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The importance of agricultural reforms
Tue, 2 Nov Pre-Open

Ownership is a powerful thing. And it can go a long way in enhancing the wealth of any individual. Take India and China for example. China so far has edged over its Indian rival when it comes to GDP growth. But there are expectations that by 2015, India would have surpassed China as far as growth rate is concerned. But GDP growth is not the only criteria. In terms of personal wealth too, Indians have the potential to grow wealthier than the Chinese in the next 30 years.

But this scenario can only play out if India stresses urgently on one important issue. And that is adopting right policies with respect to property rights of farmers. At present, 70% of India's population depends upon agriculture for their livelihood. However, the productivity has been below par. This is because Indian agriculture largely consists of small farmers, who are either working as tenants on other big farms or have marginal holdings which curb productivity. Moreover, although one cannot say that these farmers have no rights at all, many of these are pretty unclear.

Also, another way to create wealth is for farmers to be independent wealth creators rather than dependents on the state. In this regard, Derek Scissors, who is a fellow at The Heritage Foundation, a Washington-based conservative think tank, opines that state-run social welfare programmes are not the solution. This is because these do not really accentuate the wealth of the farmers so much so as enhancing the power of the government. It is a temporary solution which does not address the core issue of rural poverty.

The Indian government, in the meanwhile, has set for itself a target of India achieving GDP growth in double digits. Even if India does manage to reach that mark, the key will be to sustain the same. And although services and manufacturing sectors have been the scene stealers so far, a major boost in agricultural productivity will go a long way in sustained high level of GDP growth. And increase in personal wealth of small farmers.

But will the government introduce some much needed long term reforms for India's agriculture sector? Only time will tell.

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