'Shining' in Rural India

May 7th 2004, Abhijit Sen

Probably the most interesting feature of the forthcoming elections is that the ruling coalition has decided to contest them less on basis of new promises or vision for the future and much more on the claim that things have never been better. Whether in the jingles of 'India Shining' or 'Bharat Uday' or in their more partisan claim of 'more in the last six years than in the past fifty', the stance is confident and borders on the audacious. If the NDA does win absolute majority as opinion polls predict, it will not only claim endorsement for its policies but also popular approval of the trajectory that the nation's polity and economy have actually taken since 1996 when the Congress last ruled or at least since 1998 when the NDA finally came to power.

The opposition has of course attempted to refute these claims. The outrage in Gujarat, the continuing threats to minorities by various factions of the Sangh parivar and the misuse of POTA were all highlighted in the political effort to form a secular front to restore communal and social harmony. But this effort has succeeded only partially. Since the ruling alliance has posed the choice as one of personality, with the current prime minister projected as both moderate and with a vision on development, it is the credibility of NDA claims about the economy that may well be the deciding factor.

On this some political parties, e.g. the left, have a clear position. And, to her credit, Sonia Gandhi has concentrated on unemployment and the plight of farmers in her election speeches. But many others in the Congress sing a different tune. By claiming the present to be consequence of economic policies that the Congress initiated in 1991 but which the BJP 'stole', they provide credence to claims of 'shining' and simultaneously indicate that the trajectory is unlikely to change whatever the election outcome. Along with media hype, whether on cricket, on persons entering politics, or on quarterly GDP figures, such implicit acceptance of 'feel good' is far more effective in spreading the government message than those expensive advertisements that have now stopped.

The first point to note, therefore, is that there is a vocal constituency that does believe that the economy is doing well. More importantly, this cuts across most party lines and involves belief that the 'reforms' of 1991 served them well. The BJP not only wants to appropriate ownership of this with its 'shining' campaign but also imbue it with the celebration and aggressiveness that had succeeded on Hindutva. Implicit in this is that just as with Hindutva, there are inhibitions in this constituency which if turned from apology to assertion can cut the ground from the feet of the Congress. Having gone from opposing economic 'reforms' of the Congress in the last elections to taking it on wholesale in office, the strategy clearly is to take the winners on board triumphantly while leaving the opposition struggling to recapture those who lost.

The second point which follows from the above is that benefits of 'reform' have been uneven. This is, of course, quite well known to laypeople as also to politicians who need to judge pros and cons before taking definite positions. However, politicians seek guidance on economic magnitudes just as they do psephological help. And 'reform' ideologues among economists, whether in media, business, academia or government, have always nudged policy judgement by employing spin to discount the downside and magnify gains. Moreover, since almost all of them believe in 'reform' to the point of being insensitive to its outcome, their barrage has been remarkably consistent on economics although fickle on politics.

This means that, although more confident and aggressive in presentation, the NDA's 'shining' campaign is built on economic inputs no different from those which were received by Congress and United Front when they contested unsuccessfully to retain office. If anything, the main lesson that 'reform' enthusiasts seem to have learnt from those defeats was that the data available should not demoralise decision-makers on matters that might be politically sensitive.

For example, with yield growth slowing down sharply, there was clear evidence from available data that all was not well with agriculture when the Congress and UF had gone to polls. Also, the National Sample Survey (NSS) had shown higher rural poverty in all its nine rounds from 1990-91 to 1998 than in 1989-90. But ingenious 'reformers' had sorted out such inconvenient detail by 1999. National Accounts Statistics (NAS) of 1998 had shown GDP growth in agriculture down from 3.5% per annum during the 1980s to only 2.8% during 1990-91 to 1996-97. But in 1999 a new National Accounts series was released showing 1990-97 growth of agricultural GDP to be 3.6% per annum. The 53rd round of the NSS conducted in 1997 had shown 35.5% of rural people in poverty, up from 33.7% in 1989-90. But the NSS round conducted in 1999-00 came up with only 27.1% rural poverty.

From almost the beginning of their term of office, it has been dinned into NDA ministers that things have really been rather good on such matters after 'reforms', and certainly not as bad as they might have thought while in opposition. 'Shining' is thus as much an outcome of the skill of 'reformers' to package facts attractively as it is of BJP audacity. A resulting problem though is that no one really knows the extent of 'feel good' and, even more, that NDA leaders may be going to polls actually believing such official statistics. Since agricultural production and the extent of rural poverty are among the most basic determinants of rural 'feel good', it is worth discussing the nature of available data on these, beginning with agricultural production consisting of crops and livestock.

Data on area and yield of 43 'forecast' crops are collected annually on a scientific basis and are used to compile the official Index of Agricultural Production (IAP). Firm livestock data are available only every five years from the Livestock Census and annual estimates of livestock products are based on interpolations from these using various ratios and assumptions regarding produce per animal. But virtually no reliable data is collected on actual production of many minor crops, including most fruits and vegetables. For these, production estimates are carried forward from some assumed base using information on area, seed distribution and arrivals in major markets. Farm income estimates require further assumptions regarding inputs, price spreads and losses between the farmer and final markets.

The data revisions on agricultural GDP in 1999 involved fruits and vegetables. Till then, although production of these was estimated to have grown faster than other crops, their small estimated share of only 11-15% of total crop production meant that there was no significant difference between the trend of agricultural GDP and that of IAP, based on firm production data. However, taking advantage of some concern that fruits and vegetables production was being underestimated, the 'reformers' persuaded the NAS to revise estimates very sharply upward – almost double for 1996-97. Also, since then fruits and vegetables production has been shown growing at about 4.5% per annum.

The implication of this revision, carried out with no reliable data at all, has been rather dramatic on how agricultural incomes and Indian diets are now viewed officially. Till the revision, the value of fruits and vegetables output was assumed to be only a third of that from foodgrains production. But latest GDP estimates imply that, although grown on less than a sixth of the area, fruits and vegetables now account for about the same farm revenue as foodgrains. Further, the National Accounts Statistics (NAS) also imply that farmers receive about 70% of total consumer spending, i.e. traders' margins, losses in transit and costs of transport on fruits and vegetables all add up to only 30% of what consumers pay.

If all this were true, growing fruits and vegetables now fetches well over an average of lakh rupees per hectare, and things must indeed be shining for growers. In fact, based on such understanding, the official effort today is more on exhorting farmers to diversify than to restore yield growth in crops such as cereals, pulses, oil-seeds and fibres. However, although it is true that some horticulturists are doing rather well, NDA campaigners might be advised not to make too much of this. Not only do farmers know how much they grow and exactly what price they get, Indian consumers might be shocked to learn that the NAS now assumes that they spend three times as much on fruits and vegetables as they themselves report to NSS consumption surveys.

But what should really worry the NDA is that despite the creative national accounting, GDP from agriculture and allied activities has hardly grown during its period in office. At 1993-94 prices, latest NAS estimates place this at Rs 2861 billion in 1998-99, 2870 billion in 1999-00, 2859 billion in 2000-01, 3053 billion in 2001-02, 2894 billion in 2002-03 and 3158 billion in 2003-04. The 9% growth in the current year is impressive. But this is from last year's drought, and growth over the five years is only 10.4%. Since population has meanwhile increased by over 9%, per capita agricultural GDP this year is placed not even 2% higher than in 1998-99.

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