Agrarian Crisis in India: An Analysis

Agrarian distress remains one of the biggest challenges confronting the policy

makers in view of the fact that nearly 49 per cent of the workforce in the country

is engaged in agriculture, yet the real farm incomes have almost stagnated or

declined over the past two decades.

The growth rate of agriculture output has been decreasing in recent years;

and the relative contribution of agriculture to the GDP declining steadily. The

deceleration began from the early 1990s, and has become sharp over time. The

agricultural downfall has been reflected in performance of agriculture by crop

categories, trends in area cultivated, input use, capital stock, in and other aspects.

The country is slowly degrading from being a self-reliant country with a food

surplus to being a net importer of food. The alarm bells, however, are still to

register a drastic response. It is stated that agriculture is not seen as a profitable

activity any more, as the incomes derived from it do not suffice the expenditure

of the farmers. The government has made the agri-sector its main focus now,

rolling out reforms like e-NAM and the price deficiency payments scheme to

address farmer’s problems over lowering prices. The World Trade Organisation

(WTO) has permitted income support, and so the government has been able to

introduce income support schemes without any major scrutiny over ‘producer

support subsidy’, issues of overproduction continue to be a challenge. The

government’s agri-marketing reforms need to be foregrounded going beyond e-

NAM.

Since 2014, the budget allocation has been increased by the NDA

government to the agri-sector annually by giving out higher farm loans.

However, there has been no visible improvement in the livelihood of the

cultivators.

As per estimates of the NITI Aayog, the growth in real farm incomes

remains at around zero over the past two years, and prior to that, between 2011–

12 and 2015–16, real farm incomes had risen by less than half a per cent every

year.

Earlier, in 2016, the Economic Survey report showed that the average

income of a farming family in 17 states of India was a meagre ` 2,000 a year, or

less than ` 1,700 per month. The average farming family in India requires an

income of ` 1.5 lakh per year to come out of poverty, but unfortunately this

remains a far-fetched target. Moreover, it was reported by an ICRIER-IECD

study that farmers suffered a cumulative loss of ` 45 lakh crore between 2000–01

and 2016–17. The reason behind it was the denial of a fair price to farmers for

their produce. Several recent studies have pointed towards farm incomes falling

to the lowest level in 15 years as well as massive job losses for the rural farm and

non-farm workers.

——sidelight——

The country’s agrarian crisis has been reflected in the full-year GDP

estimates for 2018–19: the farm growth rate adjusted for inflation is the same as

the farm growth not adjusted for inflation—at 3.8 per cent. In other words,

income growth in the agricultural sector has been flat, as inflation in agricultural

produce is virtually zero.

—————

Even after putting in a lot of hard work and producing bumper harvests, the

plight of a farming family has only worsened owing to a number of factors

ranging from macroeconomic policies to diminishing returns. There was a failure

to recognise when the Green Revolution started giving diminishing returns and

suggest alternatives to tackle the situation. There is also the economic impact of

subsidies leading to indiscriminate use of inputs and causing strain on financial

resources that can be diverted to more productive purposes. So, the current

agricultural crisis can be attributed to a plethora of reasons: unviable agriculture,

poor returns to farmers, including denial of a fair price to farmers for their

produce, periodic very high spikes in prices of key commodities, shortcomings in

the MSP system, periodic excess of production which are dumped by the

roadside severely affecting several farmers and causing a huge burden on the

government, adverse terms of trade, rural indebtedness, the problem of

diminishing soil fertility, the sinking water table, and increasing costs in general

(the last three are a consequence of the Green Revolution). The factors

responsible for the farm crisis include dependence on climate and rainfall, high

import of agricultural goods, reduction in agricultural subsidies, conversion of

farm land for other uses, agricultural budget increases without relating them to

benefits on ground, etc. Agricultural distress has had an impact on the economy

as a whole affecting most of the people in one way or another, as it had affected

food supply, cost of living, health and nutrition, employment, land loss, forex

earnings, and so on.

