It is quite difficult to clearly understand the chronology of a number of socio-political and economic decisions that the policy makers of any country choose to make. Everyone wonders what was the green revolution? How did it help the agrarian economy of India? Did it have sociological impacts? Why were 14 large private sector banks nationalised in 1969? This article aims to answer some of these questions and also explain the chronology of events that took place.
The New Agricultural Strategy was brought to life in the third five-year plan. As suggested by the team of experts of the Ford Foundation in its report “India’s Crisis of Food and Steps to Meet it” in 1959 the Government decided to shift the strategy followed in agricultural sector of the country. Before 1965, when the Green Revolution began, India followed and extensive strategy in agriculture but post 1965, India started following an intensive strategy. The difference between the two is that the focus on the former is upon bringing larger areas of land under cultivation whereas the latter focuses on improving the productivity of the existing agricultural lands. At the time of this galactic move, land was not very well divided among the agricultural producers of the country. Nobel Laureate Amartya Sen in 1962 put forward his theory that land holding and productivity are inversely related. He believed that land reforms should have preceded the Green Revolution.
This NAS brought into the market, seeds that very fast maturing and very high yielding. These HYV seeds worked to solve the problem of land constraint in India because it allowed multiple cropping. This drastically increased the net area under cultivation. The problem was that these seeds mandated extensive irrigation and the use of fertilizers and pesticides. Irrigation pump-sets became a necessity for using these seeds. This combination of expensive seeds, fertilizers, irrigation and pesticides made the package very unattractive to the middle and low income farmers who could not afford any of these things without the proper availability of formal credit.
Even in 1969, more than 90% of the agricultural credit came from the unorganised credit market. The scheduled commercial banks were extending less than 1% of their total credit to agriculture. It necessitated an immediate transition from the unorganised to the organised credit structure. This made bank nationalisation of 1969 a compelling outcome. The nationalised banks were now under the legal authority of the government. Hence, the infrastructural development of technology demanded the complementary support from a parallel institutional structure. The nationalised banks were statutorily obliged to open 50% of their new branches in the unbanked rural economy. They were also mandated to extend atleast 16% of their total credit to agriculture. The interest burden on the Indian farmer was significantly reduced by massive branch expansion and increased agricultural credit. By 1980, the share of unorganized credit in agriculture declined to less than 67%.
This new technology was knowledge intensive, so the agricultural economy of India demanded availability of modern knowledge to the average Indian farmer. The new technology was to be complemented by the establishment of agricultural universities all over the country. The expensive package was appealing to the relatively well-off farmers. They could use the new technology whereas the poor farmers could not. This led to more perceptible inter-class inequality. The new technology laid the foundations for agrarian unrest. The government had to significantly increase expenditure on rural law and order.
Along with increasing inter-class inequality in the agrarian economy, green revolution also introduced inter-crop inequality. Production and productivity of high-priced cereals like rice and wheat but those of low priced cereals like jowar, bajra and maize did not increase appreciably. At the aggregate level, per capita food availability increased not because of greater access to food for the below poverty line and low or middle income families but due to higher food availability to the rest of the population. Technological modernization without prior land reforms created an economic environment of endemic hunger, deprivation and starvation. Moreover, given the nature of technology, it could not be used uniformly over the country and this led to inter-regional inequality. The northern states and later some of the southern states achieved success while central and north-eastern India lagged far behind. Such regional inequality is a potential contributor to both religious fundamentalism and political radicalism.
It is important to understand the socio-political impact of this move because this new strategy affected each and every citizen of this country. Drastic moves must be well thought out and executed in a planned fashion in order to achieve success.
Picture Credits: AFP