The dictionary meaning of empower is "to invest with power or authority; to equip with ability". In the context of the Indian farmer, empowerment means the ability to manage his destiny by effectively participating in and benefiting from the fruits of economic growth. Erratic agricultural performance, coupled with a secular decline in the growth rates of this sector, has led to the present situation where nearly 60 per cent of India's work force shares barely 22 per cent of her output.

The challenges of rural empowerment are manifest across three dimensions-economic, social and environmental. Agriculture continues to be the predominant source of livelihood in rural India-home to 72 per cent of our population and 75 per cent of the country's poor. Over 60 per cent of farmers earn their livelihoods on farms of one acre or less. Weak individual economic circumstances and the resultant low risk taking ability trap the farmer in the vicious cycle of low investment, low productivity, low income-leading back to low investment. Further, nearly 87 per cent of our 600,000 villages have a population of 2,000 and below, but collectively account for over 50 per cent of its total rural population. Apart from being geographically dispersed, our villages are economically too feeble to support large-scale investment. Total investment in the agricultural sector is less than two per cent of our GDP. Nearly 35 per cent of India's villages are yet to be connected by all-weather roads. Rural tele-density is just two per cent.

Economic impoverishment does not merely imply lack of access to material comforts. It spawns disease, unrest and a host of other social evils. It seriously undermines the ability to seize market opportunities. India is committed to achieving the Millennium Development Goals by 2015. Among others, this would mean measurable outcomes towards eradication of poverty, achievement of genderised development and vastly improved health indices relating to mortality and morbidity. The quality of human capital in rural areas is the major reason for India's low rank of 127 out of 175 countries in the Human Development Index. The size of the social challenge is even larger. Only 19 per cent of rural households have access to basic sanitation. Further, the Planning Commission estimates that 9-10 million jobs need to be created every year over the next decade. The vast majority of those entering the job market will, of course, emanate from rural India.

The farm sector also plays a crucial role in maintaining the fragile ecological balance. India accounts for 17 per cent of the world's population but only 2.4 per cent of the world's land mass, four per cent of available water resources, and one per cent of global forest resources. Per capita availability of water in India has been declining over the years and is projected at 1,341 cubic metres by 2025. Estimated water demand by that year would virtually cover the entire available water resources. Nearly one-third of India's districts are already classified as moisture deficit. And about 150,000 habitations are yet to be provided drinking water or the required augmentation of supplies. Agriculture accounts for over 80 per cent of total water use-clearly an area of criticality for the nation's water management strategy. Similarly, regeneration of forest resources is a critical necessity, particularly since real forests represent only 12 per cent of India's geographical area against a desirable 33 per cent. It is not well known that nearly 90 per cent of forest resource consumption in India is on account of fuelwood requirements, predominantly of rural residents.

From my perspective, empowerment implies creating capacity at the grassroots because such capacity can progressively address the challenges across all three dimensions. This is not an automatic outcome of economic growth. The poor farmer can be empowered only if a number of converging measures are taken in careful coordination-a combination of purpose and policy, direction and delivery, commitment and connectivity.

I believe that the Indian corporate sector has a crucial role to play in the empowerment of farmers, in its own enlightened self-interest. Consumer research reveals that a rural wage earner's propensity to consume is only half that of an urban wage earner, for the same level of income. This is due to the large uncertainties arising from over-dependence on monsoons, yield and price risks, and the absence of effective mechanisms to manage these risks. Access to effective risk management tools can enhance rural propensity to consume even at current income levels and constitute a larger demand base for industrial goods and services. This demand base can grow manifold if rural income levels can be raised through increased agri productivity, and effective connectivity to markets. To me, this represents the real fortune at the bottom of the pyramid.

The seemingly intractable issues of Indian agriculture have resulted in low levels of engagement of the organised sector with farm communities. In such a scenario, it takes a special kind of company to commit to agricultural value chains. The competitive pressures of globalising markets often force companies to look at tactical outcomes at the expense of strategic initiatives. Those corporates that are engaged in adding value to agricultural produce need to orient their strategies towards securing the competitiveness of the entire value chain. And go that extra mile in committing resources and creating viable business models that, in the long run, will provide sustainable competitive capability. Such an approach is also necessary to create employment opportunities of a significant order towards addressing the country's demographic challenge.

However, inspired corporate leadership alone will not suffice to secure rural transformation. Reforms are necessary to create a climate where investment rooted in Indian soil can become productive.

Creation of capacity among the marginal farmer will crucially depend upon investment to establish rural "last mile" connectivity-physical, digital and human. Adequacy of quality infrastructure represents the necessary condition for empowerment and sustainable economic activity. In this context, the Bharat Nirman initiative, with its focus on time-bound outcomes rather than outlays alone, is a welcome initiative that could not have come a moment sooner.

Other reform priorities at central and state levels include: creating efficient linkages to domestic and world markets; strengthening of market and risk management institutions; overhaul of food safety and land use laws; domestic tax harmonisation and moderation to benefit from a larger Indian common market; and promotion of agricultural research focussed on empowering the small farmer through effective extension services.

Simultaneously, propagation of sustainable agriculture and development of village community organisations to manage common resources would reduce the stress on soil, water and other finite natural resources. Further, conducive land use policies can harness the employment intensity of the agro forestry value chain, while concurrently addressing serious issues relating to biomass depletion, water security, ecological balance and biodiversity. Countries like Brazil and Indonesia have demonstrated the utility of linking land use with replenishment, thus, creating viable, renewable resource based industry while spawning millions of jobs in their rural hinterlands.

A critical legislative reform priority is the amendment of the Agricultural Produce Marketing Committee Acts in line with the Model Act to provide choice of market channels to farmers.

Apart from reform initiatives, a partnered approach is vital to engender competitiveness in Indian agriculture, including the small farmer. The ongoing globalisation of trade being negotiated at the World Trade Organization (WTO) and at regional and bilateral fora can translate into opportunities only if the economy and its constituents can make a successful transition towards global competitiveness. In this context, the competitiveness and growth of those value chains that are engaged in value addition to renewable agricultural inputs represent the best means of addressing the developmental issues that confront us today.

A number of such value chains carry the promise of contributing to the over-arching goal of inclusive growth. I would venture to add that roti, kapda, makaan, education and health-the basic ingredients of development-have origins in the agricultural sector and the soil. Let me give illustrations of some value chains that carry significant potential for rural upliftment whilst presenting attractive business prospects for the corporate sector.

• The roti value chain of seed to stomach, representing the food processing industry;
• The kapda value chain of fibre to fashion, representing the textile and apparel industry;
• The makaan value chain of dust to dwelling;
• The education value chain of tree to textbook; and
• The value chain of herbs to healthcare.

Such value chains can become impactful contributors in view of their potential to generate large-scale employment, which can also absorb the surplus labour inherent in agricultural productivity improvement.

An integrated approach to agriculture and manufacturing, together with urgent implementation of the reform agenda can unleash entrepreneurial energies and create a powerful tool of empowerment and development. Thus, in the new empowered India, village communities will transform into vibrant economic organisations. They will represent a huge and attractive market opportunity, inducing a virtuous cycle of development.

The agenda is vast. The stakeholders are numerous. The luxury of time is no longer available. This is the time for careful orchestration to enable the various organs of society play their roles in realising the significant potential that can emanate from empowering our marginal farmers. Only then can India's economic growth translate into sustainable development.

The author is Chairman of ITC Limited
(This article was written during the WTO summit in Hong Kong from December 13-18, 2005)