Revitalising the agricultural sector under Modi government

A Single Death is a Tragedy; A Million Deaths is a Statistic! – Joseph Stalin

The agricultural sector which once contributed a huge 51.9% of the GDP in the 1950’s shrank to a measly 13% of GDP in 2016. With almost 86% of farmers subsisting on fragmented land, agriculture has traditionally been one of the largest employers and one of the most neglected sectors in independent India. Decades merged into each other leaving the Indian farmer to the vagaries of the rain Gods, year after year!

Many schemes stillborn or otherwise were launched for “farmer welfare” under successive Congress regimes. The implementation of these schemes, in most cases, was whimsical, leaving much to be desired.

In fact, tales of farmer suicides every year due to crop loss, droughts, floods became quite banal, providing fodder for movies such as Peepli Live which did much to fatten the pockets of its producers, but very little to alleviate the condition of the affected farming class!

Even though agrarian distress and farmer suicides is a global phenomenon, with over 2.5 lakh farmer suicide cases registered since 1995, it is quite an acute one for India. Just to give a perspective I have included a list of deaths across the last 16 years:

(Data sourced from (1) (2) (3) )

A detailed analysis of farmer suicides, reveals that the causes are many, varied and opaque. For instance, almost 40% or higher of such suicide deaths can be attributed to Bankruptcy, Indebtedness, Farm-related issues and poverty combined.

Yet if one were to analyse indebtedness as a cause, one comes to realize that over 40% of farm credit comes from informal sources. Thus making the problem of farmer bankruptcy, indebtedness sticky, despite the extended farm loan waiver schemes across states. It needs a systematic, consistent and sincerely executed policy initiative over many years, to be completely addressed.

Another long-term consequence of agricultural distress is large-scale population displacement. Decades of decay in the sector has led to large-scale migration. Generations of farming community sold their landed estate and shifted to cities lock, stock and barrel, with starry-eyed dreams of better living conditions and more money. The cities themselves were stretched, overpopulated with groaning infrastructure and festering slums, as more and more people gave up farming for a promised better income through “other means”. The “other means” never fully materialised, and overtime, the families displaced from farming, grew comfortable living in slums in large cities. Crime, mafia and seedy politicians grew in stature, promising land rights, employment opportunities among other things to these slum dwellers, exploiting their insecurities in myriad ways.

This government through its successive budgets is now trying to put agriculture back in focus and stem the tide of agri-distress and its dismal consequences.

Given that the dust has settled after Budget 2018, we did a sifting of the various speeches, schemes launched pre and post budgets. What impressed most was the attention to details. Through various speeches, throughout the last 4 years, both Mr Jaitley and Mr Modi have reiterated their focus on agriculture. In fact, budget 2018 was a shot in the arm for Agriculture, Healthcare, Infrastructure and Education sectors. A slew of technology-enabled schemes has been launched by the current government during its tenure, including this Budget. Some of the most prominent ones are as follows:

1. The Pradhan Mantri Fasal Beema Yojana: Launched in 2016, it provides crop insurance to all farmers for crop loss. Though crop insurance is hardly a new idea, this program is an earnest attempt at plugging the loopholes of all previous schemes. Since crop loss can often lead to more catastrophic eventualities, it makes a lot of sense to provide a comprehensive crop insurance to all farmers.

2. The e-NAM (National Agricultural Market) Portal: Launched in April 2016, the e-NAM portal has linked 470 mandis in 14 states and provided over 70 lakh farmers with an opportunity to check real-time prices of crops online and sell directly or via an intermediary. There is also a possibility of future and options trading being taken to the farmers directly, via the e-NAM portal and app. This will allow the farmer to protect his crops from sale price volatility in the future.

3. Promoting Energy Efficient Irrigation: The directive was issued in September 2014. Under it the government and specifically the power ministry have allocated Rs 75,000/- crores for the purpose of providing energy efficient pumps to farmers.

4. Paramparagat Krishi Vikas Yojna: Launched in 2015, this scheme encourages farmers to form groups, clusters and undertake organic farming on large tracts of land.

5. Setting a minimum MSP: The vagaries of demand and supply lead to price fluctuations across commodities which in turn affects the sowing of the crop and leads to further fluctuations. Keeping this in mind the FM, during Budget 2018 announced the minimum MSP ceiling at 1.5 times cost of production of Kharif crops.

6. Increase in agriculture credit limit: A much-needed hike announced during the Budget 2018 speech by our FM. This hike from 8.5 lakh crores to 11 lakh crores of Agricultural Credit Limit, is an acknowledgement of increased debt related distress in the farming sector.

7.Blue Revolution: Launched for providing an emphasis to promote aquaculture and fishery development across the country, it was allocated a budget of around 3000 crores, under this government. The whole idea is that coupling farming with aquaculture can lead to higher farm yields.

8. Additional Irrigation outlay: During Budget 2018 an additional irrigation outlay of Rs 2600 crores was announced under the Pradhan Mantri Krishi Sinchayi Yojana, with an intention to meet the irrigation requirements of the 96 most distressed districts in the country.

9. The outlay for Bamboo cultivation: To encourage farmers to grow Bamboo in peripheral areas and increase their overall farm yield through Bamboo production and export, an outlay of Rs.1290 crore was announced in the Budget 2018.

10. Emphasis on value addition: With an estimated future FDI investment of $33 Billion, the food processing industry has the potential to transform farm income. Therefore the government is looking at food processing as a great enabler that can add value to farm produce and provide a much higher earning per farm.

11. Launch, more widespread use of programs such as Soil Health Card to provide inputs on soil quality to farmers and Neem coating of Urea to prevent fertilizer pilferage, are also some other ways to reduce farm distress.

All the above schemes can now be coupled with pioneer government programs such as Jan Dhan Accounts and Aadhar linkages to ensure that the benefits reach the last mile consumer.

Through many such measures across budgets, the government is systematically trying to revive the prospects of agriculture. Since agriculture is one of the largest employers, it follows, therefore, that this will lead to higher employment opportunities and reverse migration from cities to villages. A robust agriculture sector will only add to the overall growth and strength of the economy in the long run.

Although the issue is long-standing and sticky, one hopes that this government will continue its focus on this sector post their re-election too. By strengthening the sector over time, this government is yet again trying to deliver on its slogan of Sab Ka Saath, Sab ka Vikas. For that to happen smoothly, the state governments and the central government need to work and deliver in tandem! Needless to say that India will only truly become a superpower when all farmers, even those sitting in some remote corners of the country, are able to enjoy the fruits of such development.