November 7, 2007 ☼ Economy ☼ Public Policy
This is an archived blog post from The Acorn.
This is fourth in the series of posts examining some really poor analysis of economic statistics of the state of Gujarat. In this we will look at a technique called analytical gymnastics (or jumping from one conclusion to another).
According to the census of 2001, roughly 46 percent population of the state is dependent upon agriculture (27.67 percent cultivators and 17.91 percent agricultural labourers). Together they contribute only 15 percent to the state’s GDP, while industry and services contributes 39 and 46 percent, respectively. Consequently, there has been a gradual decline in food grain production (from 65.71 lakh tonnes in 2003-04 to 51.53 lakh tonnes in 2004-05), raising doubts about the food security of small and marginal farmers. An NSSO survey in 2005 found 40 percent of the farmers saying that given an option, they would give up agriculture.[Shivam Vij/Tehelka]
In 1999-00, across India, agriculture accounted for 60% of the share in employment but about 25.3% share of GDP. Since then, the share of agriculture in the GDP has been falling. It’s around 20% now, but the share of employment has remained roughly the same.
Shivam betrays a common fallacy: the notion that farmers should always remain farmers. Even when the farmers of Gujarat are saying that they’d prefer not being farmers. As the figures show, there’s better money to be made in industry and services in Gujarat.
Connecting low agricultural productivity with a fall in food grain production is one huge leap of logic. Not all farmers grow food crops. Farmers decide on what to plant depending on the returns they get. If cash crops are expected to fetch a better price than food crops, then a rational Gujarati farmer would grow cash crops. Gujarat, it so happens, is “predominantly a non food crop economy with preponderance of groundnut, tobacco and cotton”. So we can’t tell much about the the state of Gujarat’s agriculture by looking at a decline in the production of food grains.
But why should a fall in the state’s food grain production be a cause for concern? The connection with food security is bogus: it is always possible for Gujarat to buy its food grains from other states, or even import it from abroad. Food security improves with rising incomes. And you can’t raise incomes if you insist farmers must remain farmers and further, they should grow foodgrains.
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