PRIME MOVING FORCE: AGRICULTURE VS. INDUSTRY

A topical issue of the debate regarding India has been the choice for the sector which will lead the process of development. The government of the time opted for industry to be India’s prime moving force of the economy. Whether India should have gone for agriculture as its prime moving force for better prospects of development, is a highly debatable issue even today among experts.

Every economy has to go for its development through exploitation of its natural and human resources. There are priorities of objectives set by the economy which is attempted to be realised in a proper time frame. The availability and non-availability of resources (natural as well as human) are not the only issues which make an economy decide whether to opts for agriculture or industry as its prime moving force. There are many more socio- political compulsions and objectives which play their roles in such decision making.

The political leadership selected industry as the leading force of the economy after Independence—this was already decided by the dominant group of the nationalist leaders way back in the mid-1930s when they felt the need for economic planning in India before setting up the National Planning Committee in 1938. Given the available resource base it seems an illogical decision as India lacked all those pre-requisites which could suggest the declaration of industry as its prime mover:

(i) Almost no presence of infrastructure sector, i.e., power, transportation and communication.

(ii) Negligible presence of the infrastructure industries, i.e., iron and steel, cement, coal, crude oil, oil refining and electricity.

(iii) Lack of investible capital—either by the government or the private sector.

(iv) Absence of required technology to support the process of industrialisation and no research and development.

(v) Lack of skilled manpower.

(vi) Absence of entrepreneurship among the people.

(vii) Absence of a market for industrial goods.

(viii) Many other socio-psychological factors which acted as negative forces for the proper industrialisation of the economy.

The obvious choice for India would have been the agriculture sector as the prime moving force of the economy because:

(i) The country was having the natural resource of fertile land which was fit for cultivation.

(ii) Human capital did not require any kind of higher training.

By only organising our land ownership, irrigation and other inputs to agriculture, India could have gone for better prospects of development. Once there was no crises of food, shelter, basic healthcare, etc., to the masses, one goal of development could have been realised—a general welfare of the people. Once the masses were able to achieve a level of purchasing capacity, India could have gone for the expansion of industries. India was capable of generating as much surplus income for its masses as was required by the emerging industries for a market success. The People’s Republic of China did the same in 1949—taking a realistic evaluation of its resources, it declared agriculture as its prime moving force for the economy. The surplus generated out of agriculture was suitably invested to develop the pre-requisites for industrialisation and the country went for it in the 1970s.

The emergence of industrial China was so vibrant that its impact was felt in the so-called highly developed and industrialised economies of the world— the industrial homework of China catapulted it into a giant.

Was the political leadership of independent India not able to analyse the realities as we did above and conclude that agriculture should have been the moving force of the economy in place of industry? Is it possible that Pandit Nehru in command could have missed the rational analysis of the Indian realities, a giant among the Asian visionaries of the time (Mao was still to emerge on the international scene)? How India could have not opted for agriculture as its prime moving force whose leadership had fought the nationalist movement on the Gandhian fervour of villages, agriculture and

rural development. Even if Gandhi was not in the government there were many devout Gandhians in it and no one should doubt that the main internal force which vibrated throughout the governmental decisions were nothing but ‘Gandhian Socialism’. There were many decisions which were taken under the influence of the main political force of the times, still some very vital ones were influenced by the visionary hunches of the political leadership mainly being J. L. Nehru. This is why the economic thinking of independent India is considered and said to be nurtured by Nehruvian Economics even today. If we go through the major literatures on the Indian economic history, views of the critiques of the time and the contemporary experts, we may be able to feel the answer as to why India went for industry as its prime moving force in place of an obvious and logical choice of agriculture (we should not be happy to know that even today this is a highly debatable issue among experts):

(i) Looking at the resources available, agriculture would have been the obvious choice as the prime moving force (PMF) of the economy (i.e., cultivable land and the humanpower). But as Indian agriculture was using traditional tools and technology its modernisation as well as future mechanisation (later to some extent) would have been blocked due to the lack of indigenous industrial support. If India would have gone for import this would have required enough foreign reserves and a natural dependence on foreign countries. By choosing industry as the prime moving force, India opted to industrialise the economy as well as modernise the traditional mode of farming.

(ii) The dominant ideology around the world as well as in the WB and the IMF was in favour of industrialisation as a means to faster growth, which could be translated into faster development. These international bodies were supporting the member countries from every point of view to industrialise. Same was the case with the developed economies. It was possible not only to industrialise faster on these supports of the organisations but there was a hope for emerging as an industrial exporter in the future. The same kind of support was not offered to an economy that opted for agriculture as the prime moving force. Basically, going for the agriculture sector was considered a symbol of ‘backwardness’ at that time. The political leadership wanted to carry India ahead, and not in the

backward direction. It was only in the 1990s that the world and the WB/IMF changed its opinion regarding the agriculture sector. After the 1990s emphasis on this sector by an economy was no more considered a sign of backwardness.

