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Secret of Gujarat's Agrarian Miracle after 2000 Author(s): TUSHAAR SHAH, ASHOK GULATI, HEMANT P, GANGA

Secret of Gujarat's Agrarian Miracle after 2000 Author(s): TUSHAAR SHAH, ASHOK GULATI, HEMANT P, GANGA SHREEDHAR and R C JAIN Source: Economic and Political Weekly, Vol. 44, No. 52 (DECEMBER 26, 2009-JANUARY 1, 2010), pp. 45-55 Published by: Economic and Political Weekly

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Secret of Gujarat's

Agrarian

Miracle

after 2000

TUSHAAR

SHAH, ASHOK GULATI, HEMANT

P, GANGA SHREEDHAR,

R C JAIN_

Semi-arid Gujarat hasclocked high and steadygrowth at

9.6% per year in agricultural state domestic product

since1999-2000.What hasdriventhis growth? The

Never

Gujarat government has aggressively pursued an

innovative agriculture development programme by

liberalising markets, invitingprivate capital, reinventing

agricultural extension,

improving roads and other

infrastructure. Canal-irrigated South and Central Gujarat

should have led Gujarat's agricultural rally. Instead it is

dry Saurashtraand Kachchh, andNorth Gujarat that

have been at the forefront.These could not have

performed sowell butforthe improvedavailability of

water

groundwater for irrigation.Arguably, mass-based

harvesting and farm power reforms have helped

energise Gujarat's agriculture.

1 Gujarat's Agricultural Growth since 2000

known

for agrarian

dynamism,

semi-arid

Gujarat

has

clocked exceptionally high and relatively steady

its agricultural state thenewmillennium

rate of growth of 9.6% per year in

domestic product (sdp) in the earlyyears of

(Gulati et al 2009). This is in sharp contrastto

cre growth rateof 2.9% peryear inthenational

the rathermedio

gdp from agricul

ture and

allied

sectors.

It

is also

in contrast

to Gujarat's

own

highly volatile agriculturalperformanceduring thedecades be fore2000. Gujarat's economy has been outperforming therestof the country since 1990.However, thishas been largely because of

rapid industrial growth.Agriculture has neverbeen an important

part of the Gujarat growth story. Over the long term, Gujarat's

agriculturegrew fasterthan Indian agriculture as awhole since

1970.

However,

year-to-year

fluctuations

in Gujarat's

agricultural

growth

rates were

so violent

that for years,

researchers

have

bemoaned indifferent agriculturalgrowthperformance as a drag

on Gujarat's

overall

growth

in economic

and human

development

terms (Dholakia 2002; Hirway 2000; Mathur and Kashyap 2000;

Bagchi et al 2005).

Against this gloomybackdrop, Gulati etal (2009) foundthatin thenew millennium, Gujarat's agriculture has not only bucked itsown past trendbut also thenational trend. They reported that

"agriculture in Gujarat after2000 seems tohave picked up dra

matically, recordingaverage annual growth rateof 9.6% during

2000-01 to 2006-07" (p 4). In their preliminaryanalyses of state level trends, Gulati etal (2009) observed thatthemain sourcesof

Tushaar Shah (T.Shah@cgiar.org) is at the International Water

Management

Ganga

Institute, Colombo. Ashok Gulati, Hemant

P and

are at the International Food Policy Research

Shreedhar

Institute. R C Jain is at the Central Groundwater

Board, New Delhi.

Gujarat's

agricultural

growth

post-2000

have

been

the massive

in the high value sector

comprising livestockand fruitsand vegetables, and the rise in

boom in cotton production, the growth

wheat

production.

Table 1 (p 46) provides a bird's eye view of theannual ratesof growth of thevalue of output indifferent crop groupings before

and after 2000.

Two

striking aspects

are noteworthy.

