GROUND REALITY: Nearly 150 million casual agricultural labourers face starvation

It is almost apocryphal. Travelling through Uttar Pradesh two weeks ago, Union Agriculture Minister Ajit Singh bumped into an astrologer. Perhaps tired of the Meteorological Department's repeated bloomers, Singh asked the astrologer-half in jest-about the monsoon. The prophecy: planetary positions did not favour rains for two weeks. In short, the monsoon had failed.

Singh didn't need to ask about the impact. The showers failed to materialise over the weekend and by July 29, India was facing an undeclared drought. Without much ado, Singh declared "the failure of monsoon as the most widespread and the magnitude worse than in 1987". In Parliament, Finance Minister Jaswant Singh announced the setting up of a task force under Deputy Prime Minister L.K. Advani, and described the situation as "serious".

Of India's 593 districts, 321 in 12 states have seen little or no rainfall, with Rajasthan, Haryana, Punjab, Andhra Pradesh, Uttar Pradesh and Karnataka being the worst hit. The consequences: nearly two-thirds of the kharif crop-paddy, coarse grains like bajra, oilseeds like soya, maize and pulses-is at risk, drop in output could be upwards of 10 million tonnes and nearly 150 million casual agricultural labourers face starvation. Andhra Pradesh Chief Minister N. Chandrababu Naidu succinctly articulates the crisis, "It is a setback for the farm economy and casts its shadow on the first year of the Tenth Plan."

FALLOUT

REVIVAL BUST Lower agricultural growth may impact industrial resurgence and thus the GDP. "We were hoping to do well but the impending drought makes us apprehensive." JAGDISH KHATTAR, Chairman, Maruti Udyog "The feelgood factor is gone. The analog audio and B/W TV markets will be worst hit." RAJIV KARWAL, Senior V-P, Philips India "GDP growth rate won't be affected by more than a quarter of a per cent. There is no rationale for the dismal sentiments." BIBEK DEBROY, Director, Rajiv Gandhi Foundation "I expect the GDP to be affected by 1 per cent at the most. So, probably, you could look at a GDP growth of 4.5-5 per cent." SHASHANKA BHIDE, Chief Economist, NCAER "We've cut GDP forecast from 5.6 to 5.1 per cent but recovery will continue." MERRILL LYNCH, India Strategy Report "India is ravaged by drought due to the absence of long-term planning." SOMPAL, Member, Planning Commission "Schemes to mitigate the sufferings of farmers are in place." SHANTA KUMAR, Rural Development Minister

Predictably, the plaintive pleas of July have risen to a crescendo in August (see chart). Although states can declare drought and ask for aid only when 50 per cent of the crop fails (a British Raj norm), many states have declared that this is now inevitable. Those who didn't were targeted. If Shiromani Akali Dal leader Parkash Singh Badal accused Punjab Chief Minister Amarinder Singh of living in an "ivory tower" for delaying the declaration, Tamil Nadu Chief Minister J. Jayalalithaa was forced to rebut Union Minister M. Kannappan's statement that the state Government had sought only Rs 52 crore from the Centre, and declared that it needed Rs 300 crore.

Thanks to a combination of crisis and competitive politics, 10 of the 12 badly affected states have already demanded over Rs 11,000 crore from the Union Government. Rajasthan has, in an interim demand, petitioned for relief worth Rs 4,996 crore. Even a partially affected state like Maharashtra has asked for Rs 800 crore. Bihar, suffering from both floods and drought, is quantifying the aid needed.

Away from the fields, other problems are brewing. As water reservoir levels dip (now 44 per cent of normal), both drinking water and power supply will be under pressure. The Power Ministry has estimated that hydel power generation will drop by 12 billion units. The recent failure of the western grid, involving four states, is symptomatic of the troubled times ahead. However, Power Minister Suresh Prabhu assures that "a back-up plan is in place and we will be in a position to supply power".

But a higher demand for power in irrigated acreage is expected to push the requirement up by 30 billion units. Also mounting would be the state electricity board losses-already Rs 30,000 crore, up tenfold since 1992-as states divert power from the revenue generating industrial sector to the politically vocal farm sector, like in Punjab. Amarinder admits it would push the Punjab State Electricity Board and the state into deeper financial mess: "We may have to dip into the fixed deposits of the PSUs to purchase power."

Punjab is not the only state. Forced to forego land revenue and power levies, states would look to the Centre. With 10 of them going to the polls next year, politics and competitive populism will undoubtedly push the damages bill higher. As states clamour for aid to tend to cattle and transport drinking water to parched lands, the Centre's already strained finances will come under pressure. Indeed, the pulls and political pressures of the coalition era are bound to exacerbate the fiscal fragility.

It is a worry that has found resonance in the other economy. The bse Sensex tanked to below 3,000 and recorded a nine-month low, aided by the confusion in the US markets. As the feel-good factor evaporates and the revival dream is threatened, economists are rejigging GDP growth forecasts. The consensus so far: if agricultural growth dips by a percentage, GDP would be affected by 0.25 per cent.

However, given that two-thirds of the consumer base is dependent on agriculture, there is a belief that the indirect impact of lower incomes could upset the industrial revival and thus the GDP cart. But unlike the 1970s and '80s, India is better poised to deal with the crisis. With 63 million tonnes of foodgrains in godowns and a $60 billion option to import, food price inflation is not a major worry. Some are even hoping that rising exports and a lucky rabi crop could help GDP rise to 6 per cent.

For now, the Centre has indicated that there is enough money in the Calamity Relief Fund (Rs 2,196 crore) and the National Calamity Contingency Fund (over Rs 11,000 crore) to tide over the crisis. Ajit Singh points out that the new "task force is expected to focus on a four-point agenda to ensure proper water management, nutrition for people in affected areas, employment and creation of assets". Rural Development Minister Shanta Kumar believes the schemes to "mitigate the suffering of the farmers are in place".

The game plan is to focus on Centre-sponsored schemes and to integrate them with the food-for-work programme. But much will depend on the states, whose records aren't impressive. In the past two years, they have received Rs 6,891 crore for rural roads, of which only Rs 1,644.22 crore has been spent. Take drinking water. The states have managed to spend just Rs 118 crore out of Rs 572 crore in three years. Or wasteland development: despite claims of curing 16 million hectares by the Eighth Plan, the net sown area in India has remained at 142 million hectares for 30 years. Hopefully, the crisis will bring in efficiency.

The moot question is why India in 2002 should be so traumatised and ravaged by a 19th century phantom like a drought. The answer, says Sompal, member, Planning Commission, is the "absence of long-term planning. The Water Resources Ministry is yet to transgress the border of major and minor irrigation projects. Watershed management is yet to enter their thinking". Indeed, in 1998-99, the Planning Commission accepted member S.R. Hashim's thesis that over 25 years India could insulate itself from the impact of drought by investing
Rs 75,800 crore-an amount twice the annual subsidy bill. Agriculture insurance, another salve against drought, has stagnated since 1999.

But by a strange confluence of interests, policymakers and politicians seem to prefer subsidies to solutions. The task force could well use the crisis to implement a long-term strategy to insulate agriculture and the economy from drought.

-with bureau reports