Government Measures and Shortcomings

The government is aiming at doubling farmers’ income by 2022–23 to

promote agrarian distress and parity between the incomes of those in farming

and those in non-agricultural sectors. PM-Kisan for farmers, PM Krishi Sinchai

Yojana (PMKSY), e-NAM, Soil Health Card, Neem-coated urea, and other

measures have been undertaken. States have introduced their own farm support

schemes like the Rythu Bandhu scheme in Telengana and the Krishak Assistance

for Livelihood and Income Augmentation (KALIA) in Odisha. Along with food

subsidy under PDS, fertiliser subsidy is provided. The MSP has been increased at

50 per cent above the production cost in the 2018 budget.

The effects of such measures are hampered in various ways. The

government procurement operations covering all major crops may not be feasible

in reality. Price-hedging mechanism through derivative instruments—for

instance, forward future trading in farm goods—is not popular among farmers.

There is a need to completely revamp the value chain so that farmers can be

integrated directly with the consumers but this has not been done. A mass

irrigation programme is needed involving inter-linking of rivers, agricultural

diversification, and use of technology for smart farming. The approach should be

tuned towards providing medium-term and long-term solutions to problems.

There is no scheme providing exit route for farmers in distress. It is

necessary to make agriculture a profitable occupation and attract farmers to

continue farm production activities instead of thinking of ways to remove them

from the agricultural sector and shift them to other occupations. Investment in

agriculture and allied sectors need to be raised in a drastic manner. There should

be integrated development of rural areas so that agricultural development can

take place in a supportive framework of policies, infrastructural growth,

investment opportunities, and an improved marketing structure. Doling out a

few packages now and then is not the solution, but drastic changes in the

economic policies on agriculture are necessary.

Developments The government has so far set up 10 committees to suggest

agricultural reforms as part of a new 5-year agenda to improve the distressed

agricultural sector.

Interministerial Panel for Rural and Agriculture Sectors Focusing on the

agricultural marketing, including the mandi system that controls purchase and

sale of agricultural produce, the interministerial panel for rural and agriculture

sectors has identified persistent trade barriers in the mandi system that severely

affect traders of food commodities and, thus, farmers. The report, released in

September 2019, states that the crisis in agricultural markets is related to such

barriers and the lowering of profits for cultivators.

The committee observed that to provide farmers freer access to markets to

sell their crops, there should be a single mandi tax and removal of inter-state

mandi tax-levies charged upon traders and farmers when inter-state sale of

agriculture produce is conducted.

The panel has recommended setting up of a warehousing network where

farmers can store their goods for a longer time if expecting better prices at a later

time. To make the e-NAM effective, it has suggested a pan-India licence valid

across all such markets. Reforms have been attempted in agricultural markets to

allow trade at any place of choice: for instance, supposed to allow private

markets outside the mandi system and declare ‘warehouses’ or cold storages as

‘markets’ where farmers and traders can sell and purchase. But these have not

yielded much in actual terms.

Background The agricultural marketing system is a mix of organised and

unorganised markets. Farmers sell their produce mostly in the mandis—state-

run market yards, called agricultural produce marketing committees (APMCs).

There are 585 such regulated committees spread across 16 states and 2 UTs.

Under the APMC regulations that were established in the 1960s to protect

farmers from being forced into distress selling, farmers can only sell to licensed

middlemen in notified markets (generally in the same area as the farmers) and

not directly to buyers.

But a number of intermediaries have emerged and the presence of many

middlemen has resulted in a ‘price spread’ and led to fragmentation of profit

shares.

Panel for Linking Central Grants with States’ Reforms

A panel of chief ministers has suggested linking the adoption of agricultural

reforms by the states to boost farm growth, to the grants and allocations made by

the Finance Commission. The 9-member committee, led by the chief minister of

Maharashtra, Devendra Fadnavis, decided to draw out a comprehensive time-

bound roadmap for implementation of agricultural reforms by states.