First, annual

growth rates of all crops, except paddy, have significantly

accel

erated after 2000 compared to before. Indeed, inwheat and

pulses, the growth rate nearlydoubled, and, in cotton, it jumped

over

3.5 times. The

growth

rates accelerated

as

fast, or faster,

for

cash crops like potato and banana; thesehad a relatively small

weight in thearea cultivatedbut a disproportionatelylargeweight in thevalue of output. Livestock output,particularlymilk, too

experienced an acceleration in growth rate.The onlymajor crop where growth ratedeceleratedwas paddy. The second aspect of

the Gujarat story has todowith the fluctuations.The coefficient ofvariation (cv) forall crops and crop groups has been lower in the period after2000 thanbefore.Thismakes it important toex

plore the sourcesof stabilising influencesin Gujarat agriculture.

Economic& Politicalweekly

QBS3

December

26, 2009

vol

xliv

no

52 45

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Table 1:Annual Average Growthof Major Sectors and Crops:Gujarat (1992-93 to 2005-06)

Sectors_1992-93 to1999-2000 CV

Total foodgrains_73_42_1_0_3.4

Total cereals_8

Total pulses_53_6_9_117_4.0

3.7

11.0

2000-01to2005-06 CV

3.2

Paddy_12

1

8

3.9

Wheat_12_8_40_23_1_2.3

Maize_103_3_5_15_9_4.9

Total cash crops (excluding cotton)

Total others_33_32_04_7.2 Total fruitsand vegetables

10.5_43_19

Cotton_10_5

2.8

9_36/1_1.1

96_12/1_1.6

6_Z9_144_0.5

Banana_2

Potato_5_3_44_11/1_1.7

Livestock_5.0

0.7_66

8_

 

Milk_49_07

9_0.9

Total agriculture and livestock_54_3 Source:Gulati etal(2009).

1_2_U_

Table 2 highlights the rapidly changing composition of

Gujarat'sagrarianeconomy with cash cropsexpanding theirshare at the expense of foodgraincrops. Table 3 summarisesthe rapid

growth

gates

The

in

since

key

aggre-

Table 2: ChangingComposition of Gujarat's

Farm Economy_

1999-2000.

. Crops %

ShareinGrossValueof

of Agriculture and

274-2S

9.9

22.7

1M

10q.o

in 2007-08;

JE

2006-07

12.9

12.5

22.4

10o.o~

total

Claims Gujarat

are

especially

recent

lead-

tall

for

years:

of

has

in the

Output

T^iedSectors

ers are making

indeed,

the most

_1999-2000

vegetables

Total foodgrains_15.8

Cotton_9A_116_

Cash crops other than cotton

agricultural

farmers

income

in Gujarat

^

c

the fastest

since

Fruitsand

grown

13%

jumped

hectares

Total livestock

Totalotners14.8

tota, *te referstoTriennium Ending.

countryatanannualrate

of

2004-05;

the area Under food Crops

lakh

from 36.6

in 2004-05

Source:Gu,atietal(2009)

lakh

hectares

to 47.11

What is driving thisbreakneck growth? Is ita succession of

good monsoons? Or bettermarket

Sarovar irrigationproject? Or the things the farmersand the

opportunities? Or the Sardar

government

of Gujarat

have

done?

This

paper

attempts

to un

lock the secretof Gujarat's agriculturalgrowth miracle inrecent

is caused by acts of god - like favourable

years. If themiracle

monsoons

-

or other

exogenous

factors,

it is of relatively

little

policy interest. However, if governmentpolicy driversare behind

the miracle, the Gujarat storyacquires great significance forthe

lessons

it offers

to other

governments

rapidagriculturalgrowth.

about

how

to kickstart

2

Exogenous Drivers of Agricultural Growth

Several

exogenous

agricultural

-

Gujarat

Kachchh

growth

especially

and North

factors

have

helped

performance

the drought-prone

after

Gujarat's

1999-2000.

