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India's New Strategy of Agricultural Development: Political Costs of Agrarian Modernization

Published online by Cambridge University Press:  23 March 2011

Francine R. Frankel
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By the spring of 1966, it was abundantly clear in New Delhi that the Third Five Year Plan was a failure. Over the five year period (1961–66), the rate of increase in national income was less than half the projected level. Per capita income showed no increase at all. At the same time, prices for all commodities rose by over one half. The price index for foodgrains climbed by more than 56 per cent. By 1966, food shortages were so severe that some thirty million persons in major cities and towns were placed under statutory rationing. Another two hundred million—over one-third the population—were brought under partial rationing schemes. Even so, the general price index rose by another 38 per cent in 1967. Once again, foodgrains took the lead with a price increase of 44 per cent.

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The Journal of Asian Studies , Volume 28 , Issue 4 , August 1969 , pp. 693 - 710
Copyright
Copyright © Association for Asian Studies, Inc. 1969

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References

1 Memorandum on the Fourth Five-Year Plan (New Delhi 1964), p. 26.Google Scholar

2 India, Lok Sabha Secretariat, Lok Sabha Debates, Third Series, Vol. XLIX, No. 24, December 7, 1965, 6075.

3 India, Department of Agriculture, Ministry of Food and Agriculture, Agricultural Production in the Fourth Five-Year Plan: Strategy and Program (New Delhi 1965), p. 3.

4 Lok. Sabha Debates, December 7, 1965, p. 6078.

5 Ibid., p. 6075.

6 Subramaniam, C., New Agricultural Strategy in a Socialist Society, mimeographed, p. 5.Google Scholar

7 Actual food production in 1965, a year of severe drought, was 72.5 million tons; 90 million tons represents the production potential in that year as indicated by the output of 89 million tons achieved in 1964, the most recent good weather year. See India, Planning Commission, Fourth Five Year Plan: A Draft Outline (New Delhi 1966), p. 172.

8 The Food Ministry's calculations are presented in India, Department of Agriculture, Ministry of Food and Agriculture, Reorientation of Programs of Agricultural Production (New Delhi 1965), p. 1.

9 In 1968 Subramaniam's Personal Secretary, characterized die planning for the new agricultural strategy as very crude. He described the high-yielding varieties programs as involving, to some extent, “an act of faith” on the part of the Ministry. Interview, New Delhi, June 12, 1966.

10 Annual Report, 1964–65 (New Delhi 1965), p. 3.Google Scholar

11 Ibid., p. 2. The ICAR reported crop yields as high as 7,500 pounds per acre with the Taiwan varieties.

12 See National Seminar on Fertilizers, Proceedings, (New Delhi, The Fertilizer Association of India, 1965), p. 407Google Scholar. There is, however, the additional problem that Mexican wheats are much less popular widi consumers than the best local varieties. They are more reddish in color and harder than the grains used in the preparation of the traditional North Indian staple, chapati.

13 The Department of Agriculture in the Union Ministry selected three Taiwan varieties—Taichung Native I, Taichung 65, and Tainan 3—for use in the first year of the high-yielding varieties program on the basis of their reported performance in Taiwan. However, at the Conference of State Officials held in New Delhi, March 18–19, 1966 to consider the operational details of the high-yielding varieties program, representatives from Madras and Andhra Pradesh reported to the Ministry that the Taiwan varieties were not suitable for the major rice-growing season in dieir States (July-August to December-January), because they were ready for harvest at the onset of the monsoon in October. India, Ministry of Food Agriculture, High-Yielding Varieties Program for 1966–1967, mimeographed, pp. 1–2.

14 The first reports that the Taiwan seeds were highly susceptible to bacterial blight reached the Food Ministry from officials in Andhra Pradesh only in the summer of 1966, again after the Ministry decided to use these varieties as the mainstay of the high-yielding varieties program for paddy. Moreover, the Taiwanese strains present an even greater problem than the Mexican wheats in consumer preference. They yield thick, round and brownish grain instead of the fine, white rice of the best local varieties. They are also glutinous and stick together when cooked; Indian consumers prefer soft grain which remains separate.

15 The Statesman, January 13, 1968. Experiments are also underway at the Indian Agricultural Research Institute, Pusa, to cross Taichung Native I with the best Indian variety, Dehra Dun Basmati in the hope of evolving a new strain that will combine the fine white grain and greater resistance to disease of local varieties with the high-yielding capacity of imported seeds.

16 Nimbar, B. V., “A Word of Warning on Hybrids,” Economic and Political Weekly, Vol. II, No. 47, December 2, 1967.Google Scholar

17 This was the figure given to the Lok Sabha on July 10, 1967 by the Minister of Irrigation and Power, Dr. K. L. Rao, The Statesman, July 11, 1967.

