To spur rural development, India must make agriculture economically viable
Speaking from the ramparts of Red Fort on August 15, 1955, Jawaharlal Nehru had said: “It is very humiliating for any country to import food. So everything else can wait but not agriculture.” As India readies to celebrate 75 years of Independence in 2022, agriculture remains the Achilles heel of an economy poised to be the third largest in the years to come. Considering that nearly 49% of the workforce is engaged in agriculture, and knowing well that real farm incomes have almost stagnated or declined for the past two decades, addressing the acute agrarian distress that prevails remains the biggest challenge.
The Niti Aayog’s own estimates show the growth in real farm incomes at around near-zero in the past two years, and prior to that between 2011-12 and 2015-16, real farm incomes had risen by less than half a percent every year. The Economic Survey 2016 had earlier worked out the average income of a farming family in 17 states of India to be a meagre Rs 20,000 a year, which means farming families in roughly half the country were surviving on less than Rs 1,700 per month. An ICRIER-OECD study has shown conclusively that farmers suffered a cumulative loss of Rs 45-lakh crore in the 17-year period between 2000-01 and 2016-17. This was on account of farmers being denied a rightful price for their produce. As if this is not enough, recent studies show farm incomes plummeting to the lowest level in 15 years, and huge job losses for the rural farm and non-farm workers as well.
Farmers have toiled hard to produce bumper harvests. And yet, with each passing year, the plight of a farming family has only worsened. Agriculture in reality has been a victim of macroeconomic policies which aim at keeping food inflation low, providing cheaper raw material for the industry, and meeting the obligations of international trade. While the terms of trade were against agriculture, public sector investment between 2011-12 and 2016-17 declined to 0.4% of the gross domestic product (GDP). Private sector investment too dipped to 1.8% in the same period. With public and private sector investment on the decline, coming down to a low of 2.2% of the GDP in 2016-17, the neglect of agriculture was all too apparent.
Agriculture has been crying for reforms. But because the policy emphasis has remained on moving people out of agriculture to the urban centres, which are in need of cheap labour, farmers have in reality been penalised to grow food. Prices have been deliberately kept low to keep consumers and industry satisfied. This has to change. Policy makers must treat agriculture as an economic activity, which alone has the capacity to reboot the economy. An indication to this is provided in the Bharatiya Janata Party manifesto which promises to invest Rs 25 lakh crore in agriculture in the next five years, and provide a higher minimum support price (MSP) to farmers. Coupled with the launch of the Prime Minister Kisan Samman Nidhi Yojna (PM-Kisan) in February 2019, which provides all landowning farmers with a direct income support of Rs 6,000 a year, the intent to revive agriculture is in sight. Further, addressing the Niti Aayog Prime Minister Narendra Modi announced the setting up of a high-level task force for undertaking structural reforms in agriculture.
Telangana launched its innovative Rythu Bandhu scheme, providing Rs 8,000 per acre per year, in 2018. Odisha launched its Krushak Assistance for Livelihood and Income Augmentation (KALIA) variant in December 2018. Since then, several states — West Bengal, Jharkhand, Andhra Pradesh, Karnataka and Haryana — have started paying farmers directly, some incorporating the allocation available under PM-Kisan. In other words, governments are realising the need to provide direct income support to farmers. The essential foundational reforms should include setting up a National Commission for Farmers Income and Welfare, with the mandate to assure a monthly income of Rs 18,000 per family by way of a top up approach. This will create a huge demand, thereby reinvigorating the industry and triggering a high economic growth. At the same time, initiating an Ease of Doing Farming programme will go a long way in removing the hurdles and bottlenecks farmers encounter during cultivation, harvesting and marketing operations.
Expanding the network of Agricultural Produce Market Committee regulated markets, from the existing 7,600 to a probable target of 42,000 mandis, should be accorded top priority. In addition, strengthening Farmer Producer Organisations (FPOs) and encouraging startups in agriculture to draw out entrepreneurship should make agriculture an attractive proposition. In China, seven million educated youth, including holders of postgraduate degrees, were sent to rural areas in 2018, and reports say 60% have stayed back. To bridge the rural-urban divide, China plans to send millions of educated volunteers to the villages every year and is encouraging young migrants in cities to return. To spur rural development, India, too, needs to draw a lesson to make agriculture economically viable, environmentally sustainable and attractive. It is surely possible provided we change our mindset and let 2022 be the milestone to restore the pride in agriculture, make farm distress history, and turn farming into a vibrant economic enterprise.
(This is part of a series of articles on India’s priorities as we head towards 75 years of Independence)
Devinder Sharma is an author, writer and a food and agriculture specialist
The views expressed are personal