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How reforms in the Agricultural Sector can transform Indian economy? Issues, Govt schemes & Solutions

How reforms in the Agricultural Sector can transform Indian economy? Issues, Govt schemes & Solutions

Relevance:

  • GS 3 || Economy || Agriculture || Agricultural R&D

Why in the news?

Since independence the challenges and solutions pertaining to India’s Agriculture sector is consistent.

Introduction:

  • India’s agricultural policies include a number of objectives, including a production imperative (national food security), a consumer imperative (low food costs for a large population of low-income people), and a farmer welfare imperative (increasing farmer income).
  • Conflicts between these requirements have resulted in expensive, inconsistent policies, the consequences of which are increasingly being carried by farmers the government purse, and the natural environment.
  • Recognizing agriculture’s importance in India’s socioeconomic system, the government has set a goal of doubling farmer incomes by increasing productivity and lowering costs, as well as diversifying into high-value crops.
  • However, numerous basic improvements are required in Indian agriculture.

Significance of Agriculture in India:

  • Addresses malnutrition while also ensuring food security: Agriculture is critical to alleviating India’s malnutrition problem, since it has a direct impact on public health and worker productivity.
  • Highest Employment Provider: Agriculture employs more Indians directly or indirectly than any other industry.
  • Boosting Economic Growth: Agriculture has the ability to boost India’s total GDP growth. A 4% rise in agricultural output would contribute at least a percentage point to GDP, boost exports, and reduce India’s trade deficit.
  • Agricultural income growth underpins industrial expansion in developing countries, propelling economic transformation. Consider China’s economic development.
  • In the face of increasing scarcity, environmental degradation, and climate change, India’s essential land and water resources, which farmers exploited for agricultural output, take on greater significance.

Challenges in India’s Agriculture:

  • Agriculture’s Slow Growth Rate
    • According to the Ashok Dalwai Committee Report on Doubling Farmers’ Income, it will need an agricultural growth rate of 10-11 percent per year until 2022–23 to double farmers’ income.
    • Agricultural growth and farmer income growth, on the other hand, have remained stagnant and well below the needed pace of increase.
  • Consumer Oriented Policies:
    • To safeguard Indian consumers, the government implements export restrictions if the price of any agricultural item rises. It makes it difficult for farmers to profit from high prices in international markets.
    • This, together with the ECA, has resulted in decreased private investment in export infrastructure such as warehouses and cold storage systems.
    • Farmers are forced to sell their crops in distress due to a shortage of storage facility.
  • Faulty Agricultural Marketing Policies:
    • Due to restrictions imposed by Agricultural Produce Market Committee Acts passed by various states, Indian farmers can now only sell their produce to village aggregators, APMC mandis, and the government at the minimum support price at Farmgate or local market.
    • The launch of India’s electronic national agriculture market (e-NAM), an online trading platform for agricultural commodities, is a positive move. However, because to three significant obstacles, their benefits have been underwhelming: Transaction cost in terms of time, quality evaluation issue, and logistics of transportation.
  • Subsidies-Related Issue:
    • Subsidies for agriculture were provided to encourage farmers to participate in the green revolution. Subsidies are also meant to lower farmers’ production costs, control food price inflation, and safeguard consumers.
    • However, it is now clear that subsidies are having a substantial negative impact on several parts of the economy.

M.S. Swaminathan Commission on Agriculture:

  • On November 18, 2004, the Indian government established the National Commission on Farmers (NCF).
  • Professor M.S. Swaminathan served as the NCF’s chairman.
  • Dr Swaminathan had asked the government to put the report’s recommendations into action so that it could establish a minimum support price for grains, protect small farmers’ interests, and address the growing risk of agriculture becoming a profession.
  • Farmers required guaranteed access to and control over their lawful basic resources, according to the Commission. Land, water, bioresources, credit and insurance, technology and knowledge management, and markets are all examples of fundamental resources.
  • Recommendation of commission for agriculture reform:
    • Irrigation Changes: It was suggested that a series of reforms be framed to give farmers with “consistent and equitable” irrigation water availability.
    • Productivity Growth: The NCF recommended a “substantial increase in public investment in agriculture-related infrastructure, particularly in irrigation, drainage, land development, water conservation, research development, and road connectivity, among other things,” in order to achieve higher productivity growth.
    • Food Security: The commission proposed establishing a universal public distribution system, reorganizing nutrition support programs on a life-cycle basis with panchayat and local government participation, eliminating hunger caused by micronutrient deficiency, and fortifying food.
    • Credit and Insurance: Increase formal credit system outreach; lower crop loan interest rates to 4%; give debt recovery moratorium; agricultural risk fund; kisan credit cards for women farmers; Crop insurance for all crops across the country with decreased premiums; integrated credit-cum-crop-livestock human health insurance package;Investment in human development, sustainable livelihoods for the disadvantaged, institutional development services, and so on.
    • Farmer Suicide Prevention: Providing affordable health insurance at primary healthcare centers in villages; extending the national rural health mission to suicide hotspots on a priority basis; state-level farmers’ commissions with farmer representatives; restructuring microfinance policies that could serve as a form of livelihood finance; covering all crops with crop insurance.

