Growth slows: Time to change mindsets?

The lower GDP growth figure for 2016-17’s first quarter shouldn’t have come as any surprise as private investment, one of the engines of growth, has not been forthcoming for a while now, and the need for a rational agriculture policy is still ignored. All government policies are urban-centric, though most of India’s population is rural and depends on agriculture for their livelihood. And urban Indians too need their rice, wheat and pulses. On private investment, it’s puzzling why the country’s great minds can’t rectify this position, that has been of concern for nearly two years. There’s a limit on how much the government can spend; and this is already affecting the current account deficit.

It is, however, encouraging that manufacturing has shown robust growth: the government must build on such positives. The issues that impede the ease of doing business must be tackled with a sense of urgency, which unfortunately isn’t yet visible. The bureaucracy, ministries must be given targets and a timeframe to achieve them, or be held accountable. The decreased performance of agriculture was one of the factors that dragged down GDP growth to 7.1 per cent, compared with 7.9 per cent in January-March. Low production and low prices for agricultural commodities were the main factors for this dismal performance, and must be dealt with in a fair manner.

It requires a changed mindset and an understanding of the dynamics of agriculture. Farmers should be paid remunerative prices if they have to produce and survive, and shouldn’t be impoverished in order to keep inflation under control. This year, for example, the acreage under pulses was increased, and so was production. The result was that the price of tur dal dropped to Rs 80 per kg from Rs 200 per kg, and may come down further below Rs 5,550 per quintal, that is the minimum support price the government gives. The government and urban India must understand that an impoverished rural India is not acceptable.

They are important as consumers and have to be given purchasing power if production, demand and consumption have to increase to fuel economic growth. The target of eight per cent growth and more can be achieved if the mindsets and policies are changed. Yes, inflation cannot be ignored, but there should be a way to work around this with farmers’ cooperation. The real question is whether the government has the political will it needs to bring about changes and reach out to farmers’ representatives and bring them on board to ensure a more equitable decision-making process.