India's Agriculture Problem

The deaths of five farmers in Madhya Pradesh has brought India’s Agriculture Problem once again to the editors desk across all forms of media. While the latest incident may have got the much needed attention, but the fact is that the crisis has been under the shackles for some time. Farmers across the nation have been demanding loan waivers to get out of the trouble. Lets have a look at what steered to such a dismal situation in Indian Agriculture and what is a sustainable solution to the problem.

1Lack of Government Attention in the sector has fuelled India’s Agriculture Problem

Agriculture in India has faced slowdown in the first 2 years of the BJP led government.

The national accounts (new series) data clearly demonstrates that agriculture is facing a severe slowdown. The net value added (NVA) in agriculture declined at 0.23% per annum in the first two years of the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) government. Even accounting for bumper production last year, gross value added (GVA) in agriculture has grown at 1.77% in the last three years.

Investments in Agriculture has been on a decline in India has faced slowdown in the first 2 years of the BJP led government fueling India’s Agriculture Problem further.

Data shows that investment in agriculture is declining at 0.8% per year at constant prices since 2010-11. For the first two years of the current government, investment in agriculture declined at 3.8% per annum. It declined from Rs2.84 trillion in 2013-14 to Rs2.63 trillion in 2015-16 at 2011-12 prices—the sharpest fall in more than two decades.

Minimal Increase in MSP (Minimum Support Price)

Not only was the growth of minimum support price (MSP) minimal, the central government refused to pay the usual bonus that the farmers were given. For crops such as pulses, the MSP announced was much lower than promised.

Demonetization Effect

The final nail in the coffin was the demonetization of high-value currency notes, which affected the purchasing capacity of market traders, forcing farmers to undertake distress sales. India’s Agriculture Problem

Short Term Solutions from the Government

The response of the government in the sector has never been proactive and has been focussing on the short term. Farm loan waivers are never a long term solution. Increasing MSP also benefits only a small section of farmers.

2Farmers have been struggling to keep up with changes

Increase in Input Costs

In the same period, input costs have increased. The big increase has come in fertiliser and seed prices, denting the profitability of farmers and complelling them to hunt for loans.

Change in Cropping Patterns

There has been a structural shift in cropping patterns with horticulture and cash crops dominating farm output. Today, the overall horticulture production is higher than food grain production. Most of these crops are outside the ambit of MSP operations and hence vulnerable to fluctuations in market prices.

3The Solution to India’s Agriculture Problem

Recognition of changing patterns in Indian Agriculture

The long-term solution has to first recognize the new reality of Indian agriculture as well the changing role of agriculture in rural incomes and growth. While reviving agriculture is necessary for revival of non-farm sector and rural jobs, the instruments required are not adequate to cover the uncertainties in a globalized context.

Dedicated Investment in Storage Capacities

With farmers resorting to a more lucrative but risky perishable horticulture and cash crops, government needs to invest in better and bigger storage capacities.

Improved Transportation Network, Farming Technology and Infrastructure

What is needed is not only better integration of farmers with markets and price intervention strategies for non-food crops, but also large investments in agriculture. These are essential for creating better marketing infrastructure, storage capacities, transportation network, farming technology, research for new crop varieties, extension services and above all irrigation.

Focus on Agricultural Research

R & D capacities are required to be pumped up in the field of agriculture. Also, norms of usage of GM (Genetically Modified) crops can be reconsidered and looked upon from a more liberal perspective.

While the government may offer a temporary solution to India’s Agriculture Problem by offering farm loan waivers, the crisis is not going away. The government should rather dedicate resources to step up investment in agricultural infrastructure and price support. Not only will it revive agriculture, it will also generate employment in the rural economy.

Read More on Product Strategies in Rural Market

5Like this:

6Related

1 COMMENT

Leave a Reply