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state of Uttar Pradesh,
have registered annual
growth rates of between
1 percent and 2 percent.
What did Gujarat do
that other states could
emulate?
Over the past decade,
Gujarat’s developmentoriented
state government
has focused its
agricultural investment
on growth-enhancement
projects: irrigation,
extensive road-building
projects, marketing
cooperatives, extension
programs and related
research conducted at
five agricultural universities.
The state’s farm
product mix has shifted
significantly from grains
to fruits and vegetables
(doubling production in
the decade after 2000)
as well as industrial farm
products such as cotton,
whose production increased from
3 million bales in 2002–03 to about
11 million bales in 2009–10, roughly
one-third of all raw cotton produced in
India. This surge in cotton, fruits and
vegetables is due to a combination of
research (for example, cotton that is
resistant to certain bacteria) and farmer
cooperatives, important in a state where
the average farm size is only 6.5 acres
and even more important nationally,
where the average farm is just 4 acres.
Gujarat is also among the most successful
states in promoting contract
farming, which provides the security of
guaranteed prices along with monitoring
and advice to enhance quality and
productivity. Enabling this growth is a
chief minister who has made economic
development the priority of his regime;
the favorable results have been a factor
in his winning election three times.
On a national scale, although the
original intent of India’s farm price
commissioners was to ensure that
farmers received a fair price, it has
in fact produced a system providing
substantial financial rewards to the
commissioners for limited services as
well as slowing the movement of product
from farm to market. A positive
development for strengthening firmto-farm
connections is the formation
of grocery chains, whose sales have
grown at an average rate of 70 percent
over the past several years, although
admittedly from a low base. They have
started investing in cold-storage facilities
and storage hubs at key transportation
links, developments that could
reduce the huge wastage rate—as high
as 40 percent by some estimates—that
characterizes so much of Indian agriculture.
Foreign-owned food chains
are still prohibited, but there is proposed
legislation to permit the entry of
foreign corporations that could bring
in capital for new technology and offer
a global market for Indian products.
Perhaps the most dramatic example
of the emphasis on protection of the
farmer is the Mahatma Gandhi National
Rural Employment Guarantee Act
enacted in 2005 and designed to provide
100 days’ employment annually to every
rural household. It is projected to cost
more than $9 billion in 2010–11, the
largest such rural employment scheme
anywhere in the world. While such programs
seek to alleviate the poverty that
has fueled a “Maoist”-style violence in
the poorest parts of India, the dilemma
is that these programs also squeeze out
more productive rural expenditures.
To get agriculture out of its present
rut will require a move away from
government regulation to the greater
reliance on market forces that other
parts of the economy experienced during
the 1990s. It will also demand risks
similar to those taken by Prime Minister
Narasimha Rao and his finance
minister (and current prime minister),
Manmohan Singh, in the early
1990s, when they launched the market
reforms that set India on a significantly
faster growth trajectory. Such a move
will take political wile, as it will be
opposed by a powerful combination of
the tens of thousands of small “mom
and pop” grocery shops and cautious
farmers who like the present system of
state protectionism. n
Walter K. Andersen is administrative
director of the South Asia Studies
Program and a professorial lecturer.
2011–2012 15