Of the three major sectors of any economy, agriculture is the primary sector. It is prior in time and naturally enough forms the basis for the other two sectors — manufacturing and services. Without a solid foundation provided by an efficient agricultural sector, no society can prosper.
Everybody — factory workers, quantum physicists, doctors, programmers, musicians, writers, politicians — needs food. Farming is the oldest occupation and all civilizations begin as essentially agrarian societies. Agricultural success is the necessary precondition for the advancement of civilization. Without an agricultural revolution there can be no avenues for social, technological, and economic development.
The claim of this essay is that India has not had a comprehensive agricultural revolution. All the other problems that India faces derive from that failure. The good news is that India has the opportunity to have an agricultural revolution. It has always had that opportunity. Primarily because of plain idiocy — let’s not sugarcoat this bitter fact — India has failed in progressing much beyond subsistence agriculture. India’s abysmal poverty follows relentlessly from that fact. Continue reading
Development inclusive of people in rural areas is not really distinct from development in general. Indeed it is not possible to have real development while excluding the majority of the people — the majority of Indians are rural.
Generally speaking, Indian rural populations and subsistence agriculture are almost exactly congruent notions. As long as that equation persists, India will continue to be underdeveloped and poor. The reason is that subsistence agriculture does not scale, and therefore the productivity is bounded by a very low limit.
Navi Radjou’s blog post titled, “India’s Rural Innovations: Can They Scale?” in harvardbusiness.org concludes with:
I strongly believe that the only way India can sustain its long-term economic growth is by unleashing and harnessing the creativity of its grassroots entrepreneurs, especially in rural areas. But here is the challenge: these grassroots inventions don’t scale up. Indeed, most rural innovation initiatives such as DesiCrew and grassroots inventions like Mitti Cool, however impressive they may be, are sadly limited in their impact to a local or regional market of a few hundred customers, and end up employing no more than a dozen workers in the local community. What is missing is a mechanism to cross-pollinate and scale up these bright ideas among India’s 250-million-strong agricultural community which lives scattered across more than 600,000 villages.
I find the paragraph interesting. Continue reading
I have been promoting that idea — that the solution to rural development lies in urban planning — for a few years. The RISC model (Rural Infrastructure & Services Commons) is about planting the seeds of in situ urbanization in rural India. Glad to see that the idea that urbanization is essential for development and growth is gaining momentum. One of these centuries, the government of India may even wake up. Although by then, I will be with yesterday’s seven thousand year.
In an article in the Business Line titled “Kalam’s PURA will not work,” Lee Kuan Yew makes the case for urbanization of the population for India to develop.
The following is an article by me that appeared in ISB’s in-house magazine insight June 2008 issue.
There is a definite positive relationship between the size of the habitation and the productivity of the population.”
The full article is below.
Golf, not Chess
Economic growth in a sense, and to a much larger extent economic development, is more akin to a game of golf than a game of chess. In golf, the opponent’s moves matter very little; you may as well play by yourself and later compare scores if needed. In chess, your move depends on how your opponent has moved and how he is likely to respond to your move. In other words, chess is a strategic game while golf is not. All this is very broadly speaking, naturally. I don’t mean to imply that there are no dependencies among economies as they grow; what I mean is that, especially for a large economy like India, how much it produces and how determines how materially prosperous it is and is independent of how other economies are growing. For strictly benchmarking purposes, one can glance over at the neighbors. And if one is smart, one can learn from the experiences of those neighbors. Still, when it comes to economic growth, it is largely the case that you are playing against yourself.
Here I want to glance at India’s large northern neighbor and recently a strategic competitor in the fiercely competitive game for control of scarce resources. China has been moving mountains — quite literally as you will soon note — for quite a few years for growing its economy. From an Indian perspective, it is a chilling reminder that there are no shortcuts to economic growth and that it takes something special in terms of will and perseverance to overcome the ill-effects of flawed economic policies and failed leadership. It is also a story of hope and the indomitable human spirit, a story of almost superhuman striving by mere mortals.
India has been singularly unlucky in the sense that its movers and shakers don’t seem to get what it takes for the economy to prosper. Therefore it comes as a terribly pleasant surprise when one comes across a M&S who apparently gets it. Not only does the man get it, he gets it in spades and how.
Mukesh Ambani apparently gets it.
I was invited to attend a meeting at the Ministry of Rural Development at the Krishi Bhavan in New Delhi on the 7th of July. (Here is a note which I wrote while waiting in the lobby.)
The meeting was chaired by Renuka Vishwanathan, Secretary, Mininstry of Rural Development. Largely the meeting was attended by secretaries from various state governments such as Chattisgarh and Orrisa. There were a couple of people from President Kalam’s office; Dr PV Indiresan, the architect of PURA; Dr PS Rana, Chairman and MD of HUDCO (Housing and Urban Development Corporation); a couple of people from the Council of Indian Industries (CII); and a few others.
Today’s Business Standard carries Rajesh Jain’s article on Transforming rural India, the hub way in which he discusses the RISC model. Continue reading