The panel, in its meeting in July 2019, discussed review of agricultural

subsidies, ensuring fair prices and dismantling of market monopolies, removing

obstacles in implementation of the e-NAM system in all states and steps to

increase private investment and investment credit in the sector. It discussed

approaches to accelerate growth in the food-processing sector, emphasising on

the need for a faster pace of growth in this sector, compared to the overall

agricultural sector to raise farmers’ income. Better coordination between the

agriculture and commerce ministries has been stressed upon to put in place a

dynamic pricing policy based on international market trends for agricultural

goods. It discussed ways to target subsidies better. It dealt with ways to reduce

credit costs as well as improve linkages with financial institutions to boost

private investment.

Telangana: Farmers’ Deaths Continue despite Suicide

In Telangana, farmers’ suicides saw a drop in the months of the first half of

2019. But distress continued, with at least some 12,820 farmers who had taken the

state insurance scheme dying due to various reasons. According to a report in

July 2019, the reasons may include health problems, increased liquor

consumption (doubling of excise collections as liquid sales have shot up

significantly since the setting up of Telangana as a state), excessive use of

pesticides and weedicides. But problems related to agricultural distress continue

with poor market linkages which means farmers find it very costly to sell their

produce. The high cost of selling goods is resulting in poor returns, especially in

horticultural crops. There is also lack of access to institutional credit for tenant

farmers and those engaged in shift-cultivation.

————

Analysis

Slow Growth on Food Prices

Some agriculture specialists are of the view that agriculture has been a

victim of microeconomic policies with the intent of keeping food inflation low,

providing cheaper raw material for the industry, and meeting the obligations of

international trade. As a result of this, food prices have been growing at a much

slower rate than non-food prices in the Indian economy. The effect of this

difference in food and non-food inflation shows itself in a collapse in nominal

growth in agriculture. Unless there is a change in the current movement of food

and non-food prices, very high growth rates will be required to even maintain

the current purchasing power of farmers.

Agricultural Distress: Factors

* Poor policy and planning focus on increasing agricultural output and food

security rather than raising farmer’s income

* Heavy dependence of agriculture on monsoon; climatic changes affecting

agriculture

* Reduced average land holding due to disguised employment in

agriculture, conversion of agricultural land for alternative use, etc.

* Lack of direct measures to promote welfare of farmers

* Easy credit not available to farmers, and their dependence on many

lenders

* Limited mechenisation of farming due to costs, low awareness, etc.

* Shortage in irrigation, seeds, and other agricultural inputs

* Travails of supply chains: deficiencies in storage and cold chains, restricted

connectivity and lack of a proper agricultural marketing infrastructure

* Middleman profiting by various means

Effects of Agricultural Distress

* Poverty among farmers

* Fluctuating farmer incomes affecting farm investments and migration of

farmers to towns/cities in search of jobs

* Increase in farmer distress and suicides

* Food security is threatened and health of the agricultural sector in general

What to do?

* Underaking development of farmer-oriented policies, infrastructure, and

institutional mechanisms and to increase farm growth and farmers’ income

* Technological interventions can improve productivity and reduce gaps in

yields and improve water-use efficiency (as through drip irrigation)

* Increased emphasis on agriculture-allied sectors like horticulture, poultry,

food processing for farmers to pursue agri-related activities

* Stress on consolidation of land holdings to raise farm incomes—through

benefits in size of land cultivated input procurement and marketing of produce

* Need for a competitive and stable market so that farmers can get better

prices for their produce

* Shift from cereal-centric policies to include focus on other crops and

proactive policy management

* Reforms to ensure better price recovery along with trade policies

favourable to exports

* Develop value chain involving all aspects like cultivation, warehousing,

logistics, processing, retailing, etc.

* Direct benefit transfers most suited to support farmers

* Increasing MSP, price deficiency payments, and income support schemes

only to partially address the problem of ensuring better income for farmers

box closed

Role of Investment

While the terms of trade were adverse for agriculture, the problem was

further exacerbated by the decline in investment: public sector investment

between 2011–12 and 2016–17 declined to 0.4 per cent of the gross domestic

product (GDP), and private sector investment too dipped to 1.8 per cent in the

same period.

