Privatisation of agriculture – the right way.

Without the growth of agriculture sector, India can’t aspire to be the major economic power in the coming decades. Two things, at this point needs cognisance. One is the shifting of the rural population from the agriculture sector to the non-agriculture sector. Secondly, the need of the improvement of the productivity of the agricultural sector, so that, not only the income of the farmers is increased, but at the same time, income is distributed evenly, which will assist in reducing or narrowing the gap between the rich farmers and the poor farmers. 

The experiences of the developed nations have revealed that share of the agricultural sector in the GDP of the nation is inversely related to the status of the development of the nation. Thus, there exists a trade-off between the two. But in case of India, this relation seems to be complex and quite complicated. As major chunk of population is still engaged with agricultural activities for their employment needs, the shifting of the population towards the non-agricultural sector, like manufacturing and service sector would be a herculean task, at least, under the present circumstances.

So, then, we are left with the only other option i.e., improving the productivity of agriculture. But the productivity is functioned upon lot many variables, and here the private sector has to play their role in enhancing the productivity of agriculture.

The private sector in the form of CSR can play an unprecedented role in the agricultural sector, as rightly pointed out by the research paper on “Corporate Social Responsibility and Sustainable Growth in Agriculture in India” by Rajeev Kumar Upadhyay. By the introduction of the cold storage and infrastructure facilities, CSR can eliminate the constraints and bottlenecks in the agricultural sector to a considerable extent. Similarly, a paper on “The Private Sector and India‚Äôs Agricultural Transformation” by Marco Ferroni and Yuan Zhou, delineated the importance of the private sector in the overall transformation of the agricultural sector, that will not only enhance the productivity per se, but at the same time, assist in creating the value-supply chain and logistic network.

India’s productivity is directly related to investment. India’s agriculture situation is grim, owing to the modicum nature of investment in the past. According to the “committee on doubling farmers income”, there is requirement of additional private investment to the tune of Rs. 78,424 crores at 2015-16 to attain the objective of the doubling the farmers income by 2022-23. Private investment in the form of CSR, will not only give a stimulus to the productivity of agriculture, but, at the same time, bring scientific and technical know-how of the modern kind in the Indian agriculture.

In addition, private sector participation in the research and development will instil efficacy in the agriculture, by way of incorporating scientific innovations. The research and development in the agriculture by private sector participation will work at the grass root level, as, now the principle of cost-benefit analysis and profitability will apply in strict sense.

Further, the private sector participation at the multifarious level will create a domino effect, that will helpful in overall upliftment of the rural sector. The building up of road network, better transport facilities, a healthier retail shops network, superior and efficacious distribution of information (so as to avoid the drawbacks of asymmetric information), a better and informative team of change-agents, etc. all are interrelated. An integrated approach is the need of the hour.

If properly managed and articulated, the advantages of the private sector like better work-culture, superior growth-orientation, strategically better placed, etc. can be percolated right up to the grass-root level in the form of positive externalities.

The role of private sector is indispensable for Indian agriculture keeping in context, that the shifting of humongous proportion of population away from agriculture is not possible and rather, not feasible at the same time. Therefore, India has to move now, on the uncharted path of the agricultural growth story, where only few, in the past have shown endurance for the same.

About the author


My name is Vipal Bhagat, going to be doctorate in applied economics. My aim is to analyse and interpret the current economic happenings around us, according to the core and basic principles of economics.

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