exceptional

Much

regions

of Saurashtra,

of

Gujarat

- have

received

above-normal

rain

fall during all these years.During 2002, when almost all of India

experienced shortfallin rainfall precipitation,Gujarat too faced an overall shortfall. However, drought hit only the central and

southern

parts,

drought-prone

shown

in Figure

which

regions

1.

are

all

had

covered

above

canal

or near-normal

by

irrigation.

rainfall

The

as

Figure 1:RainfallPattern - Percentage - Deviation fromNormal -? -- 160 ^ _NorthGujarat_111 2002 2003 2004
Figure 1:RainfallPattern - Percentage
-
Deviation fromNormal
-?
--
160
^ _NorthGujarat_111
2002
2003
2004
2005
2006
2007
-40
-

foodgrainproduction has improvedby 55% from 51.53 lakhmet

ric tonnes (mt) in 2004-05

it is early days, even in

to 79-95 lakhmt in 2007-08. Though

the 2009 drought, Gujarat's kharif

sowing

-

at 82.5

lakh hectares

- is higher

than the 2008

kharif.1

No matter

how

one

looks

at

the data,

post-2000

Gujarat

agri

culture has experienced rapid growth as well as enhanced stability - both ofwhich together make the state's experience

look likeamiracle.

Table 3:Growth in Key Aggregates_

1999-20002005-06** 2007-08

_(Forecast)

Aggregate cotton output (million bales)_2.15

Aggregate wheat output (million MT)_1.1

Milkoutput (million MT)_5.26

Value of output ofmilk and major

crops (Rscrore)

at 1999-2000 prices_21,730 Value of output ofmilk and major crops per hectare

(Rs) at 1999-2000 prices*_(19,191)

22,876

6.87

2.32

6.96

36,953 NA

37,510#

(32,576) NA

8.28

3.84

7.91

GSDPA * per farmer (Rs) at 1999-2000 prices##_37,683.6

Figures in parentheses arevaluescalculatedon thebasisofselected crops andmilk. #Perhectarevaluefor2005-06 isbased upon netsownareaestimatesfor2003-04,the last year

forwhich statenetsownarea figures areavailable. **

publishedby theCentralStatistical Organisation (CSO) isforthe period

##Basedon totalnumberof landholdings datafromthe Agricultural Census2001 (http://

agcensus.nic.in/cendata/StateT1table1.aspx),assuming no change between1999-2000and2005-06.

67,316.3

NA

Thevalueof

output data and gross

statedomestic product in agricultural andalliedactivities

1999-2000to2005-06.

Also helpful has been themarket environment.The highly re

munerative

minimum

support

prices

(msp)

for cotton, wheat

and

other

strong

crops announced

by the central

government

incentive

to farmers

to increase

production.

have

provided

For Gujarat

farmers, of particular significance has been the high msp for

cotton

curement

has

as

been

since

the Cotton

operations

strong,

largest

Corporation

in

the

state.

of India

Export

has

demand

Gujarat

and

a sizeable

has

pro

for cotton

emerged

cotton

too. During

recent years,

state

India's

cotton-producing

a major

supplier toChina.

The

spontaneous

emergence

- and wildfire

growth

- of "illegal"

local production ofBt cottonseed by relatively unknown entrepre

neurs was

for long viewed

with

concern

by the central

authorities.

The Gujarat government,however, expressed its inability to bring these informalseed producers under control even as it

kept paying lip service to theneed to do so. It cannot be

any

body's

case

that this development

has

been

an unmixed

bless

ing.Indeed,unregulated development ofBt cotton seed industry has brought into the fraymany fly-by-nightoperators who sell

fake

seeds

and

that Gujarat's

bring

cotton

farmers

boom

has

to ruin. However,

been

aided

in no

it is also

true

small measure

by the availability of reasonably priced quality Bt cotton seed.

