Budget 2021: Will agriculture sector get a boost?

The government could consider a shift from the price support system to an income support system. PM-KISAN is a step in that direction, but the assistance under that is lacking. (Image: Wikimedia Commons)
The government could consider a shift from the price support system to an income support system. PM-KISAN is a step in that direction, but the assistance under that is lacking. (Image: Wikimedia Commons)

The agriculture sector is confronted with high price volatility, low returns, low productivity and weather risks. Yet, it is the highest employer, with about 50% of the population engaged in agriculture and allied activities; 87% of them are small and marginal farmers.

What is the policy roadmap to ease farmers’ distress and improve the status of Indian agriculture?

The government has set the target of doubling farmer's income by 2022, and several schemes have been launched. Even while coming out of the nationwide lockdown, a slew of measures was announced to make agriculture AtmaNirbhar (self reliant). To deliberate on measures needed in the first post-pandemic budget during an economic slowdown, Impact and Policy Research Institute, New Delhi organised a panel discussion on the topic.

Setting the tone for the deliberation, the session’s chair Dr Neelam Patel, Senior Advisor (Agriculture), NITI Aayog highlighted the unsustainable processes and practices in agriculture. Meant to improve productivity and meet food security needs, these practices have hurt soil and groundwater health. She highlighted the prevalence of poor farm infrastructure and consequent wastage, leading to huge losses.

Patel also pointed to challenges like rising water scarcity, increased fragmentation of agricultural landholdings, a rising proportion of small and marginal farmers, and low income. These challenges need to be holistically addressed. The agriculture budget needs to increase and has been growing year on year for the past 5-6 years, she added.

Prof C S C Sekhar, Institute of Economic Growth, New Delhi highlighted the sectoral challenges of falling growth rate and low farmers income widening the large disparity between the per capita income of farm and non-farm jobs.

Focus on export and consistent trade policies

“The agriculture sector is a highly resilient export-oriented sector of the economy with a lot of potential. Centre and states should focus on creating agri-infrastructure and reduce skyrocketing logistics costs. The share of the gross capital formation (GCF) in the sector has dropped from nearly 20% to less than 10%. Wastages should be reduced from the current 30-35% to 10-15%,” said Dr S P Sharma, Chief Economist, PHD Chamber of Commerce and Industry. The focus should be on direct transfer schemes; global supply chains and agri-exports should be boosted.

“Agri-exports must increase rapidly to meet the ambitious goals of doubling the farmer's income. AtmaNirbhar does not mean that India grows everything within its boundaries. Instead, it should focus on adequate imports without which the export sector would not grow. More open trade would lead to the availability of a wider variety of food at lower prices; farmers will earn more, and value chains will become more efficient. We need globally competitive agriculture and a self-dependent farmer, who can earn a decent living from agriculture and allied activities,” said Dr Avinash Kishore, Research Fellow, International Food Policy Research Institute (IFPRI).

“Doubling farmers income by 2022 is not possible as agriculture has never grown at the rate of 4% in India at the national level. To expect it to grow at 10% per annum is unrealistic,” said Kishore.

He mentioned the need to make trade policies more consistent and predictive so that the farmers and trade partners can be assured about the price/trade/export-import policy. There is also a need to shift towards import of lands and water-intensive products like rice/soybean and export of skill/labour-intensive and high-value products like fish, fruits, and vegetables. Investment in livestock, fruit, and vegetables generates two-thirds of the value of agriculture and a higher return rate. Kishore also spoke of the need to increase R&D budget for the agriculture sector to usher in innovations.

“Rice exports mean more water demand, leading to domestic water table decline and adding to India's climate change woes. Exports of Basmati rice could continue, but the export of other rice varieties may be hurting more than helping us, especially if it is produced in water-scarce areas like Punjab and Haryana,” said Kishore.

Sustainable agriculture, the key

“Farmers need to be prepared to tackle the pertinent challenges of the anthropocene, like climate change, water stress, diminishing soil health, shifting consumer demands, and the need for diversification. Solutions are needed that will increase productivity while maintaining sustainability,” said Ranveer Nagaich, Public Policy Consultant (Economist), NITI Aayog. 

Stimulus package

Government’s post lockdown stimulus package for agriculture - Rs 1 lakh crore fund set up to create post-harvest infrastructure and the Rs 2 lakh crore credit facility is significant.

The Atmanirbhar Bharat announcements for the agriculture sector had a tranche of schemes covering three main verticals - agriculture marketing, infrastructure creation, and diversification of income sources of the farmer. Additionally, schemes like Pradhan Mantri Formalisation of Micro Food Processing Enterprises Scheme (PM-FME), Matsya Sampada Yojana, and the animal husbandry infrastructure development fund were also introduced.