18 Indian Statistical Institute, The National Sample Survey, Number 140: Tables with Notes on Some Aspects of Landholdings in Rural Areas (States and All-India Estimates), Seventeenth Round, September 1961–July 1962, Draft (Calcutta 1966), p. 60.

19 India, Expert Committee on Assessment and Evaluation, Department of Agriculture, Ministry of Food and Agriculture, Community Development and Cooperation, Intensive Agricultural District Program, Second Report, 1960–65, (New Delhi 1966), pp. 131, 162, 189, 215, 239, 273, 299, 324, 339, 376, 405. 434. 476, 492.

20 In 1962, net savings per annum of the lower 60 per cent of all rural households were reported to be negative, ranging from a deficit of Rs. 537 for the bottom 5 per cent of all households to a loss of Rs. 3 in the 50–60 percentile groups. Moreover, the average positive saving of the 60–70 percentile group reached only Rs. 17; it increased to Rs. 61 in the 70–80 percentile group. The top I per cent of rural households actually accounted for 59 per cent of net savings at an average of Rs. 3, 722 annually. See India, National Council of Applied Economic Research, All India Rural Household Survey: Saving, Income and Investment, Volume II, (New Delhi 1965), 95.

21 This estimate is from a 1968 report published by the Registrar-General and Census Commission. It is quoted in The Statesman, June 1, 1968.

22 A Study on Tenurial Conditions in Package Districts, India, Planning Commission (New Delhi 1964), pp. 13, 21.Google Scholar

23 Only some Rs. 15 is required for seed. The highest additional expenditure is for fertilizer (Rs. 200); the remainder covers the cost of pesticides, irrigation, and power. Estimates per acre provided by the Office of the Economic and Statistical Adviser to the Government of India, Ministry of Food and Agriculture, New Delhi, July 1966.

24 There is, however, some differential between the output maximizing dose of fertilizer per acre, and the dosage which maximizes additional net income to the farmer. This is true for both conventional and high-yielding seed varieties. V. G. Panse, for example, using crop response rates for traditional varieties and 1964 cost-price ratios for fertilizer and agricultural output, concluded that farmers could earn the highest profit per acre by applying 40 pounds of nitrogen to rice, and 46 pounds to wheat. The optimal dose of nitrogen per acre from the point of view maximizing output would have been 47 pounds and 55 pounds respectively. If the cultivator were a tenant, the economic limits of fertilizer application would be much lower. See V. G. Panse, “Fertilizer Recommendations” in National Seminar on Fertilizers, Proceedings (New Delhi, The Fertilizer Association of India, 1965). Experimental data is still limited on the imported varieties. Minhas and Srinivasan report data for Mexican wheat (Sonora 63) which suggests that additional applications of nitrogen cease to be profitable to the farmer above levels of 90 pounds per acre. See B. S. Minhas and T. N. Srinivasan, “New Agricultural Strategy Analyzed” in Yojana, January 26, 1966. The Food Ministry's agronomic recommendations call for applications of 80 pounds of nitrogen per acre for wheat, paddy and hybrid maize; 60 pounds of nitrogen per acre for hybrid jowar; and 40 pounds of nitrogen per acre for hybrid bajra. Economists have also pointed out that overall production, as opposed to maximum profitability for individual farmers, could be achieved in a situation of fertilizer shortage and diminishing rates of crop response by spreading available supplies more widely, i.e., by reducing average applications of nitrogen for paddy and wheat to 50 or 60 pounds per acre. Panse, and Minhas and Srinivasan argue forcefully for this approach in the articles cited above.

25 Interview with the Economic and Statistical Adviser to the Government of India, New Delhi, August 2, 1966.

26 For a description of the crop-loan system as recommended by the government, see India, Reserve Bank, Agricultural Credit Department, Manual on Short-term and Medium-term Loans for Agricultural Purposes (Bombay 1966), Part 1.

27 In June 1965, the total working capital of primary marketing societies was approximately Rs. 40 crores. India, National Cooperative Development Corporation, Review of Cooperative Agricultural Marketing, Processing, Supplies and Storage in India, Cooperative Year, 1965–66, Chapter II. The estimated value of total marketable surplus in the same year, by contrast, was more than Rs. 1,300 crores.

28 In open competition with private traders, marketing cooperatives have managed, at best, to attract 7 per cent of the total marketable surplus. In 1965–66, when the state governments and the Food Corporation of India advanced additional sums to the cooperatives to undertake purchases on government account, the total share of the cooperative structure in the foodgrains trade increased to 10 per cent. Ibid., p. 42.

