Opportunity to reform Indian agriculture missed

 

The Economic Survey correctly identified certain problem areas with our agriculture, but the Budget did not address them.

 

The Survey has shown the mirror. Agricultural growth of 2.9 per cent this year is much below the previous two years. Agriculture’s contribution to the GDP has dropped to 14.4 per cent and is estimated to decline further. Fifty per cent of the population still survives on agriculture. This dichotomy creates problems of its own. An encouraging development is increasing share of women among farmers, currently at 13.9 per cent. The Survey emphasised the need for cultivation of the crops with high productivity using minimal resources.

 

Water concerns
 

The new metric in farming should not be just yield per acre, but also productivity per litre of water. It showed some States with high productivity of land lagging badly in productivity of water.

 

Water is identified in the Survey as a key area of concern. But there has been no concrete allocation to address this problem in the Budget. When an irrigation project is completed, farmers have a tendency to grow crops with higher water requirement, like paddy and sugarcane. Agriculture uses 80 per cent of the water resources in India, out of which 60 per cent goes into paddy and sugarcane cultivation. It is time we move from flood irrigation to micro irrigation methods like drip or hose reel. These methods can save up to 60 per cent of water and also help in preventing pest incidence. Sufficient funds should have been allotted for this purpose.

 

The Survey also shows low private investment in this sector. The Budget should have focussed on measures to increase private investment, especially in technology, infrastructure and market linkages.

 

The government recommends natural farming, to reduce chemical usage and to conserve natural resources. The Survey reports that 1.6 lakh farmers follow zero-budget natural farming. In the Budget, the government advised the farmers to adopt zero-budget farming to double their income. Enough data needs to be generated to conclusively prove that zero-budget farming is a potential solution and is scalable. It is being used in a few States.

 

The ICAR has to scientifically test this technology and demonstrate its long term benefits successfully before directing farmers to take it up on a pan-India basis. No single technology fits the whole country. We need a basket of technologies to address the complex problems of Indian agriculture.

 

The government is envisaging providing farm advisory and market prices to farmers through mobile technology. It is a welcome step. The Survey has advised the government to ensure that farmers get the best prices for their produce and to encourage and support allied industries — poultry, dairy, fishery etc. These are the right steps, however success depends on how effectively government can accelerate the implementation.

 

Market forces
 

The Finance Minister thanked the pulses farmers for the enhanced production. She requested the oilseed farmers to follow suit and save the country from perpetual edible oil imports.

 

Though the pulses farmers saved the nation, they were not saved from market forces. The surplus production led to drop in farmer gate prices. The oilseed farmers too may meet the same fate unless preventive steps are taken.

 

The only direct benefit for the farmers in the Budget is that the cash transfer offered to farmers — of ₹6,000 per year — under the Prime Minister Kisan Samman scheme got an allocation is ₹75,000 crore.

 

The governments do know that these short-term measures will not create any long-term impact. Unless the government commits itself to the ground level structural reforms, there will be no change in the economic progress of farmers.

 

The Finance Minister proposed to lay 1.25 lakh km of rural roads with an outlay of ₹80,250 crore. This is undoubtedly a great initiative, helping rural India to connect with urban consumption centres. The government also has desires to train 75,000 rural youth in entrepreneurial skills and build a pipeline of small entrepreneurs. The government’s readiness to offer tax rebate to these entrepreneurs on processing of locally produced farm produce will be a big boost to farmers as it can add value to their production.

 

The Budget proposed to create 10,000 Farmer Producer Organizations (FPOs) to help unite farmers and strengthen their bargaining power. This is a laudable idea but the FPOs did not get the Income-Tax exemption they have been requesting.

 

The Budget urged farmers to use the eNam facility extensively for better price realisation.

 

There was no talk of investments to expand the network of mandis covered by eNam to create critical mass.

 

Revamp of the Agriculture Produce Marketing Committee Act by States should be the top priority if the government seriously wants to improve farm gate prices.

 

While on one hand, the Survey recommends reducing the usage of chemical fertilisers, the Budget on the other hand has enhanced fertiliser subsidy by 14 per cent to ₹79,996 crore.

 

It would have been an important step if the Budget proposed major initiatives in the areas of public-private partnership in new seed research for the development of the seed technology and industry. Farm credit continues to be a major concern as farmers fail to secure required funds in time. The Budget is silent on this crucial issue too.

 

The banks are hesitating to increase farm lending due to the high cost of reaching farmers, high rate of NPAs and threat of loan write-offs. It would have helped if the government had announced a first-loss guarantee to banks on agricultural lending which would have provided relief.

 

In summary, one can conclude that the Budget did not address basic structural issues in agriculture. It would have been an enormous support and encouragement to the farming sector, had the government created a National Agriculture Council under the leadership of the Prime Minister, on similar lines of the GST council.

 

As the Central government role is limited in agriculture, the Centre and the State governments need to come together in this council to address the issues and to alleviate rural poverty and farm distress.