Reimagining India: Unlocking the Potential of Asia’s Next Superpower (33 page)

At least Boisar has public education worthy of the name. In Chandpur, a census town bordering the city of Varanasi in Uttar Pradesh, there are no government schools, only four private ones—and though some of the private schools in the area are well run, their fees are far too steep for many of the village’s original residents, while the cheaper alternatives offer dubious instructional value.

In Chandpur, too, some citizens agitate for municipal status. Upset over problems such as sporadic garbage collection, crumbling roads, and the rapidly depleting supply of groundwater, people like Sanjay Itankar, a retired railway worker, say they are impatient for Chandpur to shed its rural status and merge with Varanasi. “Of course we will pay taxes!” said Itankar. “If we get the facilities, we will be happy.”

But a vocal group of dissenters is opposed—Ram Sharan Patel, a rotund, garrulous businessman is one of them. “The day they make this a town, I am going somewhere else,” said Patel, who runs a successful weaving and dying factory in Chandpur. At fifty-four years old, he doesn’t want to start paying municipal taxes, he explained, before admitting that his business probably also exceeds the city pollution limits.

Perhaps India will muster the resolve to overcome that kind of resistance, so that development of its hinterlands proceeds in a manner that will enhance the vast majority of lives among its rural populace. On the present trajectory, however, such an outcome does not appear likely to materialize.

NOTE: The author wishes to thank
Mint
deputy managing editor Anil Padmanhan and
Mint
staff writer Cordelia Jenkins for their contributions to this essay.

Sonalde Desai

Sonalde Desai is a demographer and professor of sociology at the University of Maryland and a senior fellow at the National Council of Applied Economic Research.

Nearly seventy years after Mahatma Gandhi declared, “India begins and ends in the villages,” the statement still rings true. Only three out of ten Indians currently live in cities. The lives of the rest can seem scarcely changed from Gandhi’s time. Any tourist driving through Rajasthan today will pass women in brightly colored saris, silver bangles clanking, trudging through the desert with jugs of water on their heads as they did in Mughal times. Golden fields of mustard in Uttar Pradesh and stretches of emerald coconut groves in Kerala look like advertisements for the serene, timeless India imagined by generations of Western travelers.

But look closer. In a prosperous Punjabi village one might see a batch of
lassi
being mixed up in a shiny washing machine. Instead of riding a bullock cart into the fields each morning, young men in Tamil Nadu hop onto motorcycle taxis to commute to their jobs in nearby towns. Even real Indians don’t necessarily want to live in the “real India” any longer: Those Rajasthani women may look picturesque, but don’t forget that they have to walk for miles just to get safe drinking water.

The fact is, Gandhi’s India cannot and should not survive in today’s world. When he said, “India lives in her . . . villages, and the cities live upon the villages,” he may have been right: At independence, more than 50 percent of the Indian economy depended upon agriculture. Now, though, agricultural stagnation and shrinking plots have made living off
the land nearly impossible for India’s millions of small farmers. The only villages to survive in the future will be those with links to economically dynamic towns where jobs are available. Even if they don’t live in cities, “real” Indians will ultimately have to work there.

This trend is irreversible and has been developing for years. The size of the typical Indian farm shrank drastically between 1970 and 2005—from an average 2.28 hectares to 1.21 hectares. At the turn of the twentieth century, large farmers and
zamindars
, landlords who employed tenant farmers, dominated rural India. Since then, the
zamindari
system has virtually disappeared. Laws limiting the size of individual holdings, as well as the natural chopping up of plots to divide them between successive generations, have fragmented the landscape still further. More than 80 percent of Indian farms today are tiny, less than 2 hectares apiece. This shrinkage stands in direct contrast to the trend in Western countries, where farms are large, as well as in thriving Asian nations like Japan and Korea, where farms are tiny. In the United States, during this period, the size of the average farm rose to 180 acres, up from 150 acres, while in Japan farm size grew to 1.2 acres, up from 1 acre, and in Korea farm size grew to 1 acre, up from 0.9 acre.

