Farmers & FTAs

India needs more trade deals to spur growth, but its hands are tied by world’s largest farmer population

Rome wasn’t built in a day, but 22-year-old Alcaraz beating 38-year-old Djokovic at Australian Open is yet another reminder that coming of age needn’t take forever. Nasa took just 11 years to touch down on Moon. Japan was running rings around US car industry, in America, after 20 years. India went from being milkdeficient to the largest producer 28 years after launch of Op Flood. Yet, almost 80 years after Independence, our millennia-old agriculture and dairy are considered incapable of standing up to foreign competition, therefore, in need of tariff protection.

This is clear from trade agreements signed over the past 12 months. Whether it is CETA with UK, or the FTA with New Zealand, and now the EU and US deals, agriculture and dairy always become sticking points for India. It’s no secret that ink on the deal with Trump would have dried early last year, but for India’s political compulsions based on its vast farmer population. Now, no country is immune to such pressures. France, even though it has fewer than 4L farming households, as against up to 15cr in India, has seen strong resistance to EU’s recent trade deal with S America’s Mercosur block. And that’s understandable because food security is part of national security. Jawan and kisan together win wars.

But India’s resistance to agri imports – commerce minister has said “India is never going to open up dairy” – is not about Jai Kisan . Rather, it’s an acknowledgement of the precarity of our farmers. Farming accounts for only 1.2% of US employment. It makes up 1% of US GDP, and 1.6% in EU. But it’s worth 16.3% of India’s far smaller GDP. Simply too many Indians are eking out a living on small, unviable farms. Why? For want of better and dependable employment. And because agriculture as a sector is growing far slower than the Indian economy – 4.4% vs 7.4% – their prospects aren’t exactly bright.

So, India’s protectionist stand is justified, but for how long? That’s the Rome question. How many more decades will it take us to reduce agricultural population to, say, 20%, or 10%? Because keeping 45% of population in an unproductive sector is like parking money in a low-interest savings account. It’s a waste of India’s demographic dividend. India should show greater urgency to absorb farmers in the industrial workforce. So that 10 or 15 years from now, every FTA does not seem like a threat to half the population’s livelihood.

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