Benefits of investment have to reach the poor and deprived and for this, efficiency in development expenditure has to vastly improve. Obviously, this is highly nuanced and various; more developed the state, region and beneficiary class, more is the efficiency, diversity, and volume of absorption of assistance including subsidy. One template fits all cannot be the policy and investment option for this.
From 1981 to 2013, per hectare spending on agricultural subsidies has been Rs 5,000 in Tamil Nadu and Punjab; and less than Rs 1,000 in Assam and Orissa. This manifest in stagnation or imbalances in input use, productivity and income growth, explaining the relative inequalities in regional development.
Agricultural or land productivity is a necessary part of development. From the point of view of the ever diversifying and increasing food, health and nutritional needs (HDI and SDG indices) of a growing population, trade and storage complexities, and income of the rural people including landless agricultural labourers, productivity increase is essential.
Urbanisation has shrunk available agricultural land. But agricultural income of villagers will increase only if the relative prices are higher; that is, if inputs like seeds, fertilisers, machinery, electricity, transport, fuel etc are moderately priced. Investments in the production and modernisation of these inputs have to be more.
Increase in education level enhances productivity across trades, obviously including individual earnings. Therefore, investment in education or efforts to run schools, polytechnics and ITIs more relevantly will enhance rural productivity. This enables fitting rural youth into the emerging non-farm employment complexities.
Non-farm employment helps drawing out labour away from low productivity and low wage farm activity, leaving fewer people to share the increased agricultural economy/income pie. Incidentally, agricultural GDP is less than 14% of the total GDP of the country and is proportionately declining every year, owing to the inexorable expansion of the service, manufacture and urban sectors.
Further, enabling non-farm employment through entrepreneurial activity, better rural infrastructure, finance capital, roads and transport, ferrying villagers to the neighbouring centres of non-farm employment, adds to the productivity of rural manpower. Improving housing, sanitation, availability of water and electricity, construction, trade, warehousing, entertainment, sale and maintenance of farm and non-farm equipment will all entail increased absorption of non-traditional, possibly skilled labour and apprentices.
A higher income from rural non-farm labour is sure to sustain the demand for produce locally. This incentivises agriculture and animal husbandry sectors, further contributing to retaining youth in their native places and evenness of regional development and incomes. Without this retention, villages will become virtual old age homes accentuating gerontological social problems, on the other hand complemented by urban misery and drift.
Thus, investments in improving methods and technology in rural activities require to be efficient and innovative, possibly investments in local R&D, social and economic symbiosis. Since rural produce gets significantly absorbed locally, the need for transport gets reduced, minimising the cost of administration, commissions and trade.
Improving access to irrigation will enhance agricultural production. But this has to be in dryland areas since already irrigated wetland areas have deteriorated vis-a-vis soil fertility. Launching and running schemes towards minimum irrigation use, low water intensity crops, raising of pulses, oil seeds and millets will enhance efficiency in investments.
Spreading irrigation in dryland areas implies rainwater harvesting and sustained schemes for waterbody restoration and general greening of fallow lands and hill slopes; particularly important for India that has 17% of world population and hardly 4% of global freshwater resources. Large-scale irrigation projects are environmentally unwelcome and are ill-advised.
Increasing income of the rural poor depends on increased efficiency in spending on education, agricultural R&D, healthcare, and energy. And this spending has to favour the needy regions and social sections which in turn have to be made to absorb these facilities. This poses a challenge to the development administration and participatory democracy.
(The writer is former Professor, Maharaja's College, University of Mysore, Mysuru)