milk cooperatives provide many farmers are left high and dry by such everyone in the plains access to dairy farming and poor arrangements and prefer to supply directly to rural families the means for gaining upward social processors, as the author found in official interactions mobility, as do subsidies or loans for irrigation. 1 ‘Doubling Farmer Income’, a workshop held on 1–2 June 2018 at B A College Auditorium Hall, Anand Agriculture University Campus, Anand, Gujarat. 140 Alagh M Base-level scenario and challenges parties to a contract could trust each other, and there would be little possibility of default (Hayami 1997: A major conclusion of this author’s study (Alagh 2014) 246). As a member of a cooperative, the consumer of Gujarat’s agricultural marketed surplus is that would have access to the modern financial system of agricultural trade is mostly privately handled, and this credit, and they would derive better utility and be better is a severe limitation in transforming rural Gujarat. The off. If the constraints of the bureaucracy are overcome, report gave results on the relevant variables leading to society focuses on institutions, and more effective market surplus—including cropping and irrigation channels of communication between farmers and the intensity, fertilizer and electricity consumption, uses of modern agricultural implements, etc.—and these government are instituted, clarity will emerge in terms make for an agricultural miracle. of responsibility allocation and results (North 1992). The piece-based implemented agenda in rural Gujarat Growth theorists (Romer 1986; Barro et al. 1995) hold has been effective, and it has accelerated agricultural that for growth to be stable and sustainable, certain development in the state after the 2000. The agenda conditions must be met: the workforce must be skilled, has specific plans: the Krishi Mahostav campaign (for economic activities must be efficient, and there should research and extension support); Soil Health Card be innovations of knowledge systems and learning and facilities (for soil conservation); the Jyotigram Yojana experience effects of skilled stakeholders. In Gujarat (to supply electricity round the clock); the Sardar the nature of rural employment is based on the nature Sarovar Project (for constructing major and medium of the farmer as an innovator and as an enterprising canals for irrigation); and Sardar Patel Sahakari Jal risk taker within constraints, which are the Gujarati Sanchaya Yojana (for managing groundwater traits. irrigation). Other policies include programmes to The soil and weather conditions are difficult in certain develop horticulture (through the Gujarat Horticulture areas, and expanding government extension Mission) and improve market access (through mechanisms (Schultz 1964) there and concerted and Agricultural Produce Marketing Committees (APMC) focused action would improve the input supply and and farmer producer companies (FPC)) (Behera 2015). extension arrangement, make it intensive, and spread The sources of surface water irrigation are the major it out well regionally. Water harvesting and farm field and medium irrigation canals under the Sujalam irrigation are innovative concepts capable of generating Suphalam Yojana; minor irrigation schemes and a lot of social and economic benefits in water-rich indirect benefits through percolation tanks; and check regions (Ilyas 1999), but these do not work in naturally dams, etc. under the Sardar Sarovar Project Yojana, water-scarce regions like Saurashtra, where the soils which need to reach marginal farmers. The dynamic absorb less moisture. The surplus water of the Narmada water resources development department of the can be transferred to North Gujarat, and it can be used Government of Gujarat estimates the utilization and to recharge the alluvial aquifers by the means of gravity irrigation potential of surface water and groundwater recharge and spreading water in the fields, as some sources. However, the delivery system, constrained by scholars have argued recently; and the initial analysis the panchayats at the village level and by the state has shown that this would be economically viable bureaucracy, is not balanced or equitable (Acemoglu (Ranade 2004), but correct pricing would be crucial. et al. 2005), and the results depend on how motivated In Gujarat, the yield of staple crops, like wheat, and of the bureaucracy is in handling these issues. commercial crops, including horticultural crops, The bureaucracy is inactive, and the political will for improved between 2002 and 2007, influenced by action is missing, because the problems—like the massive growth in the net irrigated area and gross moneylender/trader trap and the inadequate solutions irrigated area and by the increase in the ratio of gross to the problem of conditions for crop sale—need long- irrigated area to gross cropped area, the ratio of net term solutions, which do not interest politicians or the irrigated area to net sown area, and the percentage of bureaucracy. If mutual trust between particular the area under food crops and non-food crops. individuals were elevated to institutional arrangements, Extension is less visible in areas where soil, water, or where the necessary externalities are taken care of, the rainfall conditions are poor. One area where extension Moving towards an implementable agenda for the rural economy of Gujarat 141 seems to be missing is the Panchmahal district. Here, The system in rural Gujarat depends largely on the the monsoon is adequate at best—rainfall averages inherent strength of the stable yet unchanging village 700–800 mm—and long dry spells are common even hierarchy and the hardiness and practicality of farmer, in the rainy season. and these same factors constrain (Pattnaik and Shah 2013) the ability of society at large to take firm, resolute In an interview, a farmer2 said that they do not have a steps towards an actionable agenda—without the power connection for their tube well, and that is a farmer needing to look over their shoulder. problem at the time of irrigation. The Sardar Sarovar Project water though flowing through this area is not Studies suggest that commercialization will lead to reaching the village as it is uphill from the canal quick transformation (Nadkarni 1988), but the danger distributary. Extension officers do little work, but there is that the paradigm shift (Pal et al. 2008) involves is much publicity, and government agencies provide corporatization. The organizational forms of the new seeds and fertilizers, but other problems remain, like agriculture, which are important for this transformation, wild pigs and nilgais eating the crop. will involve thinking in

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