Farm and Factory

The Modi government isn’t laying the necessary foundations for its manufacturing ambitions

01 May 2015
Harsha Vadlamani
Harsha Vadlamani

Arguing in support of the Land Acquisition Bill in the Rajya Sabha in March, Finance Minister Arun Jaitley emphasised the need to reduce the number of people in the country who subsist on agriculture. “The share of GDP of agriculture is 15 percent, and 60 percent of the population shares that 15 percent,” he said. “So you have to bring people out of agriculture and create jobs in manufacturing.” This was as succinct a summary as any of the government’s intentions with regard to agriculture and industry.

While the aim itself cannot be faulted, the concrete measures taken towards it so far suggest that Jaitley’s is a facile formulation, and one that conceals far more than it reveals. Jaitley’s assertion begins with an indisputable fact, central to the challenge of India’s growth: if wealth is to be distributed more equitably, it will be vital to reduce the number of people who depend on farming. A great part of the wealth being generated in this country is not reaching a large section of the population; and farmers suffer most severely from this inequity, which is only increasing with time. In the 1994 financial year, agriculture generated 28 percent of the country’s GDP, and 62 percent of total employment; by 2010, these figures had fallen to 15 percent and 53 percent respectively. Thus, the decrease in agriculture’s share of total GDP was far greater than the decrease in the number of people the sector supports.

But Jaitley’s conclusion, that jobs in manufacturing offer a way out, does not follow from this. It is based on the premise that, in general, if more jobs become available in sectors such as manufacturing, people move out of agriculture in greater numbers, allowing those who remain in it levels of affluence comparable to those of their counterparts in urban India.

Hartosh Singh Bal is the political editor at The Caravan.