46 December

26, 2oo9

vol

xliv

no

52

(3321 Economic& Politicalweekly

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Despite the threatof fake seeds, farmersfrom farawayPunjab throng toNorth Gujarat where Mansa townhas emerged as the

Bt cotton seed production hub. Indeed, a train bringing hordes

farmersfromJalandhar toMehsana isnow popularly

of Punjab

called

"Bt cottonseed

express".

The Gujarat

government

tolerated

local Bt cotton

seed manu

facturers

in early years

because

they undercut

Monsanto

whose

seedswere found tobe prohibitivelyexpensive at Rs 1,600 per

packet. But gradually, local producers too began to chargehigh

prices.

To

regulate

these,

the state government

first used moral

suasionwith seed producers, and when that failed, imposed a ceiling ofRs 750 per packet toensure thatfarmers got seeds at a

reasonable

price.

Since

then, Bt cotton

seed production

in Gujarat

has increased rapidly. The steep fall inthe price ofBt cottonseed

fromRs 1,600 toRs 650 fora 450 gm packet has helped spread the expansion ofBt cottoncultivationin Gujarat (Gupta 2008).2

These

exogenous

agricultural

miracle.

factors however

After

the 2002

cannot

explain

the Gujarat

drought,

monsoons

have

been kind tomost parts oflndia, except in 2009. The high msp of wheat, cottonand other crops were available tofarmersinall the

states. Even

the Bt cotton

revolution

spread

in all cotton-growing

states like Maharashtra, Andhra Pradesh and Punjab. The overall

economic boom that Indiahas enjoyed shouldhave generated a

demand pull forfarm products all through the country.Yet, it

experienced rapid acceleration in agri

cultural growthduring

by Gujarat

specificdrivers, which may include policy initiativesof the gov

that Gujarat's agricultural boom is likely driven

was onlyGujarat which

these years. This led us to hypothesise

ernment

of Gujarat.

3 Policy Drivers of Agricultural Growth

Althoughwidely lauded for adopting an aggressive industrial policy thathas made Gujarat a much-favoured destination for

investment,

the Bharatiya

actually

devoted

a great

deal

Janata

Party

of energy

(bjp)

government

has

and

resources

to acceler

ating agriculturalgrowth in the state through a broad spectrum of policy initiatives.These can be grouped intofive categories:

Improved

government

Market

took

Access:

This

cluster

to improve

farmers'

enhance

their margins

and

in general

includes

all measures

the

access

to better markets,

forward

strengthen

link

ages. Gujarat was amongst

tural Produce

the early states

to amend

the Agricul

farmers

Marketing

Committee

(apmc) Act to enable

to directly

sell their produce

to wholesalers,

exporters,

industries

and large tradingcompanies without having to operate through

arhatias

or commission

agents.

It also

allowed

large players

to

establish spot exchanges. The amendment also helped create conditions conducive for the spread of contract farming. The

government

also

encouraged

large corporates

to establish

retail

chains and source their requirementsdirectly from farmers.

Gujarat government has also pursued aggressive policies to promote diversificationto high value crops, especially fruitand

vegetables,

and

spices

and

condiments.

For example,

it began

of

fering farmersdirect capital subsidy ofRs 2.5 lakh to set up green

houses, besides 25% relief in electricityduty.3 These measures

have

produced

some

Economic& Politicalweekly

outcomes.

For example,

fSXSk December

26, 2009

between

vol

xliv

2000-01

no

52

47

= =

REVIEWOF AGRICULTURE

and 2005-06, Gujarat's horticulture production increased by

108% (Government of Gujarat 2009a).

Technical Support, Extension and Credit: This clusterincludes

government initiativesto strengthen backward linkages in terms

of extension, research support, and inputsupply. Here, Gujarat

government did some remarkable things, with the political class leading fromthe front.Like elsewhere in India, the agricultural

research and extension system in Gujarat has deteriorated.The

old, World Bank-induced "training and visit" (t&v) system isall

but defunct.

vive

The

bjp

farm extension,

government

technical

and

took

several

initiatives

to re

credit

support

to farmers.

