Sarabjit Singh and Bir Singh stand over 200 km apart in northern India’s fertile plains. The parched Yamuna—only a sliver of water, with cattle grazing on its sandy banks—that runs between them would usually be a sign of coming trouble in these heavily cultivated lands. Indeed, caught in the throes of their annual farming cycle, they pray for the very same thing: An improbable recovery in the weak monsoon rains.
Yet, in the small mofussil towns where they live —Khamanon in Punjab and Uttar Pradesh’s Garhi Pukhta — their fears don’t reflect that of their communities. Farming has ceased to the definitive activity even in India’s wheat, paddy and sugarcane-growing heartland, representing the fall of agriculture’s share in rural gross domestic product (GDP) from about half to one-fourth in the past decade.
That is why Amarjeet Singh of Kamal Motors, the Hero dealership on the Chandigarh-Ludhiana road that cuts through Khamanon, is not particularly worried about the rains. “It’s all about the property market,” he says. “That’s where everyone put their money and that’s driving sales. Land prices have increased 10-fold in 10 years in Khamanon. So, I’ll still sell about 40 motorcycles every month, last year’s average.” The town has a population of about 10,000, though the dealership services an area of 7 km around Khamanon.
Hero MotoCorp, India’s largest motorcycle-maker, derives about 45 per cent of its sales from the rural market and, if Singh’s prediction is accurate, rural sales will remain flat this year. That’s not good news for a sector that has believed in the promise of rural consumption.
Down the road from Kamal Motors, Rajesh Khurana of the eponymous Khurana Enterprises feels after three years of strong growth, the slump may be coming. “Air conditioners are still selling, fridge and television sales are dropping,” he says. “For traders like us, there’s little to gain if volumes go down but that’s exactly what’s happening.” That’s because here, one of India’s richest agricultural belts, it has been a summer of chronic power outages and weak rains, prompting fears of a bad harvest.
Sarabjit Singh, standing amid 15 acres of his paddy crop, knows all this only too well. A few weeks ago, he was forced to sell of one his two tractors, reminders of better days, to have enough money to water his fields. India’s 22 per cent below normal monsoon rainfall has meant that he needs to pump water into his fields.
With no more than five hours of electricity daily, diesel is used to run the pumps. That costs about Rs 2,000 per day. Singh has been doing this for close to 50 days. “I would’ve liked to buy a new motorcycle, but now, I can’t,” he adds. “The rains are essential.”
He’s not the only one. Although it has rained early in the morning in Garhi Pukhta, over 200 km away from Khamanon in Uttar Pradesh’s sugarcane belt, Bir Singh is anxious. “It has rained today after almost 20 days. Last year, the rains came on time, so things were fine,” he says. “But this time, I’ve had to spend up to Rs 4000 per day to water my fields.”
The 10 acres that he and his four brothers own feed a family of 20. Although the share of agriculture in the rural GDP has dropped, for every 1000 people employed in rural India, 679 are engaged in farming. But in Uttar Pradesh, it’s not merely population pressure that makes the situation worse, the defunct public distribution system also has a significant hand. “Nothing comes to us,” says Singh, “No rations, no fertilisers, even the children don’t get meals at school. We get nothing.”
In Punjab, on the other hand, rising fertiliser prices led farmers to hoard before the agricultural input became nearly unaffordable. Not here, says Singh, because small farmers just don’t have the money. MOP (Muriate of Potash) fertiliser prices have risen 282 per cent since March 2010, while Diammonium phosphate (DAP) rates have gone up by 157 per cent in the same period. “No small farmer here is making big purchases. Instead, we are moving towards cheaper products,” adds Singh. “Those who are buying aren’t farmers.”
That explains why Narrotam Lal, the owner of the largest general store in Garhi Pukhta, a town of over 15,000, isn’t hurting yet. “Lots of boys from here go outside to work, usually around Delhi or Mumbai. Many of our Muslim brothers go south to Bangalore,” he says. “It has slowed down a little in the last few months because some people are spending less because of inflation and the farmers usually spend when the rains are good. So, I’ll leave it to Lord Indra.”
Vijay Giri, Garhi Pukhta’s municipality chairman, refuses to even acknowledge that people may spend less if the monsoon doesn’t deliver. “We have electricity and irrigation and the crop is doing well,” he declared, “Everyone has money. There have been no suicides. No problems, at all.”Giri has three cars —the Maruti Swift, DZire and Ritz — and a massive generator stands outside his office.
A few hundred metres away, Bir Singh lies on his bed, staring at the sky. “Before he became chairman, Giri had a broken tractor,” he mumbles, “Now look at him.”
India’s rural consumption boom isn’t merely about agriculture, monsoon and migrant labour, it also involves the billions of rupees of subsidy and schemes that got plucked out of the system.