According to the Food and Agriculture Organisation (FAO), insufficient

investment in the agriculture sector in most developing countries over the past

30 years has resulted in low productivity and stagnant production. Investment is

the key to unlock the potential of a developing economy. But the policy regime in

the past several decades has neglected this sector resulting in sluggish

investment growth in the farm sector. It is crucial that an enabling investment

package is provided to the sector. Unless adequate investment reforms are taken

in primary sectors, steps taken to foster growth in other sectors will not yield the

desired result.

Terms of Trade Problem

When it comes to determining the cause of the problem relating to terms of

trade in agriculture, there is a debate regarding its actual reason. One view says

that the problem is there due to excess in agriculture, and a glut in food markets

has led to a reduction in food inflation.

So, a reduction in agricultural production is suggested as the only way to

deal with the farm distress. However, such an argument is not valid as it focuses

almost entirely on supply side factors ignoring the demand side. The production

glut is because there is no increase in effective demand for food in India (India’s

per capita supply of calories, protein, and fat have, since the 1970s, not increased

at a fast pace) owing to lack of mass income growth.

Adherence to this view would entail that agricultural policy be tailored

towards either reducing agricultural production, and hence growth, or going for

a stronger push towards export so as to ensure that domestic food inflation does

not fall as it has in recent times. Another view argues that a squeeze on mass

demand, rather than excess supply, is behind the worsening of terms of trade for

agriculture in the recent period. This debate must be resolved first in order to

embark on the required policy intervention.

The agriculture sector is in dire need for reforms. But due to inherent policy

fault, the emphasis is on moving people out of agriculture to the urban centres,

which require cheap labour. The policy of allowing agricultural prices to remain

low to satisfy consumers and industry is a wrong approach. Food prices have a

46 per cent weight in the Consumer Price Index basket, which is India’s

benchmark inflation measure. In this scenario, farmers bear the brunt of low food

prices, while the rest of the population enjoy the benefits of low food inflation.

So, any policy intervention aimed at improving the terms of trade for agriculture

risks a political backlash due to inflation becoming higher so the government

does not want such a policy reform. But this stance has to change for the benefit

of the economy as a whole. Agriculture must be treated as an economic activity,

and this alone is capable of reviving the economy.

Income Support Considering the low level of income of an agricultural

household, it is a pertinent first step, though not sufficient, that some form of

income support is provided to farmers in addition to the other subsidies. Several

state governments are providing direct income support to farmers. Telangana

and Odisha have launched farm support schemes in 2018 the Rythu Bandhu

Scheme in (Telangana) and the Krushak Assistance for Livelihood and Income

Augmentation (KALIA) scheme in Odisha. Other states—West Bengal,

Jharkhand, Andhra Pradesh, Karnataka, and Haryana—pay directly to farmers,

some incorporating the allocation available under PM-Kisan.

Recognising the importance of provision of direct income support, the

essential reforms plan should include a national commission for farmers income

and welfare with the mandate to assure a sufficient monthly income per family

as a top-up approach. Along with this, an Ease of Doing Farming Programme to

remove the hurdles farmers face in production, marketing, and harvesting. The

network of Agricultural Produce Market Committee (APMC) regulated markets

may be expanded from the 7,6000 mandis to 40,000 or more. Farmer Producer

Organisations (FPOs) should be strengthened and start-ups in agriculture

encouraged to draw out entrepreneurs. However, the income-support schemes

do not provide enough for India’s youth to be retained in agriculture, which is

necessary to reverse the rural-to-urban migration pattern.

Agriculture is in dire need for reforms. Though agriculture is a state subject,

it requires comprehensive reforms such as those carried out in 1991 which

should include the centre, the states, banks, and the RBI. Such a massive reforms

push is needed in view of the fact that though a lot has been done to deal with

the problems of the corporate sector in the last seven or eight years, agriculture

remains a neglected sector. In this context, the former RBI Governor Y.V. Reddy

stated that agriculture should be recognised as a nationwide problem. It

expresses itself differently in different parts of the country, requiring localised

suitable measures. Hence, a national consensus involving both the union and

states has to be built around a new approach.