“Few promising schemes were launched to double the farmer's income by 2022, the 16-point program introduced in last year's budget is notable. The cluster-based approach took into consideration regional specialization and cropping patterns; increased marketing avenues for the farmers through Krishi Udaan and Kisan Rail, and the utilisation of uncultivated barren lands to set up solar panels and generate electricity. These programs can augment additional source of income and the forthcoming budget should consider these initiatives,” said Sekhar.

Nagaich spoke about the current policies and schemes - income support scheme, Pradhan Mantri Kisan Samman Nidhi (PM-KISAN); a scheme to increase the irrigation coverage like Pradhan Mantri Krishi Sinchai Yojana (PMKSY); crops insurance scheme like Pradhan Mantri Fasal Bima Yojana (PMFBY); the e-NAM scheme to facilitate increased connectivity between the agricultural markets; efforts to promote Farmer Producer Organizations (FPO); and subsidy schemes like Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), and other measures to bring about a regime of Direct Benefit Transfer (DBT).

Nagaich highlighted the need for investment in the agriculture value chain, especially in human resources, farmgate infrastructure, and an efficient end to end cold chain and for leveraging frontier technologies like blockchain for replication across India. There should be added focus on expanding Kisan Rail, and Krishi Udaan should be reoriented to focus on the North East region with poor rail connectivity. There should be a push for increased uptake of natural farming and rationalization of fertilizer prices for promoting sustainable agriculture.

Addressing the decreased allocation towards rainfed area development and climate change, Kishore highlighted that even the existing allocations under Atal Bhujal Yojana or Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan (PM KUSUM) have barely been deployed. He also emphasized the need to increase the utilisation of existing schemes for the Central India Tribal Belt, which is the least irrigated area in India but receives adequate rainfall.

Focus on rural infrastructure

“Rural infrastructure plays a significant role in enabling adequate market access and schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), which is in its third phase, PM-Wifi Access Network Interface (PM-WANI) scheme and the PM-AWAS Yojana, which is expected to achieve its target of building 2.95 crore houses by 2022 are noteworthy. NITI Aayog has also promoted natural farming, which is showing promising results in states like Andhra Pradesh and Himachal Pradesh. Time and resources are being spent to develop agri-tech solutions for the farmers in collaboration with the private sector through ideas like KrishiNeev or AgriStack,” said Nagaich.

“Grameen Haats or rural agri-markets in a deplorable state should be developed, and adequate infrastructure needs to be created. This will reduce the distance the farmer travels to sell her product. Swaminathan committee recommended one grameen market for each gram panchayat; however, only about 22000 rural agri markets exist for over 2.6 lakh gram panchayats,” says Prof C S C Sekhar.

Minimum support price should continue

“The Minimum Support Price system needs to continue for staple crops like rice, wheat, and pulses. But for other crops, a different strategy needs to be devised as it is not economically or logistically feasible to provide it. The government could consider a shift from the price support system to an income support system. PM-KISAN is a step in that direction, but the assistance under that is lacking. A scientifically realistic amount needs to be arrived based on either the cost of production or the cost of living in a particular region,” says Nagaich.

“Lack of collateral impedes availing institutional credit by landless farmers or livestock owners. The government should explore new and advanced technologies like blockchain-based models where the farmer's existing livestock can be used as collateral to avail credit and purchase more livestock,” said Prof Surabhi Mittal, Member Secretary, International Committee of Women in Agricultural Economics.  

Redesign schemes

Patel pointed to the need for a more realistic disbursal amount under PM-KISAN. However, better targeting must be employed to ensure that the neediest farmers receive assistance. She raised issues like the status of many FPO's, which are now defunct, and the status of various DBT pilot schemes launched in collaboration with the NITI Aayog. Were the poorly performing schemes scrapped or are they being redesigned, she asked. There is a need to include local inputs concerning agro-climatic zones, soil type, weather variability, and cropping pattern in designing price-prediction models.

Drawing curtains on a very insightful deliberation, Dr Arjun Kumar, Director, IMPRI and organizer of the discussion, noted the need for pushing an integrated Agri-CSC (Common Service Centre) at each gram panchayat. These centres should harness Digital India, SPM RURBAN Mission, Skill India, etc., along with agricultural and village related programs.

The success of PM-KISAN, e-NAM, Jan Dhan Yojana, Swachh Bharat Mission, PM-AWAS Yojana, Ujjwala Yojana, etc., led by gram panchayats should be leveraged, and models of Krishi Mitra, FPOs, rural haats, SHGs, Ayushmaan Bharat’s Health and Wellness Centers, Swamitva Yojana and alike, as well as MGNREGS, Kaushal Vikas, Skill India, can be streamlined through these Agri-CSCs. This initiative will enable and create access to information, market, and handholding regarding agriculture schemes and technologies.

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