29 In 1965–66, less than 10 per cent of all loans advanced by credit cooperatives were recovered through the sales proceeds of marketing societies. Ibid., p. 56.

30 Intensive Agricultural District Program, Second Report, 1960–65, pp. 144, 173, 200, 224, 251, 282, 307.

31 India, Department of Agriculture, Ministry of Food and Agriculture, Report of the Agricultural Prices Commission on Price Policy for Kharif Cereals for 1965–66 Season (New Delhi 1965), p. 2.

32 See India, Finance Ministry, Economic Survey, 1966–67 (Delhi 1967), Table 5.1, Index Numbers of Wholesale Prices.

33 National Seeds Corporation, Fourth Plan (Outline), mimeographed, pp. 27, 29–33.

34 Reorientation of Programs of Agricultural Production, p. 5.

35 Fertilizer Association of India, Fertilizer Statistics, 1965–66 (New Delhi 1967), p. 6.

36 Ibid., pp. 8–9.

37 India, Department of Agriculture, Ministry of Food and Agriculture, Report of the Committee on Fertilizers (New Delhi 1965), p. iii.Google Scholar

38 Agricultural Production in the Fourth Five-Year Plan: Strategy and Program, p. 11.

39 India, Department of Agriculture, Ministry of Food and Agriculture, Report of the Working Group for the Formulation of the Fourth Five-Year Plan Proposals on Plant Protection (New Delhi 1965), p. 34.Google Scholar

40 Agricultural Production in the Fourth Five-Year Plan: Strategy and Program, p. 12.

41 Working Group for the Formulation of the Fourth Five-Year Plan Proposals on Plant Protection, p. 3.

42 Agricultural Production in the Fourth Five-Year Plan: Strategy and Program, p. 13.

43 Interview with the Deputy Secretary (Pesticides, Agricultural Machinery), Department of Agriculture, Ministry of Food and Agriculture, New Delhi, July 17, 1966.

44 Agricultural Production in the Fourth Five-Year Plan: Strategy and Program, p. 13.

45 Interview with the Deputy Secretary (Pesticides, Agricultural Machinery), Department of Agriculture, Ministry of Food and Agriculture, New Delhi, July 17, 1966.

46 Agricultural Production in the Fourth Five-Year Plan: Strategy and Program, p. 24.

47 Receipts from exports during 1966–67 and 1967–68 were Rs. 1,140 crores and Rs. 1,200 crores respectively, (The Statesman, October 9, 1967; June 4, 1968). In June 1968, an inter-Ministry Committee, including officials of the Planning Commission, estimated that total imports were unlikely to increase more than 4.4 per cent per annum during the next three years, (The Statesman, June 4, 1968). Altogether, therefore, total export earnings between 1966 and 1971 will probably be about Rs. 6,263 crores. It is very difficult to predict actual receipts under foreign aid. Congressional cuts in development loan funds starting in 1967 have reduced American contributions to the Aid-to-india Consortium from $435,000,000 in 1965–66 to about $320,000,000 in 1966–67 to an estimated $175,000,000 in 1968–69, (New York Times, August 22, 1967, July 30, 1968). The first effects of the American action were felt in 1966–67 when total aid pledges by Consortium members declined to $900,000,000 compared to over $1 billion in the previous year. Guidelines adopted by the Consortium at its May 1968 meeting suggest even lower totals of about $750,000,000 annually for 1967–68 and 1968–69, (The Statesman, May 26, 1968). Assuming that these commitments are actually honored in full, and that aid totals do not fall even lower in later years, India's foreign exchange receipts from external assistance might total about $3.9 billion or Rs. 2,925 crores. Total foreign exchange from export earnings and foreign aid, (i.e. Rs. 6,263 crores plus Rs. 2,925 crores) would be approximately Rs. 9,188 crores. Debt payments during 1966–71, even taking into account the $300 million of debt relief voted by the Consortium, will take about Rs. 2,059 crores. The remainder, some Rs. 7,139 crores, represents the total amount of foreign exchange likely to be available for imports during the five-year period, 1966–71.

48 In 1965, the Planning Commission estimated that Rs. 7,184 crores would be needed for maintenance imports, exclusive of fertilizers and fertilizer raw materials during 1966–71. See India, Planning Commission, Perspective Planning Division, Draft Fourth Plan, Material and Financial Balances, 1964–65, 1970–71 and 1975–76 (New Delhi 1966), pp. 129, 132.

