The globalized world economy is facing a new challenge in the face of COVID-19 induced lockdown.

Every economy around the globe is opting for protectionism and India is no exception. The recent
announcement by Shaktikanta Das, the Governor of Reserve Bank of India (RBI) indicated that our
economy is at tatters. RBI has not revealed the GDP percentage of the recent quarter but mentioned
that it was in the negative trajectory.

AGRICULTURE- THE SAVIOUR

At a time when the country has reached a standstill and all the factories are closed the only saviour
is agriculture except for increased government expenditure. Almost 47% of our total GDP is acquired
from the agricultural and related sectors. According to data available from the 2011 Agricultural
census of India, close to 61.5% of 1.3 billion of Indian population is rural and dependent on
agriculture. Yet the agricultural sector has long been ignored post-independence in the wave of
Nehruvian industrialization.

But every time our country is faced with an economic challenge it is the agricultural sector that has
helped us pull through and stand back on our feet. Even during the previous economic crisis of 2008
economic sector was least affected and helped us to keep up a stable growth rate. When Corona
Virus hit India three months ago India was quite comfortable in terms of food security. The Food
Corporation of India (FCI) has a stockpile of 87 million metric tons of food grain which can roughly be
translated into almost 100 kg of wheat or rice for each member of every family that holds a ration
card. The stock can increase when the wheat-season comes to end this year and due to heavy post-
monsoon rains of last year we are expecting additional production of Rabi crop (the 14 crops of
Kharif season including bajra, barley, jowar, ragi and all kinds of pulses)

NEED TO REINVENT AGRICULTURE

The rural Indi is least affected by the virus outbreak and thus agricultural sector is still functioning
while urban India is under lockdown. The work in farms and fields and agricultural ‘Mandis’ requires
space and thus, social-distancing norms are easier to follow that the close clustered atmosphere of
urban factories. The scope of agriculture has gone beyond providing food security. Economists have
emphasized agriculture’s active role in terms of product, factors, market, and foreign exchange.
Here, product refers to the supply of raw materials for the industries (e.g. Cotton, Jute) while taking
in labour, which is probably the most critical contribution of this sector. The market generates and
accelerates demand for industrial products like consumer goods. The factor indicates the supply of
capital and labour for the non-farm sectors. Last but not the least, agriculture’s contribution in terms
of foreign exchange refers to the export of agricultural commodities. These ‘not so mainstream’
aspects of the agricultural economy have to be taken more seriously than ever now.

The technological boom of the 21st century has shown explicitly visible growth in almost all aspects
of agriculture, namely fishery, and livestock. Often their large scale impact has come to be known as
‘revolutions’ like the blue revolution in fisheries, the green revolution for crops, the white revolution
in the dairy sector, etc. The labour needed for pre-harvest, harvest, and post-harvest activities, as
well as the sectors which are driven by input demand for agriculture (e.g.-farm machinery, fertilizers,
pesticides, etc.), is capable of boosting the economy.
Lakhs of migrant workers are returning to their native places losing jobs in cities. The mass exodus
will create pressure on the agricultural sector as it would lead to an excessive supply of workforce.
These new developments have thrown both challenges and opportunities at us and it is high time to
revisit the government policies and see the agricultural sector in a new light. We must understand
that the workforce is an asset and not liability considering the scope of agriculture in India. The
government has to play a crucial role here to channelize the energy of the population towards the
positive growth of the economy.

AUTONOMY FOR AGRICULTURE – THE NEED OF THE HOUR

Last week in a news article our Vice President Mr. Venkaiah Naidu commented on the situation of
the farmers in India. He quoted holy Gita and said our farmers are working relentlessly on the fields
throughout the year even during the pandemic without asking for the right reward. The farmers are
not allowed to sell their produce. Yet, these important economic agents have been systematically
denied the constitutional right to trade. this is a form of exploitation that has its roots in our colonial
past like the Bengal famine of 1943, drainage of wealth from India during the Second World War and
later consecutive droughts and food shortages of the 1950s-60s.

The Agricultural Produce Market Committee (APMC) Acts of the states, and The Essential
Commodities Act of 1955 have tied the hands of the farmers. They are only allowed to sell their
products within the designated market area and to Food Corporation of India (FCI). Due to such
restrictions, farmers try to sell their produce via middlemen to gain profit from unregulated markets
the profit earned from agriculture goes to middle-men and brokers before reaching the producers.
There is no incentive for private corporations to invest in agri-sector because of the non-
remunerative nature of farming in India. The chains around the farmers are not being fruitful to any
of the stakeholders. Neither is State getting extra revenue nor are the producers receiving desired
profit nor are private companies finding any incentive to invest in the farm sector. This is high time
our agricultural sector is given as much priority as the industrial sector and farmers are given their
due.

THEORETICAL UNDERLINING

Many experts say that the Indian economy has dualistic features but it is not determined if we can
call India- a 'dual economy'. in a dual economy model, both the urban industrial sector and the rural
agricultural sector co-exist in a set-up of perfect and healthy competition. Historically, the dual
economy models use comparative statistics of both the sector to create a competitive atmosphere
and accelerate the growth rate. This economic model has been propagated by many experts like
Arthur Lewis. Although India has both the sectors operating simultaneously, the non-remunerative
character of farming has taken the competition away from the economic scenario of our country.
Typically, in a dual economy, industrial goods and farm goods function as substitutes whereas the
prices of agricultural products are determined either exogenously (by meeting the global standards
of prices in open economies) or by using utility maximization method (used by closed economies
thus not suitable for Indian structure). India has subsidised most of the farm goods so the Indian
agricultural sector is not ready to sustain the global competition posed by western agri-goods.

RECENT DEVELOPMENTS

Bringing autonomy in the agricultural sector have been discussed in Nirmala Sitharaman's five
tranches revelation of 20 lakh crores economic stimulus package announced by Prime Minister
Narendra Modi. On 3rd of June, union cabinet headed by the PM has passed an ordinance to amend
The Essential Commodities Act of 1955 and it will be made effective immediately. The amendment
aims at deregulating production as well as other aspects like storage, distribution and movement of
agri-commodities. The Centre hopes by removing the fear of excessive government regulation in
this sector, private and foreign investments will be attracted and in the long run, it will help to
modernize the food supply chain.