Apart from all the recommendations, one of the major issues associated with agriculture is migration of farmers from their own place to other metro cities in search of work because of agricultural failure if the above-mentioned reforms are taken seriously by the government migration of farmers there village or their place to others in search of a job.

Initiatives taken by government to increase farmers’ income:

  • Permitting Land Leasing: Land leasing markets should be liberalized by the federal government, in collaboration with state governments, to assist farmers earn a consistent income while ensuring asset security. Leasing property to solar or wind power firms in isolated arid locations might offer farmers with comparatively higher and more consistent earnings.
    • The Model Land Lease Act of 2016 provides a useful framework for states and UTs to develop their own laws in accordance with local needs and pass an enabling Act.
  • Improving India’s agricultural export situation: The composition of India’s agricultural export basket has to be addressed. Agricultural exports now account for 10% of the country’s total exports, although the majority of them are low-value, raw or semi-processed, and bulk-marketed. India’s high-value and value-added agricultural produce accounts for less than 15% of the country’s total agricultural output.
    • Strong agricultural exports will boost demand for India’s farm products (and hence, incomes of farmers).The government has issued Agriculture Export Policy 2018 in this regard. It aims to increase agricultural exports by a factor of two and integrate Indian farmers and agricultural goods into global value networks.
  • Agriculture Infrastructure Investments: The greatest long-term approach to boost farmers’ actual incomes is to invest in productivity-enhancing sectors such as agricultural research and development (R&D), irrigation, and the development of rural and marketing infrastructure.
    • Investing at the local level to create village-level storage facilities, improve surface irrigation management, and invest in drip irrigation, tile drainage, trap crops, and other technologies that can provide benefits in a short period of time.
  • Subsidies-Related Issue: This can be accomplished by lowering input costs to market levels or charging optimal cost pricing for fertilisers, electricity, agri-credit, and canal water fees.
  • Investing in agricultural R&D, irrigation, marketing infrastructure, and establishing value chains by engaging Farmer Producer Organizations (FPOs) and connecting farms to organized retail with the savings generated.

Recent reforms in agriculture:

  • Parliament passes three critical laws to overhaul the agricultural marketing system, attracting private investment of Rs 80,000-1,00,000 crore and creating jobs for 15-20 lakh people.
  • Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Act, 2020, and Essential Commodities (Amendment) Act, 2020 are the three bills.

Steps taken by government to increase farmer income:

  • Subsidizing Input Costs: Providing subsidies for water, electricity, and fertilizer to reduce production costs.
  • Minimum Support Prices (MSP) and public procurement are used to stabilize output prices.
  • KUSUM scheme: Increasing Non-Crop Agriculture Income
  • Providing Farmers with Direct Income Transfers: Pradhan Mantri Kisan Nidhi Samman (PM-KISAN).

Conclusion:

Many agricultural reforms have been implemented by the government in order to provide farmers with a quality of living and equitable socioeconomic opportunities. Due to natural disasters, failure of the monsoon, a lack of technology, and a lack of adequate agricultural education, India’s agriculture industry has been in a state of crisis, which has led to farmers taking drastic measures, including the loss of lives. Due of the current pandemic epidemic, farmers faced several challenges throughout the wheat crop’s post-harvest season. Farmers were unable to harvest crops on time owing to worker migration, and they were unable to sell their goods on the market due to the country’s lockdown. As a result, the government proposed amending the Essential Commodities Act of 1955, which would allow them to sell their goods on an electronic platform at a greater price. The current administration has established a goal of doubling farmer income by 2022, and the following listed plans or programs are steps and measures in that direction.

Mains oriented question:

Fundamental changes in Indian agriculture are urgently needed for budgetary and environmental sustainability. Discuss. (200 words)