Agriculture & Economic Growth

Summary

Based on a public lecture delivered under the auspices of the Forum of Free Enterprise in Bombay on 9 January 1974, this booklet by the economist Colin Clark — then Director of the Agricultural Economics Institute at Oxford — argues that India is on the verge of aborting its post-1950 economic take-off through a self-inflicted food crisis. Clark warns that the gravest threat is not external but a Government response built on procurement, price control, and the systematic neglect of agriculture. The famines that followed Lenin’s procurement policy, Stalin’s 1929 collectivisation, China’s collectivised farming, and the experiments in Cuba, Algeria and Tunisia are paraded as the empirical record of what happens when the state replaces the market in the countryside.

The core diagnosis is that Indian agriculture has been stagnant since 1910 — per-capita output essentially flat for sixty years — while the planners under Mahalanobis privileged heavy industry. About 25 per cent of Indians are hungry in the literal sense; yields of rice, wheat, maize and sorghum are a fraction of those obtained in Japan, Italy, Taiwan or Egypt; more than 60 per cent of the labour force remains tied to the land at productivity barely above subsistence. Clark identifies fertiliser starvation as the binding constraint: India uses 12 kg per hectare to China’s 30, Egypt’s 100, and Taiwan’s 250, and the Government’s six-year blockage of the Tata Fertiliser Project in Gujarat has, on his calculation, destroyed 4½ million tonnes of grain a year.

The prescription is unsparing. Abandon procurement entirely; postpone land ceilings by ten to twenty years until literacy improves; give absolute priority to fertilisers and to capital spending on agriculture and exports; cut the Central and State Governments’ deficit spending to halt inflation; sink tube-wells in preference to mechanisation outside Punjab; and restore land taxation on the Australian model of unimproved capital valuation, which would reward rather than penalise the improving farmer. Clark closes by noting that he favours, for now, continuing not to assess agricultural income to income-tax, given the depth of India’s food shortage. The Forum’s standard disclaimer that the views are not necessarily its own is appended.

Key points

• Clark dates India’s economic take-off — in W. W. Rostow’s sense — to around 1950, with the savings rate rising from about 5% to 10% of national income, but warns the take-off can still be aborted by food crisis and inflation.

• He rejects food procurement as ‘utterly and completely wrong,’ invoking a personal interview with Mahatma Gandhi at the end of 1947 in which Gandhi opposed Nehru’s procurement, price-control and rationing scheme.

• Collectivisation is condemned via comparative history: Lenin’s procurement, Stalin’s 1929 collectivisation and the 1933 famine, China’s 1961 famine, and recent declines in Cuba and Algeria; Tunisia reversed its 1969 collectivisation on seeing the effect.

• Indian agricultural production per capita has stagnated since 1910, while industry and services have advanced; about 25% of Indians are hungry in the literal sense (calorie minimum estimated at 1,650).

• Yields are a fraction of those in Japan, Italy or Egypt — rice 1.67 vs 5.5 t/ha, wheat 1.23 vs 2.4, maize 1.15 vs 5, sorghum 0.49 vs 4 — and Indian fertiliser use (12 kg/ha) trails China (30), Egypt (100) and Taiwan (250).

• Land ceilings, Clark argues from his Oxford fieldwork, work only where farmers are literate (Japan, Taiwan, Egypt, Ireland) and should be postponed 10–20 years in India.

• The Government’s six-year blockage of the Tata Fertiliser Project in Gujarat is held responsible for the loss of about 4½ million tonnes of grain a year and Rs. 500 crores in foreign exchange savings.

• Policy recommendations: end deficit spending, give capital priority to agriculture and exports, sink tube-wells, mechanise only in Punjab-like regions, restore land taxation on the Australian unimproved-capital-valuation model that rewards farmer improvements.