Reforms must aim at getting the centre and the states together on a common

platform. A federal agency, like an agricultural development council, should be

set up to harmonise centre-state relations related to policy-making,

administering, and implementing measures to encourage farming and farmers.

As mentioned earlier, it is to be noted that despite the rise in output of food

and horticulture since 2015–16, farmer’s income has not improved in the absence

of a demand and supply chain that can help enable viable farm gate prices while

delivering the produce in time to the consumer. In this situation, there is a need

to go behond the e-NAM initiative and the price deficiency payments scheme

(aimed to deal with farmer’s distress over falling prices).

E-NAM, a chain of electronic national agricultural markets, looks fine on

paper but it hasn’t yet taken off in states—there is no actual inter-state trading

taking place. Lack of required equipment and absence of qualified technicians or

essayists who can carry out quality checks on farm samples, are among the major

flaws in this system.

———

Reform in this direction should promote self-sufficiency in crucial crops like

pulses. Pulses are an important crop from the point of view of nutrition and

enhancing soil fertility, and their low water requirements.

Another thing to consider is that despite record-high food production, agri-

imports have been growing at 9.8 per cent Compound Annual Growth Rate

(CAGR) in the last five years while exports growth remains at a dismal 1.1 per

cent CAGR.

While the government cannot revive food demand or prices globally, it can

certainly come up with long-term policies on exports and imports that would

help producers deal with non-tariff barriers.

Better policy and management aimed at ensuring institutional reforms such

as creation of farmers producers organisation (FPOs) can help in removing

obstacles in accessing credit, logistics, and marketing services which are the need

of the hour.

The rise in horticulture output should be maintained by ensuring better

marketing channels and crop insurance. In view of rising horticulture produce, it

is quite important that the sharp spurt in horticultural output is sustained by

improvements in marketing channels as well as financing schemes that can also

introduce product differentiation. There is need for infrastructural development

like setting up cold storages. The state of food processing parks should also be

reviewed. Apart from this, it should be ensured that all states implement the

Model Agricultural Produce and Livestocks Marketing Act, 2018 and promote

investments in argi-processing.

Very little targets can be achieved by just increasing the Minimum Support

Price (MSP). There is a need to go beyond it and target subsidy policy.

The subsidy policy has been blamed for the demand-supply equation in

agriculture that is skewed against the producers. The demand curve is steep

while the supply curve is relatively flat. The market price is closer to the supply

curve, which leaves a huge consumer surplus (demand being much more,

meaning the people may be willing to pay more but do not) and little of profit. If

the demand line is flattened, the price is closer to demand, which means smaller

consumer surplus and higher profits for farmers. The subsidy policy has been

seen as contributing to this.

Subsidy Policy

The ill-advised subsidy policy of the government should be rationalised.

The current subsidy policy makes no discrimination whatsoever on the various

input subsidies to agriculture. This has led to injudicious decisions, for example,

subsidies have been given for paddy and cane in rainfed regions, such as free

electricity, which resulted in inappropriate crop choices. Moreover, when

everything from electricity, water, seeds, fertiliser, interest are given free of cost

or subsidised without taking into consideration the landholding or size, the end

result is similar cost structures for most suppliers. To overcome the problems

that have sprung up due to an indiscriminate subsidy policy, subsidies should be

rationalised by restricting them to only those holding 2–3 acres or to the first 2–3

acres only for even larger farmers. Direct Benefit Transfer can be a good

beginning in this direction. In this way, the larger units which lose a part of their

subsidies will find cultivation of traditional crops uncompetitive. As a result,

there would be diversification of crops. The larger landholder will diversify into

other commercial crops or crops for which there are no subsidies now so that

they do not suffer, in comparative terms, in relation to subsidy-supported small

or marginal farmers. This diversification is an important requirement for

increasing income of farmers as foodgrains production is in surplus.

It will also have a positive effect on government finances. It can reduce the

crops procured under MSP since the market prices would have substantially

enhanced the incomes of farmers. Poorer marginal sections could be covered

through higher public distribution system (PDS) subsidies.

