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The link between jobs, farming and climate

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October 03, 2019

What is the issue?

  • In September 2019, a teenager Greta Thunberg addressed the United Nations climate change summit, which had an impact.
  • But, Indian government is all-absorbed by the news of slowing economy.

What should we be worried about?

  • It is true that India’s economic growth has slowed for the past few quarters — the past 2½ years, if we go by annual growth rates.
  • Indian government’s desire is to give a boost to the economy.
  • Those who heard Greta Thunberg’s address may not be as worried about economic growth as the government is.
  • Globally, industrial growth driven by mindless consumption is the cause of climate change.
  • But India does need some growth as income levels here are still very low.
  • However, the problem of low incomes can be tackled even with less growth so long as it is of the appropriate type.
  • So, the slowing of growth in India cannot reasonably be termed a crisis.

Why is there rural unemployment?

  • Unemployment is the only feature of the economy that answers positively to the query of whether it is in crisis today.
  • Periodic Labour Force Survey report 2017-18 – Points a dramatic rise in the unemployment rate since 2011-12.
    1. Apart from the category of ‘Urban Females’, the unemployment estimate shows that it is the highest in the 45 years since 1972-73.
    2. Even for ‘Urban Females’, it is double what it was in 2011-1
    3. For ‘Rural Males’, it is four times the average for the 40 years up to 2011-12.
  • These figures should convince us of the existence of a grave situation with respect to employment in the country.
  • Government’s responses to the slowing growth - Announced a range of measures, the most prominent of them being the reduction in the corporate tax rate.
  • The tax cut is meant to be a remedy for stagnant corporate investment.
  • But if the level of corporate investment reflects some underlying reality, it is only by tackling the latter that we can get to the root of the problem.
  • A large part of corporate sales is driven by rural demand.
  • The government does not hear their voices, as they are less organised than some other sections of the corporate world.
  • The rural picture matters not only because the largest numbers are located there but also because of their low incomes.
  • This means that the future growth of demand for much of industrial production is likely to come from there.

Why is there is a production decline?

  • The recent history of crop agriculture is one reason why rural incomes are growing so slowly. Since 2008-2009, it has shown no growth.
  • Households incurring consumption debt in bad crop years would be repaying it in the good years.
  • This implies that the consumption doesn’t grow appreciably even in good years.
  • The other factors range from low export growth to the state of the banking sector.
  • Poor agricultural performance is a significant explanation of slack domestic demand.
  • Unstable agricultural production first lowers the demand for agricultural labour, and subsequently, its supply, showing up in greater unemployment.
  • It has been pointed out that the investment rate has declined.
  • This is indeed correct but this may well be a reflection of the poor agricultural performance.
  • Private investment both follows output growth and leads it.

What could be the long-term solution?

  • Any long-term solution to the problem of unemployment to which the slowing growth of the economy is related must start with agricultural production.
  • Observing the performance of crop agriculture since 2008-09, India might be witnessing something wholly new.
  • India has long been recognised that there is a crop-yield cycle related to annual variations in rainfall but we are now witnessing stagnation.
  • Now, unlike in the case of a cycle, recovery cannot simply be assumed.
  • The expertise of agricultural scientists is needed to confirm what factors are responsible for this state.
  • Factors - The role of ecological factors in causing agricultural stagnation could be considered.
  • Land degradation leading to scarcity which raises the cost of cultivation.
  • Most of these fact0rs are directly man-made, related as it is to over-exploitation of the earth’s resources.
  • Solution - A deeper adaptation is required to deal with these factors.
  • Intelligent governance, resource deployment and change in farmer behaviour would all need to combine for this.
  • The reality of an unstable agricultural sector rendering economy-wide growth fragile has not elicited an adequate economic policy response.
  • Policy focus is disproportionately on the tax rate, the ease of doing business in the non-agricultural sector and a fussy adherence to a dubious fiscal-balance target.
  • It is time to draw in the public agricultural institutes and farmer bodies for their views on how to save the sector.

 

Source: The Hindu

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