Productivity on farms in India lags behind that on farms in many other developing nations. The average Chinese farm is half the size of an Indian one yet is nearly twice as productive. In India, small farms are more productive, on a per hectare basis, than large farms. Even so, India’s lilliputian plots cannot provide a decent livelihood for their owners. Recent studies have shown that the average farming family in India earns barely $500–$600 per hectare annually. If Indian farmers had to subsist solely on agriculture, more than 60 percent would sink below the poverty line.

Fortunately, towns and cities have begun to offer a lifeline to the most well-connected villages. The key to economic well-being in rural India is access to sources of income other than farming. Three-quarters of the richest rural households now earn money from nonagricultural activities. In villages that are linked to urban areas by roads, buses, trains,
banks, and telephones, the range of potential moneymaking activities expands greatly. Villagers might work construction jobs in nearby towns in between harvests, or might set up small businesses there. Within villages themselves, jobs for teachers, clerical workers, artisans, and shopkeepers become more viable.

In the countryside, one out of five adult males now holds multiple jobs, both agricultural and nonagricultural, throughout the year. Nearly half of all rural households derive at least some income from work unrelated to farming. Good infrastructure betters lives overall, too. The less isolated teachers and nurses feel, the more likely they are to live in the village where they work, which in turn raises the quality of education and health care. Nongovernmental organizations, too, are more likely to set up in villages where staff can remain connected to the outside world.

Understanding this reality should force us to reexamine how we approach the question of rural development. The focus should not be on preserving farming as a way of life; the picture-postcard version of the Indian village is no longer viable. Instead, we should strive to increase access to nonfarm work—to connect the disconnected.

Simply funneling money to the poorest rural districts, as is done now, won’t work. Villages near district headquarters tend to be relatively well developed already. Instead, aid strategies need to be much more targeted, focusing first on the states with the worst infrastructure, and then within those states on the most isolated villages. Otherwise the two-tier system that’s already emerging—between villages with access to infrastructure and those without—will only become more entrenched.

We must be alert to another danger, too. One might think that as villagers’ fortunes improved, old fault lines of caste and religion would gradually fade away. Instead, they appear to grow stronger. The worst inequities tend to follow an inverted U-shaped pattern: The old divisions
matter least in the poorest villages (where everyone faces a similar struggle for existence) and the biggest cities (where ambition matters more than background). In between, though, in newly prosperous villages and small towns, the competition for well-paying salaried jobs is fierce. Children who come from traditionally better-off classes have a head start: Studies have suggested that while two-thirds of upper-caste kids can read, less than 45 percent of Muslim and Dalit (or untouchable) children can.

Even those who do manage to get college degrees often find themselves frustrated. With so many more graduates nowadays and so few white-collar jobs available, those youth with better social connections often snap up all the good positions. Thus privileged groups become more privileged, and marginalized groups more marginalized.

That’s not an argument to slow rural development, of course. Instead, the task is twofold—not just to increase villagers’ access to infrastructure but also to expand social and educational opportunities for the least-privileged communities. The village India Gandhi knew is going to disappear regardless. Our task is to make sure that a brighter future replaces it.

Barnik C. Maitra and Adil Zainulbhai

Barnik C. Maitra is a partner in McKinsey’s Mumbai office. Adil Zainulbhai is chairman of McKinsey India.

The image of upwardly mobile India is an urban one, of high-rises and well-educated young people working at their computers before going to the mall. That is true enough, but in an important way, not true to the reality of India. About 70 percent of Indians live in rural areas. And the fact is that living in rural India can be very difficult indeed.

Some three hundred million rural Indians live below the poverty line, literacy is only 46 percent, and only one in five has access to basic sanitation. Although more than two-thirds of Indians (833 million people) live in the countryside, agriculture accounts for only 14 percent of GDP. Forty-two percent of India’s children under five are underweight, the second-highest figure in the world (only Timor-Leste ranks higher).

Can Indian agriculture help to plant a different kind of future, in which its rural citizens are more prosperous, its children more robust, and the national economy stronger?

Yes, it can.

