Economic Experiment

Posted in Guest Posts by Harsha on November 16, 2006

As part of my continued interest in ‘recruiting’ other folks to share their experiments, I wanted to bring to your attention an article my father wrote in a leading business newspaper in India. For Indians and India-based readers (and other worldwide closet subscribers to this blog!), I am sure that you will find this an interesting proposal. If you need clarification on terms used in this article, drop me a note and I’ll be happy to clarify. Feel free to share the link with academics here in your country.

My brief note on this post: India is primarily an agrarian community (the IT boom is largely urban and India as Gandhi said, lives in its villages). 20% of India’s GDP is agriculture. Here is an innovative, capitalistic approach to that solution, that may have applications in other 3rd-world nations. Thanks.

Here is the link to the article online. Now for the post.


India Inc can sow a paradigm shift

S. Raghavan


Corporates can bring about a turnaround in the agriculture sector, bringing all-round benefits.

The influence of agriculture on the health of the economy is significant. About 71.4 per cent of the population relies on this sector for a livelihood.

The economy may be booming but most of the agriculturists remain steeped in poverty. A boost to the farm sector at this stage would set the economy ploughing the high growth furrow.

Governments have tried their best to reform this sector but with little success. The Finance Minister, Mr P. Chidambaram, in this year’s Budget speech, mentioned that if agriculture could not grow at 4 per cent, 10 per cent GDP growth would be difficult.

More funds

The Government has enhanced the outlay for Bharat Nirman programme substantially from the previous year. The Finance Minister rightly said that, "we cannot continue to be Bharat with patches of India. It is important to provide capillary links, take growth to the villages and make it more equitable."

He further elaborated that "India spends over Rs 60,000 crore on poverty alleviation but outlays don’t translate into outcomes. It costs the government nearly Rs 4 to deliver Re 1 to the poor."

Growth in agriculture cannot come the way it is structured today.

The Chinese model may be worth emulating. It has the world’s largest number of Farmer Agro Technology Extension Agents.

These 1.5 million Agents work with the farmer on the field employing a "bottom-up" approach. It is a far cry from India’s Krishi Vigyan Kendras, whose approach is primarily "top-down" whereby the "package of practice" developed by an agricultural scientist on the experimental farm is thrust on the farmer to adopt.

Perhaps, the private sector can take a hand. Some corporates have already come up with specific projects but these have been in the form of contract farming.

This has attracted just the rich farmers, leaving behind the majority. It is the uplift of the latter that will to a paradigm shift in agriculture. Uplifting the masses can be of far reaching consequence for the economy.

Sub-division and fragmentation of land is one of our biggest problems.

Perpetual indebtedness of the farmer in the hands of the local money-lender and more recently with the banks.

Lack of knowledge to grow the crop best suited to the land, instead of continuing what their forefathers grew.

Inability to market the produce toget the real value.

Lack of water facility due to monsoon failure and the inability to tap such alternative sources such as bore well.

Government initiatives that have not worked, as the burden of performance falls on the poor farmer.

All this means the management of agriculture needs to improve. Corporate India may have some ideas though may not have thought of getting onto the field. But what does corporatising agriculture mean?

Corporatise Agriculture

Agriculture will need to be thought as an industry. A corporate model could be on these lines:

A public limited company can be registered with, say, a "capital" of 10,000 hectares. Land-contributors can be allotted shares. An `usage rent’ is paid for the land that gives the farmer money for his daily needs.

A demat-type account of the land is maintained so that farmers can buy or sell plots. The best technology is applied to grow appropriate crops to maximise output. Farmers cab be employed on the farms.

The cattle of the farmers can be taken over. The animals can be provided nutritious food to produce milk, egg and meat. The income from this source can supplement the farm earnings.

The corporate is bound to profit. It can declare dividend, forming the third source of revenue to the farmer. Any surplus the corporate can use to build community infrastructure such as schools, godowns, and water resources.

All this will motivate the farmer and improve his productivity and income. The migration to cities will stop.

Farmer across the country will be emancipated. Indian agriculture will leap forward and no Indian will go hungry. Indeed, quality farm products will be available for exports too. Unemployment will fall.

The government will become healthier and can concentrate on governance. India can soon be a major power to reckon with.

(The author is a former Director — Marketing — IBP Company Limited. He can be contacted at


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