However, this process of rationisation need not be done for all products. It

can begin with those where there are surplus buffer stocks. When prices of those

products rise, consumers will move on to other products diversifying their

consumption basket, and the prices of un-subsidised products will also start

rising.

MSP Procurement The agrarian crisis is also linked to changes in MSP

procurement. Already as it is, this limited relief is heavily tilted in favour of

traditional Green Revolution states, Haryana and Punjab, that account for half of

the total procurement. The government has been pushing towards direct cash

transfers in the PDS, calling it one of its biggest achievements, on the grounds of

combating corruption. But it means that the government’s procurement

requirements will fall, as it would result in a change in not just the quantum of

MSP hikes but also the amount of grain procured. A significant dilution of the

MSP would result in tensions in areas that have enjoyed its benefits. Other

changes may follow as in cropping patterns as farmers would grow uncertain

about returns without an MSP-based procurement assurance.

The Problem of Unproductive Cattle

What has been adding to agrarian unrest, slowly but surely, is the problem

of disposing of unproductive cattle—cows that do not yield milk and male cattle

that are no longer seen as necessary for working in farms. They have become a

huge economic burden on farmers who don’t know how to get rid of them.

Hindus are against beef-eating but this religious outlook is not reflected in the

farmers’ cattle-rearing practices—the unproductive cattle is not ‘put up with’ on

religious grounds but considered an enormous burden financially. This

contradiction was addressed earlier by the country’s unorganised cattle market

where the farmers sold them to traders for slaughter. This way they got money in

exchange even while not having to conduct the slaughter themselves.

But with BJP making cow slaughter a major poll plank to consolidate Hindu

votes, legal and extra-legal factors have disrupted this unorganised market.

Slaughter houses have been shut down in many places. Cattle traders have

become quite wary as they have been targeted with physical violence by people

even when they have not been involved in cattle trade for slaughter purposes.

With nobody ready to buy the unproductive cattle, they have been simply let

loose resulting in a large-scale increase in stray cattle menace causing crop-

destruction for farmers around the country. Farmers are forced to increase

vigilance in the fields to prevent the stray cattle from destroying their crops. This

entails either hiring extra labour or putting in extra labour oneself. Both ways,

this adds to the labour costs that have a significantly higher share in the A2+FL

measure of costs that has been used by the government to justify MSP mark-ups.

(The A2+FL formula takes into account actual cost plus imputed value of family

labour in the production of a crop.) Importantly, labour costs have a significantly

higher share than animal costs in the cost of cultivation and now, they have

increased at an even faster pace. There is no policy in place to deal with this—a

problem that will require significant resources to take care of the unwanted

cattle. But this issue has been ignored not just by the government but also others.

Role of Middlemen

The calls for breaking up of cartelisation of middlemen (to tackle the

agrarian crisis is naïve.) Removal of middlemen and reforming and Agricultural

Produce Market Committees (APMCs) may not address the issue of poor farm-

gate prices. The middlemen have an important role in terms of taking immediate

delivery of perishable produce, lending finance to farmers, storage, interacting

both ways with customers and markets and linking them, and inventory-

holding. Government agencies cannot perform these tasks as the middlemen do

for various reasons. Small farmers whose reach doesn’t extend beyond the

village boundaries cannot do the functions middlemen do for them.

Another important aspect of this reform architecture is the provision of

credit. The RBI has an important role to play in this regard. The RBI has not come

up with any new policy initiative for agricultural sector. Surprisingly, the limit

for collateral-free loans in the agricultural sector is ` 1.6 lakh, while MSME

borrowers get collateral-free loans of up to ` 10 lakh; and for educational loans,

the limit is ` 7.5 lakh. There is a strong case to hike this limit by coming up with

realistic norms with immediate effect for small and marginal farmers.

Commercial banks must also pay more attention and invest more

manpower resources for dealing in rural and inclusive business.