(iii) The second World War has proved the supremacy of defence power. For defence a country needs not only the support of science and technology, but also an industrial base. India also required a powerful defence base for herself as a deterrent force. By opting for industries as the prime moving force of the economy India tried to solve many challenges simultaneously—first, industry will give faster growth, second, agriculture will be modernised in time and third the economy will be able to develop its own defence against external threats . Since the economy had also opted for scientific and technological preparedness, its achievements were to sustain the pace of modernisation.

(iv) Even before Independence, there was a socio-economic consensus among social scientists along with the nationalist leaders, that India needed a boost towards social change as the country lagged behind in the areas of modernisation. A break from the traditional and outmoded way of life and cultivation of a scientific outlook was a must for the country. Such feelings also made the political leadership of the time go in favour of wholehearted industrialisation.

(v) By the time India got her independence the might of industrialisation was already proven and there were no doubts regarding its efficacy.

Given above are some of the important reasons that worked to make Indian political leadership go in favour of industry as the economy’s prime moving force. Probably, the resource related and temperamental realities of India got marginalised in the hope and wish of a future industrialised and developed India. It is yet impossible to conclude whether the economy has completely failed to do so. Experts have divided opinions on this issue.

The last decade of the 20th century (i.e., the decade of the 1990s) saw major changes taking place in the world economic idea about the agriculture sector. It was no more a symbol of backwardness for an economy that emphasises on the agriculture sector as the engine of growth and

development. China had proved to the world how agriculture could be made the prime moving force of an economy and generate internal as well as external strength to emerge as an industrial economy. In the wake of the ongoing reform process, India was introspecting almost all economic policies it followed since Independence. It was time for the agriculture sector to have the prime attention. A major shift10 took place in the Indian economic thinking when the government announced in 2002 that from now onwards, in place of industry, agriculture will be the prime moving force of the economy. This was a policy shift of historic importance which was announced by the highest economic think tank of the country—the Planning commission—as the economy commenced the Tenth Plan (2002–07). As per the Planning Commission11 such a policy shift will solve the three major challenges faced by the economy:‌

(i) Economy will be able to achieve food security with the increase in agricultural production. Besides, the agricultural surplus will generate exports in the globalising world economy benefiting out of the WTO regime.

(ii) The challenge of poverty alleviation will be solved to a great extent as the emphasis will make agriculture a higher income-generating occupation and induce growth in the rural economy by generating more gainful employment.

(iii) The situation of India as an example of ‘market failure’ will cease.12 Though the world’s perception regarding agriculture had changed by the

mid-1990s, India recognises the sector as the prime moving force of the economy a bit late, i.e., by 2002. Now, there is a consensus among experts and policymakers regarding the role of agriculture in the Indian economy. Agriculture and allied activities remained the major source of livelihood for nearly half of the Indian population—its share in employment being 48.7 per cent, with 17.4 per cent contribution in the GDP.13

Once India started the process of economic reforms, it commenced in the industrial sector—as the economy had got its structure through the successive industrial policies, it looks a normal thing. To the extent the agriculture sector is concerned reforms were initiated a bit late—better say by early 2000s.

Three major reasons may be cited for this delay:

(i) Agriculture being always open for the private sector, it was now difficult to go for further privatisation for encouraging investments. The need was for ‘corporate’ and ‘contract’ farming under the leadership of the corporate world.

(ii) Lack of awareness about the contours of the economic reforms among the farm community.

(iii) The heavy dependency of population on agriculture for livelihood could not permit the government to go for the right kind of agricultural reforms at the right time—first, the industrial sector (via manufacturing) needed expansion to lessen the population dependency on the agriculture sector.

Any one sector in which the governments at the Centre and states have been facing the biggest hurdles has been the farm sector. The major reform needs and the hurdles being faced may be summed up in the following points:

(i) A national agri-market is the need of the hour, but there lacks a political will among the majority of states to put in place a right kind of Agricultural Produce Market Committees.

(ii) The need of promoting corporate investment in the farm sector is hurdled by the lack of an effective and transparent land acquisition law.

(iii) Labour reforms needs fine-tuning to promote industrial farming, which is hurdled by a long tradition of complex kind of labour laws of the country.

(iv) Farm mechanisation is hindered by the lack of investment in industries.

(vi) Research and development needs huge investment from the private sector, but there lacks a conducive atmosphere for it.

(vii) Right kind of ‘downstream and upstream requirements’ together with a proper kind of ‘supply chain management’ is bsent in the area of agri-goods.

(viii) Expansion of the right kind of commodity trading in—agri commodities.

(ix) Strengthening the farm sector to face the competition posed by the agricultural sector of the developed world, with regard subsidies and prices, in wake of the globalising world economy.

(x) Making farming remunerative to check farm crisis of contemporary times.

Experts believe that for taking the right policy steps in the sector there needs a high degree of federal maturity in the country. Increased awareness among farmers together with the right government support to prevent farm distress will serve the purpose in a great way.