The Fourth Industrial Revolution (4IR) heralds an exponential pace of technological change, building on the digital revolution to combine technologies, spawn new ones, and transform systems, industries, countries - even society itself.
For developing countries, advances in computing power, connectivity, artificial intelligence, biotechnology and GIS, and newer, more capable technologies hold tremendous promise. Inclusive agriculture, rural growth and structural transformation from agriculture to high-productivity manufacturing and other economic sectors can be accelerated, as technological change transforms individuals’ lives and enables developing countries to progress at speeds and on scales previously inconceivable.
To realise the positive outcomes of this new industrial revolution, public policymaking must bridge the already widening gap between skilled and unskilled labour. This gap already poses a threat to the liberal world economic order in the form of anti-globalisation movements - manifested in the rise of US President Donald Trump and Brexit - which have been caused in part by the liberal elites' prolonged neglect of the growing economic inequalities and the plight of the working class that globalisation has prompted.
The case of India is salient because, unlike its East and Southeast Asian neighbours, rapid economic growth has not been inclusive enough to reduce the numbers of Indians living in poverty. India contains the largest number of poor people in the world: 270 million, according to the World Bank. Employment growth is critical in low-productivity agriculture, which accounts for nearly three-quarters of the poor population. But automation threatens to create more unemployment. Public policy must be directed toward increasing the productivity of poor people rather than just offering handouts.
The Government of India (GOI) is confronting these challenges. As more young men are migrating from rural poverty to urban areas to seek employment, they are contributing to a rapid feminisation of agriculture. Women, especially dependent on agriculture, perform most of the backbreaking labour. Their low productivity in agriculture, itself increasingly affected by climate change, demands action by policymakers. Any transformation of agriculture requires removing the constraints on women; Bina Agarwal recently argued that the discontent of rural youth could become the agitations of rural women farmers, dissatisfied with lack of access to land, irrigation, credit, inputs and markets.
Aware of these issues, in 2016 India's Prime Minister Narendra Modi introduced a new national policy to double farmers’ incomes by 2022. It targeted poverty reduction, food security and climate change, which is hurting agriculture with rising temperatures, increasingly frequent floods and droughts, and a greater incidence of pests and diseases. The Ministry of Agriculture & Farmers Welfare launched a national scheme called Pradhan Mantri Krishi Sinchai Yojana (PMKSY) with the aim of irrigating every Indian farm and improving water-use efficiency.
Through its Digital India programme, GOI is working to transform the country's rural economy and create skilled jobs in rural areas. For the estimated 156 million Indian rural households, most living in poverty according to India’s National Sample Survey Organization (NSSO), there is need for investment in transportation, power, and internet access to create more employment for women and youth in rural areas.
The Ministry of Communication and Information Technology, along with other ministries, is working to reform states' service delivery, through GOI’s Goods and Services Tax (GST) system, to establish a uniform interface for taxpayers with a common IT infrastructure, shared between the central government and the states. Digital India’s strategic cornerstones, the Common Services Centres, are meant to provide access points for delivery of various electronic services to villages, to promote digital and financial inclusion, encourage rural entrepreneurship, and build rural capacities and livelihoods, offering a bottom-up approach to social change, particularly among India’s rural citizens. New technologies enable small farmers to shift from input-intensive to knowledge-intensive agriculture. Precision agriculture can improve the timeliness of planting, secure the best market prices through market information and e-market reforms, provide fertiliser subsidies via direct bank transfers that eliminate or reduce the cost of financial intermediaries, and improve agricultural extension. Combined with improved seed supply and land and water management, which can in turn increase double and triple cropping, farmers’ income can grow.
In April 2016, Modi launched eNAM (National Agriculture Market), an online platform for farmers that integrates agricultural markets online, allowing farmers and traders alike to view all Agriculture Produce Market Committee-related information and services, commodity arrivals and prices, and buy and sell trade offers, thus helping farmers bid for the best prices across markets. GOI also launched a crop insurance scheme, the Pradhan Mantri Fasal Bima Yojana (PMFBY) in 2016, which now covers 37 million farmers.