49 For an analysis of the possible repercussions to the Indian economy as a whole of the looming foreign exchange shortage, see Millikan, Max F., “Economic Development: Performance and Prospects,” Foreign Affairs, Vol. 46, no. 3, April 1968.CrossRefGoogle Scholar

50 During the Second and Third Plans, all nitrogen produced in Indian factories was procured by the central government at fixed prices and placed in a Central Fertilizer Pool along with imported stocks. The total available amount was then distributed at standard subsidized rates throughout the country, mainly by cooperative marketing societies and government operated stores in each Community Development Block. Although the private sector was supposed to account for about one-third of all nitrogen production in India by the end of the Third Plan, these arrangements were so unattractive to Indian businessmen that in 1966 over 95 per cent of all nitrogen production came from public sector factories.

51 Ammonia synthesis represents the first stage in the production of nitrogenous fertilizers. Nitrogen from the air and a cheap source of hydrogen are the basic raw materials in the production of ammonia. In recent years, advances in technology have made it much more economic to use natural gas or naphtha than the other hydro-carbon fuels—coke, lignite or coke over gas—as a feedstock for hydrogen. A number of international chemical companies have established large ammonia plants at the site of extensive natural gas deposits in the Arabian Gulf, North Africa, and South America. India has only limited supplies of natural gas. However, she does have adequate amounts of naphtha (as the by-product of petroleum refinery programs) to support the needed new capacity for production of nitrogenous fertilizers.

52 National Seminar on Fertilizers: Proceedings, p. 112.

53 Talks on Planning (Bombay 1961), p. 95.Google Scholar

54 For an extended analysis of the interrelationship between ideological goals and economic policy in India's agricultural planning, and the political obstacles to effective implementation of institutional reform, see Frankel, Francine R., “Ideology and Politics in Economic Planning: The Problem of Indian Agricultural Development Strategy,” World Politics, XIX (July 1967), pp. 621–45.CrossRefGoogle Scholar

55 The Statesman, August 10, 1967.

56 The fate of the Intensive Agricultural Areas Program is a case in point. In March, 1964, the central government announced plans for a program of intensive development in approximately one-third of India's districts having maximum irrigation facilities. The State Governments, which duly designated selected areas for the operation of the new program, nevertheless refused to give priority to their requirements in the allocation of scarce supplies of fertilizer. In doing this, they ignored urgent advice from the Center, and were guided by protests from Panchayat leaders in excluded districts of their States. So far, therefore, the only difference between the “intensive” areas and “normal” districts is an increased staff complement paid for by central government funds. Worse still, State leaders have ignored the Center's plea to take up the high-yielding varieties program in intensive areas only in order to benefit from the higher staff concentration. Instead, they have preferred to spread the new program over as many districts as possible.

57 Brown, Lester R., “The Agricultural Revolution in Asia,” Foreign Affairs, Vol. 46, July 1968.CrossRefGoogle Scholar

58 The Statesman, August 28, 1967; October 10, 1967.

59 The Statesman, August 29, 1967; October 15, 1967.

60 Hoist, Willem, “Planning for Self-Sufficiency in Foodgrains,” Economic and Political Weekly, Vol. II, No. 27, July 8, 1967, 1213.Google Scholar

61 Economic Survey, 1966–67, p. 10; The Statesman, June 22, 1968.

62 See India, Planning Commission, Annual Plan, 1966–67 (New Delhi 1966), p. 11Google Scholar; India News, August 4, 1967; Economic and Political Weekly, Vol. III, No. 32, August 10, 1968, 1231.

63 Lester R. Brown, “New Directions in World Agriculture,” Studies in Family Planning, June 1968, p. 2.

64 Estimate prepared by Foreign Exchange Division, Indian Planning Commission.

65 On February 20, 1968, the Ministry of Petroleum and Chemicals announced that it had issued a license to Dharamsi Morarji Company for construction of a fertilizer plant using imported ammonia as raw material, (The Statesman, February 21, 1968). It also seems likely that a similar proposal by the Tatas will be approved.

66 The Economist, July 13, 1968.

67 Goyal, Hari Dev, “The Economics of Improved Seeds,” Economic and Political Weekly, Vol. II, No. 45, November 18, 1967, 2030.Google Scholar

68 The open market price for wheat in 1965 was about Rs. 70 to Rs. 75 per quintal. Central government procurement prices in 1968 ranged from Rs. 75 to Rs. 81, (The Statesman, May 30, 1968).

69 See Production and Consumption of Fertilizers, Annual Review, 1966–1967, (New Delhi, The Fertilizer Association of India, 1967); High-Yielding Varieties Program for 1966–1967, p. 203; The Statesman, December 21, 1967, June 22, 1968.

70 The Statesman, December 25, 1967; June 12, 1968.

71 The Statesman, June 12, 1968.

72 The Statesman, December 2, 1967.