We believe in a successful future, because we have seen success in the past. Despite poor infrastructure, policy barriers such as restrictions on procurement and marketing, and land laws that prevent land consolidation, India’s farmers have proved admirably resilient. India has been self-sufficient in food grains since the mid-1990s, with production rising from 130 million tons in 1980 to 240 million in 2010. India is the world’s third-largest agricultural producer ($260 billion a year, behind China and
the United States), and is the global leader in producing bananas, mangoes, papayas, milk, buffalo meat, spices, castor oil, and sesame seeds.

Pockets of excellence demonstrate the potential that improved practices can deliver. For example, when farmers in Gujarat used better seeds and drip irrigation, they doubled their yields and quintupled their income. What we also see, unfortunately, are opportunities lost or never attempted. India exports only 10 percent of the value of its domestic production (the average for the top fifteen global producers is 39 percent). Part of the reason for the low export figures, of course, is India’s need to feed its own people. But low productivity and the failure to meet global quality standards are also important factors. Another lost opportunity is in food processing; less than 10 percent of Indian output is processed within India, much less than in Brazil or Indonesia.

Moreover, yields are often poor. The world’s best wheat producers produce twelve tons per hectare; India produces three. Or consider the dairy sector. The Food and Agriculture Organization estimates that production per Indian animal (about one thousand kilograms a year) is half the world average.

India is on the cusp of change that will reward success. Per capita GDP is expected to increase by 320 percent over the next twenty years; as income rises, people’s eating habits change, specifically away from cereals and legumes, and toward fruit, vegetables, seafood, and meat. With India’s population growing, food consumption will grow 4 percent a year. At the same time, consumers in India will demand high-quality, safe, and healthy food.

Put it all together, and the conclusion is that this an important moment for Indian agriculture. If the country can imagine, and then make real, this opportunity, the result could be broader prosperity and higher health and living standards all across the nation.

• We imagine an India that is a global agricultural powerhouse,
with exports approaching $164 billion a year by 2030 (compared to $30 billion in 2011).

• We imagine an India with agricultural output of $620 billion by 2030 (compared to $270 billion in 2011).

• We imagine an India with a food-processing GDP of $120 billion by 2030 (up from $24 billion in 2011).

• We imagine an India where the income of rural citizens rises sixfold and approaches that of those in the cities.

• We imagine an India that is a leader in agricultural research and innovation.

reimagining indian agriculture

That is the vision. What needs to be done to make it happen? Here is our to-do list.

1. Improve agricultural technology, including seeds and farming practices.

Low-quality seeds are the most important single reason for India’s relatively low crop yields. Better seeds can boost the yield of potatoes by up to 40 percent, but India produces only 10 percent of the amount required. That adds up to at least $600 million in lost value. Across the country, India supplies less than 20 percent of the demand for quality seeds. To take just one example, despite being the world’s largest producer of mangoes, India ranks sixtieth in terms of yield. In addition, poor postharvest management allows up to 20 percent of the crop to be wasted. We think India can increase yields by 40 percent and cut waste in half by doing no more than adopting proven practices. India should start a coordinated effort to create high-yield varieties of seeds suitable for different regional climates, educate farmers to adopt them, promote mechanization and modern irrigation, and disseminate best practices.

2. Make soil and water sustainability a priority.

India has 18 percent of the world’s population and just 3 percent of its water. The efficient use of water is essential for increasing agricultural production, but the subsidy system encourages the opposite. For example, because of generous subsidies for urea-based fertilizers, farmers rely on these alone rather than using them in conjunction with potassium phosphate ones, which is more effective. To start, India needs to create a better base of knowledge—a national map of soil type and water availability—and use geographic information systems (GIS) to monitor various land-use activities and watershed projects. India should emphasize research on cropping practices that use soil nutrients efficiently and decrease land degradation. New approaches need to be adopted to avoid overexploitation of resources, starting with farmer education and supported by incentives, planning, metering, and allocation of quotas in selected areas. As an example, mobile testing labs could be set up to provide farmers with “prescriptions” for their soil—a simple card that tells them how much fertilizer, pesticide, seed, and water to use.