Additionally, GOI is investing in mapping all of India's aquifers, and using technology to manage water demand. Quantifying the relationship between rainfall and groundwater levels under alternative modes of irrigation and farming should enable prioritisation of prospective water and irrigation investments.
Greater investment in research, meanwhile, is needed to develop multi-resistant crops. India has lagged behind its Asian neighbours in genomics, even resisting the approval of genetically modified crops developed by its own scientists. Arguably, such crops do not involve multinational monopolies, can be grown by poor farmers, and offer increased resistance to extreme climatic conditions.
Digitised land registration, mobile phones and 'Uberised' tractor services all are contributing to improved farm management. Digital India Land Records Modernisation Programme (DILRMP) is updating millions of land records, providing title guarantees and increased security of land tenure to farmers while stimulating land rentals by nonviable smallholders and land consolidation.
To facilitate communications, Digital India is implementing plans to connect 2.5 million Gram Panchayats (local governments) with high-speed internet by 2018, with hundreds of thousands already internet-enabled. GOI has also mandated that all mobiles phones must support at least one of 22 Indian languages, other than English and Hindi, beginning July 2017. With only 27% of villages having banking services within 5 kilometres, the government is licensing new banks and using mobile phone payment technology to an increasing extent. Mobile coverage is high—over 1 billion of India’s population of 1.4 billion are connected.
The need for safety nets
Complementing efforts to increase agricultural productivity and employment is India’s triple innovation system (JAM), consisting of Jan Dhan (the Prime Minister’s initiative to open universal bank accounts, depositing Rs1000 [US$15.4] per household), Aadhaar (a unique 12-digit ID number for citizens) and mobile phones.
Between them, these factors have provided a platform for expansion of India's public safety nets. The Public Distribution System (PDS), the world’s largest safety net of its kind, distributes food grains and essential commodities via a network of over 521,000 Fair Price Shops (FPSs). More recently, the Modi government has focused on reforming PDS using new technologies. There is now far less pilfering thanks to the digitisation of 230 million ration cards, 56% of which are strengthened with a universal ID and Aadhaar. Several states have now installed electronic point-of-sale devices at FPSs to track sales of food grains to cardholders on a real-time basis. A much debated policy shift - in-kind cash transfers in place of food distribution - is also being facilitated by digital technology.
Since 2014, liquid petroleum gas (LPG) subsidies to over 176 million consumers have transferred over Rs.400 billion ($6.2 billion) directly to beneficiaries’ bank accounts. Through GOI’s 'LPG Give It Up Campaign', 12 million consumers voluntarily gave up their subsidies to provide greater access to LPG for their more underprivileged neighbours. Nearly 6.3 million new LPG connections have been provided to poor families in 2015–16, with a target of providing 50 million LPG connections over three years.
Further, the Mahatma Gandhi National Rural Employment Guarantee Scheme, (MGNREGS), the largest in the world, guarantees up to 100 days of rural employment for those in need of employment at Rs100 (US$1.5)/day. Using DBTs to pay beneficiaries has reduced transfer costs, waste and corruption - and sidestepping any possible misallocation of funds transferred from central to state to district to panchayats for distribution.
The limits of technology
Despite technology’s promise, there remains a need for substantial increase in old-fashioned investments to catch up with the backlog in physical infrastructure and education to achieve a geographically more dispersed development away from the 100 big cities. Around 25% of Indian adults cannot read or write, and the gender divide must be addressed with investment, particularly in rural women’s education and training. Geographical application of new technologies is still limited in rural areas; many farmers remain unaware of these advances. Insufficient connectivity in rural areas along with a lack of basic computer knowledge and literacy hinder development. Substantial investment is needed in physical infrastructure, power, broadband, transportation and education, particularly in rural regions and among the poorest populations in order to truly reap the benefits of the 4IR.
This paper will be published in Agricultural Economics, the Journal of the International Association of Agricultural Economists, November 2017 issue