Investment and Infrastructure

Infrastructure in agriculture is an agri-segment that has been getting little

attention over the last few years. There is a need for measures to encourage

private investment in agri-infrastructure, such as in agri-startups, agri-tourism,

and agro-processing where tax holidays and simplified licensing procedures

would help. In agri-tourism, for instance, the existing tourism circuit can be

integrated with it to provide tourists glimpses of farm staff and operations. It

would boost investment and generate in-situ employment as well. More of

allocation to micro-irrigation schemes and drought-proof farming is the need of

the hour. Investment needs to build up public and private extension advisory

system and the quality of agri-education and research-for resource conservation

and sustainable use through organic, natural, and green methods. Where

livestock is concerned, India having the highest livestock population in the

world, investment can be focused on employing next-generation livestock

technology emphasising on productivity enhancement as well as disease

surveillance and treatment, livestock quality, waste utilisation, and value

addition. Investment in renewable energy generation involving use of wind mills

and solar pumps on fallow farmland and hilly areas would reduce the burden on

electricity distribution companies and build up energy security in villages and

towns. Private investment in agriculture can be routed through farm business

organisations which can be linked to commodity exchanges, providing

agricultural commodities more space on international trading platforms and

reduce the pressure on markets when there is a glut season.

Agri-data Agri-data is important to power artificial intelligence-led

agriculture in soil mapping, to trace climate-related changes, for e-markets, and

so on. There is need to maintain agri-data on various fronts in a systematic

manner that would ensure accessibility. A centralised institutional mechanism

can go a long way in maintaining farm level-data available for real-time (virtual)

assessment. Various food schemes can be monitored even while dealing with

loopholes in subsidy distribution, funding, and production estimates. The

structural weaknesses in the agri-sector can be addressed by converging public,

private, and foreign investments, as enunciated in the Economic Survey 2016–17.

Other Measures

To deal with the agrarian distress and resolve the plight of farmers by

stabilising farmers’ income and reducing climate-related vulnerability, there are

some focus areas identified by the National Innovations on Climate Resilient

Agriculture (NICRA) and Indian Council of Agricultural Research (ICAR)

studies:

These include—

* better land use planning methods;

* renewable energy generation through agro-voltaic system and rainwater

harvesting from fallow land;

* incentivising the agro-forestry system;

* utilising farm waste in an efficient manner;

* enhancing carbon sequestration;

* enhance soil fertility;

* facilitation of crop diversification in ‘Green Revolution’ areas—Western

UP, Punjab, and Haryana;

* promotion of animal health;

* integration of centre and state subsidies.

The government should promote R&D with enhanced funding to the level

of 1 per cent of GDP. Methods of traditional farming like zero-budget natural

farming (ZBNF). The method promises to reduce input costs and restore soil

fertility. Zero-interest credit cards to small and marginal farmers with a

maximum ceiling can be an ideal solution to further expand credit growth.

Promotion of ancillary agricultural activities like agri-farming and bee-keeping

may diversify farm income. Interventions to make farmers more resilient to

climatic and price risks are needed. To leverage digital markets and the

monopoly of the APMC, agriware house grids may be set up as well as incentive-

based village storage systems along highways. Some kind of an organisation for

ushering in synergy in the context of drought-related management would bring

relief to farmers. For instance, there can be exclusive agency for reporting,

assessing, and streamlining the process of disaster-related claims—a matter that

has affected the financial condition of farmers.

Investment in agricultural R&D is necessary as even a small growth in

agriculture can be 2 to 3 times more effective in reducing poverty than a

comparable growth in other sectors. As of now, public investment in agricultural

R&D, in terms of percentage share in agri GVA, is at 0.37 per cent, as compared

to 3 to 5 per cent in developed nations. Public investment rise should be

accompanied by education, research, and extension services even while public

expenditure is reduced on subsidies, kind transfers, populist measures, etc.

A right combination of various policy initiatives for infra push along with

an innovative outlook can be the key to unlock the potential of agriculture, and

thereby resolve the crisis afflicting the sector for decades. The strategy being

adopted to tackle the situation may be on the right track, but its policy mix needs

to be fine-tuned.