Strengthening agriculture, building India

 

Nevertheless, the current set of enabling environment for reforms on price, market and institutions is adequate and capable to achieve the sustainable growth rate and place the economy on a growth path, provided the right strategy and institutions are on the ground, while also giving space and time to a bottom-up approach.

 

Extreme weather and climatic events in the Indian subcontinent are gradually mutating to new regions and states. According to the Economic Survey 2018-19, currently India incurs losses of about $9-10 billion (about Rs 62,000 crore) annually due to extreme weather events. Series of floods in 2019 affected over nine states, perhaps the highest number in single year, and even extended to dry and deserted farming regions. There is also a threefold rise in widespread extreme rainfall events in the past 65 years, across central and northern India, where the region accounts for nearly half of the nation’s food production and farming people, but their lower level of adoption and mitigation to extreme events may lead to colossal losses in the future.

In addition, nearly 30% of land area has been degraded through deforestation, over-cultivation, soil erosion and depletion of wetlands, amounting to a loss of 2.5% of GDP annually. Further, poor soil fertility status owing to non-judicious use (of water, fertiliser, etc) in the Green Revolution region is raising sustainability and food security concerns, necessitating an immediate redressal of several constraints.

 

Furthermore, the ecosystems of various types in recent times are slowly degenerating. The forest and tree cover, which, according to the National Forest Policy (1988) and the draft National Forest Policy (2018), should be around one-third of the total area, is not even one-fourth at present. The National Agriculture Policy (2000) has also advocated encouraging farm forestry, block forest, village wood lots and others, but the current share of agroforestry system stands at 3.39% of the geographical area.

The taskforce of the erstwhile Planning Commission, 2001, assessed that the implementation of agroforestry system in the rainfed area will help in poverty alleviation of 30 million people. As forest and surrounding ecosystems are critical for the onset of monsoon and precipitation, there is a demand for concerted efforts for better management, besides seedling distribution to the existing agroforestry systems.

 

Effective institution and policy
 

Institution and policy are key elements to connect the ground realities to the people. The right mix of technology and clear perception of the past experience would help to better leverage these elements in a more effective manner.

First, the ‘integrated approach’ by fortifying institutions (such as Krishi Vigyan Kendras, Rythu Kendras, and key NGOs, etc) that are at the frontline of farm service. For instance, improvement in irrigation infrastructure that stabilises agricultural production and sustainable agri-food system, while also increasing scope to diversify our agri-food systems; improvement in logistics to combat uneven price spread and volatility; and crack on cartelisation in the market that ensures remunerative prices to farm produce and affordability to consumers.

The second is to establish demand-driven institutions, such as National Agriculture Disaster Authority, an agency to streamline drought/flood declaration and claims which are often ignored and reflected in price spike and distress sale. Further, disconnect of agricultural policies (both at the Centre and state levels) has warranted reforms to resolve farm distress. Therefore, policy paradigm at various levels needs to take cognisance of evidence-based research findings to alleviate farm distress.

The third is to establish agri centres/service in embassies amongst key countries importing agri-products to ameliorate global supply chain in order to suck up excess farm supply and harness comparative advantage in niche segments. Time is now ripe to create a Foreign Agriculture Service (FAS) that would help to better leverage and place farm dependants and their products aided by APEDA (Agricultural & Processed Food Products Export Development Authority). The model of FAS can take cues from the USDA (United States Department of Agriculture).

Fourth, strengthening the real-time delivery of risk-management tools and interventions like insurance, MSP, price stabilisation fund (uptick in allocation, creation of price-risk management fund), future market and contract farming, which, in turn, can increase propensity to save and invest in farm operations.

The last is that public investment, which is the main source for agricultural growth, is slowly decreasing—it currently stands at 17%, compared to 33% in 1985. It is evident from empirical studies that when public investment grew just by 1% during 1991-2005, agricultural GDP grew by almost 2.7%. When investment increased in the subsequent period (2006-17) by 3%, GDP growth raised to 3.3%. Increased incidence of extreme natural events weakens the farm infrastructure in rural areas, which further accentuates climate vulnerability. Therefore, rise in public investment is a dire need when the goal of doubling farmers’ incomes is nearing, whilst absorbing such shocks of natural events in the coming years.

 

Agri reforms in recent times are often touted as old wine in a new bottle, with less capacity to heal farm distress. Indeed, reforms in the recent years are modest and most convincing to stakeholders, but failed to tide over uncertainties of natural events. Time is right to put agriculture on the Concurrent List (if not completely then partially), so that missing dots in policy adoption and translation may be connected in order to streamline micro-level policy interventions and macro institutions. As Indian agriculture is now on the cusp of a major transition, accelerating growth rate, a strong institutional mechanism and sustainable reforms along with affirmative action in states under crisis are prerequisite for building rural India.