It

unbundled themonolithic Gujarat AgriculturalUniversity into

four independent universitieswith significant increase in re sourcesand autonomyprovided toeach of them.The scientistsof the revitalised agricultural universitieswere thenmobilised to

reinvent

Gujarat

the defunct

evolved

t&v agricultural

extension

model.

its annual

month-long

Krishi Mahotsav

cam

paign as a unique extensionmodel that broughtagricultural sci

entists,

extension

staff, agro-industries,

input suppliers,

coopera

tives,banks, local and state-level political leaders together on a

platform to exchange knowledge and informationon the latest

technologies andmarket opportunities.Large exhibitions organ

ised inall the agriculturaluniversitycampuses and districttowns are widely attended by thousands of farmers.A Krishi Rath -

complete

with

audio-visual

equipment,

posters,

models

and

ac

companied by scientistsand administrators - visits everyvillage of the state.Scientists give some lecturesbut also undertake soil

health testsand give soil-healthcards to the farmers detailing

the soil composition, and thebest possible crops forthesoil type. They also carry out vaccination of the cattle, distributekits on

agriculture, animal husbandry, and horticultureto the five poor

est farmersin the village.4 Gujarat officialsrecount several ef fectsof thereinventedextensionmodel. For instance,theyargue

that in using chemical fertilisers,Gujarat farmershave moved

wholesale

position

from a 13:7.5:1 nitrogen-phosphorous-potassium

to a 6.5:3.5:1,

thereby

reducing

cost, optimising

com

produc

tionand improving net income.5The farmcredit system toohas

been

clocked

ernment

revitalised.

22-25%

policies.

Agricultural

annual

In the

loan disbursements

rate,

thanks

ending

in Gujarat

to supportive

have

gov

growth

three years

2006-07,

for exam

ple, agricultural loan disbursals in Gujarat doubled from 4,735

crore

in 2003-04

to 10,468

crore

in 2006-07.6

Canal Irrigation: A major priority forall governments in Gujarat

since Indian independence has been irrigationdevelopment. Under theBritish Raj, the Gujarat part of the erstwhile Bombay

statereceived littleorno public irrigation investment.As a result,

after becoming

a

state

in 1959,

successive

Gujarat

governments

have devoted substantial budgetary resources to constructionof

major and medium canal irrigationprojects. By far the largest such project is the Sardar Sarovar Project (ssp) on Narmada -

called the"lifelineof Gujarat" - which has beenmired incontro

versies and disputes. Gujarat has, however, raised the ssp dam height to 121.5metres; and there is enough water in thedam to

irrigate

1.8 million

hectares

as originally

planned.

However,

ssp

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irrigationdevelopment is stuckbecause of the slow pace of com mand area development. Themain and branch canals are nearly

complete.However, the government is facingmajor road blocks in acquiring land for creating thenetworkof distributaries, mi

a feeder getspower with low voltage. Because theyget subsidised or free power, farmersdo not complain about quality; but poor

quality of farm power supply remainsa major speed breaker for agriculturalgrowth and a bane forrural society.

nors and

sub-minors.

As

a result,

against

a target

of 1.8 million

hectares, the ssp is irrigatingonly 80-100 thousand hectares mostly inthe Narmada, Bharuch andVadodara districts. Despite

The way

out,

tions,

charge

it is suggested

farmers

based

by many,

on power

is tometer

consumed,

farm connec

f a r m connec

and

provide

them 24/7 three-phasepower supply.However, farmershave

ssp's

lacklustre

progress,

several

large canal

irrigation

systems

- forcefully resistedsuch proposals because ofa variety of reasons.

