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Opinion
Drought can be Overcome, Action Must be Swift
by Sushma Ramachandran
The latest
data on industrial output, which shows a 7.8 percent growth in June,
brings with it a silver lining to the specter of drought, which looms
large over the country because of the scanty June-September monsoon, so
critical to the country's farm output.
Little wonder the country's overall growth projections have now been
pushed up once again to around 6.2-6.5 percent. But that does not take
away the seriousness of the situation since agriculture remains a major
driver of the country's economy although accounting for just 17 percent
of the country's gross domestic product (GDP).
As many as 600 million people in India remain dependent on the farm
sector for livelihood. The prevalence of drought in 25 percent of the
country's 626 districts thus remains a matter of serious concern. The
government, therefore, needs to act, and act fast.
The most critical casualty of droughts is the farmer - and the
government cannot ignore the suicides committed by them in recent years
when they were under distress. Not only have their crops failed, many
have found that their cattle have died. It is imperative, therefore, for
the government to quickly work out a rescue package for farmers.
Several steps are needed:
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Farmers
need to be provided with alternative employment opportunities
through the job guarantee scheme.
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Emergency
supplies of food need to be rushed to drought-hit areas where many
are going hungry.
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Fodder
needs to be made available in these areas to prevent further cattle
deaths.
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And the
government may even have to think of yet another loan waiver scheme
for farmers in drought-hit regions.
The other
issue of food price inflation, which Prime Minister Manmohan Singh has
been warning about in recent pronouncements, also needs to be tackled
with the same urgency. The plus point is food grain stocks in this
country remain at relatively comfortable levels.
But there may still be a need to import grain and a decision on this
needs to be taken quickly as world prices have already begun rising in
response to reports that India may enter the market. India is a big
buyer. Its entry into the market normally leads to some hardening in the
expectation of large purchases.
Other commodities may also have to be imported given the failure of the
sugar crop and the poor output of pulses - an important source of
protein for the poor that is costing over Rs.100 per kg for some
varieties.
Sugar remains a cyclical problem, now aggravated by drought, but output
of pulses continues to stagnate, despite innumerable schemes, and larger
imports are needed to meet domestic demand.
The drought also highlights the vulnerability of Indian agriculture to
climate change. Despite pious intentions of several governments,
irrigated areas have not expanded sufficiently, but for Punjab, Haryana
and western Uttar Pradesh. The harsh consequence has been a crisis
whenever the monsoon plays truant.
The current spell of drought has also cast a doubt over India's ability
to rebound fast from the recession. Even Finance Minister Pranab
Mukherjee has pared his growth forecast to six percent from 6.5 percent
earlier.
The latest industrial output data, however, has been much more
encouraging, though rural demand may not rise as much as anticipated
this year. There is hope yet, as "kharif" is the summer sowing season in
India and the "rabi" or winter crop is still to come.
The summer crops are mainly paddy, millet, pulses, maize, sugarcane and
oilseeds, while the main rabi crops are wheat, barley and gram. Thus,
even as there could be a fall in the output of rice, sugar, pulses and
oilseeds, the production of wheat and barley may still be more than
sufficient to meet the country's needs.
But that does not wish away the fact that the immediate situation
remains critical due to the drought, hampering the prospect of a
stimulus in demand over the next few months on account of the festival
season between September and November.
Normally, the numerous festivals in the run up to Diwali provide an
occasion of feasting and buying, much on the lines of the Christmas
season in western countries. But such a buying spree is unlikely in
rural areas given the dent on purchasing power due to the drought.
Both the prime minister and the finance minister have assured timely
steps and said the country has the capability and the capacity to tackle
any eventuality as the country did on the previous occasion in 1987. One
can only hope these skills have improved so as to cause minimum pain to
the common person.
(Sushma Ramachandran is an economic
and corporate analyst. She can be reached at sushma.ramachandran@gmail.com)
IANS | August
14,
2009
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