Agriculture: A transformative role
In pursuit of a $5 trillion economy, the agricultural sector must see decisive changes
One of the best things about ambitious challenges is that it compels one to think and think ‘out-of-the-box’. So when the 94th Foundation Course (FC) which is scheduled as a week-long program at the Statue of Unity (October 26-31) worked on five thematic subjectsa) agriculture and rural transformation, b) inclusive urbanisation c) jobs, skills and education, d) health and nutrition and e) sustainable resource management, the integral links they bear on each other and the innovations required to achieve the targets, it led to some fascinating debates as well as heated discussions. There is light at the end of the tunnel – for there are specific recommendations that each group has made, not just for its own sector but also for the connected sectors.
Take agriculture and rural transformation, the thematic group with which your columnist has been associated. While our internal discussions will be supplemented by inputs from a panel curated by the World Bank, Singularity and the Institute of the Future, we need to put some basic propositions which can become the building blocks for an action agenda.
First, India’s current GDP from agriculture, which is about 200 billion dollars, must touch at least 450-500 bil
lion dollars in the next two to three years. This means that doubling farmers’ incomes will have to be launched in mission mode, with the caveat that this income need not be from core farming but also farm-related and value-added services. The policies have to be backed by institutional arrangements, technologies and most importantly, investment. This can be in the public sector as in the case of Green Revolution or the cooperative sector in the case of Operation Flood (White revolution) or the individual farmers and the private sector in the case of the Rainbow (Horticulture) revolution.
Second, it is also important to mention that the agriculture sector has to compete for land and water. In recent years the demands from infrastructure, housing and urbanisation are posing a real challenge. Without a major technology intervention in the management of
land and water, it may not be possible to make agriculture sustainable, both from the point of view of ecology as well as financial returns. Many state governments, notably Punjab and Haryana are taking steps to switch the cropping pattern in favour of less water-intensive crops. But the decisive shift from paddy to maize, nutri cereals and horticulture crops calls for adequate institutional arrangements to facilitate the marketing of the produce. The group has done some interesting analysis on how much water is required to produce sufficient calories for nutrition and food security and the results are telling. On a pan Indian level, we are using three to five times more water to meet our calorific needs.
Third, the policy signals emanating from the Union government are indeed forward-looking and send the ‘signal’ for private investments in agriculture. Thus, the Model Acts on land leasing, contract farming and agricultural markets promote private sector investments but the institutional mechanisms need to be strengthened. Therefore, unless we create a public authority to record land leasing with clear objectives, the policy will not have the intended consequences. The first objective is to ensure access to credit on the basis of the operational holdings and the second to ensure that ‘lease’ does not lead to permanent alienation of land. Moving further, an easy one-step arbitration and mediation for disputes arising out of contract farming are absolutely necessary for the roll-out of the Contract Farming Act. Some states have already shown that it can be done. For an interstate market to actually flourish, we need publicly funded assaying, grading, sorting and warehousing services in the major APMC markets. How else does one transact in commodities as varied as turmeric and saffron, apples and cinnamon? Fortunately for us, we have the technology to assess almost all the parameters to ensure that the assaying is based on an objective criterion, rather than the anecdotal ‘look and feel’ factor. In other words, it should be possible to set standards and grades for the important agriculture produce which have wide circulation and acceptability. Thus, in the case of milk, we know that it is defined by the fat and the SNF content. We need similar standards for onions and potatoes and tomatoes. Without such a service available in rural areas like the ubiquitous weighbridge (Dharma Kanta), how do we expect aggregators in Jammu to trade in onions from Lasalgaon?
Fourth, we need to look at all the investments in agriculture, livelihoods, fertilisers and food security on a single platform to understand their interconnections and impact on each other. These are major public investments but each one sends a different signal. The PM Kisan sends the message that each farmer with a holding of fewer than two hectares needs income support and also that the government trusts the farmer to spend the money on whatever the farmer thinks best. The subsidy on fertiliser, on the other hand, sends a different message and this is certainly different from the ZBNF (zero-based natural farming) model which the PM mentioned in his address from the ramparts of the Red Fort. The outlays for PM Kisan and fertiliser subsidy are both in the range of Rs 80,000 crore each but the former benefits the marginal and small farmer and the latter is skewed in favour of the farmer with larger holdings. The larger the farm, the more is the fertiliser use per unit of land. Higher allocations for MGNREGA also imply agriculture cannot generate adequate livelihood opportunities and that skilling of rural youth to take up positions in services and manufacturing is imperative. If the bulk of expenditure on MSP and PDS is on wheat and rice, crop diversification will not find many takers.
In the next edition, this column will follow up more specifically on the technology interventions to ensure that the agriculture sector does not lag behind in our quest for a five trillion dollar economy.
India’s current GDP from agriculture must at least double in the next 2-3 years. Doubling farmers’ incomes will have to be launched in mission mode with the caveat that this income need not be from core farming but also farm-related and value-added services