Mahi,

Ukai-Kakrapar,

Karjan,

Damanganga

- provide

a network

of canals mostly inCentral and South Gujarat, which have over

70%

of Gujarat's

command

areas.7 While

Gujarat

has

surpassed

other

states in many fieldsof agriculturalpolicy,management of

large irrigationprojects remains an area with much scope for

Since

2000,

International

Water

Management

Institute

(iwmi)

has been suggesting a secondbest solution: (a) rationfarm power

supply tofit irrigation demand schedules; (b) providepower ration against a fixed,preannounced schedule; and (c) overcome farmer

resistance by offering to farmers uninterruptedpower supply of

improvement

and

innovation.

full voltage.

Management of theGroundwater Economy: While ssp remains

a distant dream

and progress in canal irrigationis, in general,

lukewarm,

the Gujarat

government

ventional initiativesin managing

has undertaken

some uncon

the groundwatereconomy, the

During 2003-06, Gujarat governmentimplementedJyotigram

Yojana with theaim of providing 24/7 power supply to villages. However, thiscould not be done without effective rationing of

farm power supply. This led the government to investRs 1,200

crore

in separating

agricultural

feeders

from non-agricultural

mainstay of its irrigatedagriculture. For one, the government has

feeders throughoutGujarat. This

done, Gujarat

government be

enthusiastically made common causewith farming communities

gan rationing farm power supply.During the

past two years,

in undertaking decentralised rainwater harvesting and ground

water

movement

recharge

work.

This

movement

in the late 1980s. However,

had

started

as

the bjp government

a mass

under

Keshubhai Patel as well as Narendra Modi lent stronggovern

ment

support

to communities

and

non-governmental

organisa

tions (ngos) to expand thiswork ina participatory mode under

theSardar Patel Sahakari Jai Sanchaya Yojana. The scheme per formedbest inSaurashtra and Kachchh regions; but forthe state

as a whole,

created

by December

check

-1,13,738

2008,

dams,

nearly

5,00,000

55,917 bori bandhs,

structures

2,40,199

were

farm

ponds, besides 62,532 large and small check dams constructed under the oversight of theWater Resources Department of the

Government

of Gujarat

- all

in a campaign

mode.8

Then,

Gujarat

micro-irrigation

also

pioneered

technologies

a new

programme

in groundwater

to popularise

irrigated

areas.

While the government of India offersan annual subsidy of all of

Rs

400

crore

the Gujarat

to promote

government

micro-irrigation

for the whole

created

the Gujarat

Green

country,

Revolution

Company (ggrc), a special purpose vehicle (spv) for promoting

micro-irrigation,

with

an

initial

funding

of Rs

1,500

crore

to be

replenished as needed, ggrc developed a subsidy-loan scheme which is by farthebest offered by any state to adopters ofmicro

irrigation. As a result, the spread of micro-irrigationtechnologies

ismore

rapid

in Gujarat

than other

states during

recent years.

Finally, a reformthathas had by far themost far-reaching

impact on Gujarat's agriculture is JyotigramYojana, which was

designed, ironically, to ration power supply to farmersand pro

vide 24/7 three-phaseelectricity tonon-farmruralusers (Shah and Verma 2008). Most Indian states charge subsidised flattariff

forfarm power supply; some like Punjab, Tamil Nadu and And hra Pradesh, provide free power. However, the quality of farm power supply is verypoor; farmersseldom get power according

to a pre-announced

schedule;

power

comes with

frequent

inter

ruptions and very low voltage. InAndhra Pradesh, the utility is

unable

to control

illegal

connections;

as

a result,

every

farmer on

Punjab has also fully separated

Andhra

Pradesh,

too, has

done

farm fromnon-farm feeders;

it in most

districts.

However,

Gujarat follows all three iwmi recommendations: it provides

farmersa rationed power supply but the power that Gujarat

farmers get

Farmers in Punjab and Andhra

Pradesh get rationed power but of poor quality, with many inter

provided on

is 430-440 voltage, with few interruptions and is

a strictschedule.

ruptions

and on uncertain

schedules.

Road and Other Infrastructure: Gujarat has always been ahead of other states in investing in the road network since the 1960s.

One reason why rural roads in many parts of Gujarat are good is

the

rise of da