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MANAGERIAL ECONOMICS
DAVAR’S COLLEGE
YEAR: - 2010-11
AGRICULTURE
Group Members
DHRM STUDENTS:-
Anita Chopra
Ranjana Dungaria
Tanaz Bhesania
Prarthana Akmanchi
DFM STUDENTS:-
Mitali Shah
Manasi Jadhav
Agricultural and Rural Development in India: A RejoinderIntroduction:-
The primary focus of the present article is agricultural and rural development in India, as the title suggests. The article has attempted to address issues related to agricultural development, food security, poverty reduction and livelihoods generation. Keeping an area as huge as this at the center-stage of policy debates and discussion is important since a vast majority derives their livelihoods from agriculture, and they reside in rural India. The author has touched upon various issues related to agricultural development, which include: a. Labour market in India; b. Political economy of Indian agriculture; c. Indian agriculture before and after liberalization; d. The rural farm economy; e. Agrarian crisis and ‘liberal’ policies; f. Farmers’ suicides and its causes; g. Sustainability of Indian agriculture; h. Recent policy measures; i. Rural livelihoods and social audits; j. Agricultural R&D; k. Right to development; and, l. PDS, poverty and hunger in India. A thorough discussion from a historical context along with necessary data analysis has been done to understand the reality, as it exists. A detailed review of literature has been deemed necessary to understand the problematic .
a. Labour Market in India:-“…A free labour is one who is able to accept or reject the conditions and wages offered by the
employer. If he wishes, he may refrain altogether from working. Once having taken the job, he can decide to give notice and quit. Economic stringency may indeed compel a free labour to agree temporarily to terms he does not consider favourable. But his basic right to refuse work or to seek alternative employment remains uncompromised…”
“…An unfree, or bond(ed) labour, by contrast, is one whose bargaining power is virtually non-existent, or has been surrendered. Such a labourer does not possess the right or has yielded the right to refuse to work under the terms set by his master. Through customs, compulsions, or specific obligation, the bond(ed) labourer is tied to his master’s needs. He can neither quit not take up work for another master without first receiving permission…”
--Daniel Thorner (1962): Employer Labour Relationships in Agriculture, in Land and Labour in India by Daniel and Alice Thorner.
Studies on the labour market institutions, on the dynamic relationship between market forces and market institutions, show that transactions interlocking labour, credit, land lease etc. are common instruments for not just reducing weather and market risks but also for land owners gaining market control through exercise of extra-economic coercion. There are three different schools, namely-the neo-classical school, the Marxian school and the neo-institutional school, who have their own approaches towards understanding the formation of wage labour market, labour wages and formation of other contractual arrangements involving labour. A chief phenomenon characterising exchange that has been noted widely is what is termed as ‘interlinked markets’ or interlocking of factor and commodity markets. A dominant party conjointly exploits the weaker party in two or more markets by interlinking the terms of contracts, according to the Marxian approach. The weaker party loses the option to exercise in other markets, where his free entry is already pre-empted or terms of participation pre-determined. The power of the dominant party to exploit in such interlinked markets is much more than in markets taken separately.
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Agricultural labour constituted around 27% of the total number of workers (main plus marginal), according to the Census 2001. Almost 12.86% pf agriculture labour originated from Andhra Pradesh. Between 1964-65 and 1974-75, the flush period of India’s Green Revolution, the number of primarily wage-dependent rural households with little or no land nearly doubled from 18 million to 25 million. The upsurge in ruralproletarianisation has arisen from a combination of three factors: a. rapid population growth on a slower growing land-and-water base; b. agrarian structural changes simultaneously with population growth; and c. the push and pull effects of the increasing regional disparities, working through displacement and labour-market influx of the formerly self-employed. Agricultural labour is not the creation of the British economic policies alone as it has been in existence since the inception of the caste-system. British colonial policies aggravated the problem of land alienation to such an extent that during their rule a noticeable class of proletarian labour was formed, whose characteristics differed from the past. In almost all regions of the country, the lower caste agricultural labourers operated within the framework of the jajmanisystem (NCRL, 1991)1. The peasantry itself was highly stratified and some segments were subjected to various economic and extra-economic constraints. Angus Maddison (1971)2 found that of the total labour force in Moghul India, 72 percent was in the rural economy, and majority of them were landless labourers. IrfanHabib (1984)3 found that the size of the labour force would have been 20-25 percent of the total rural population. Dharma Kumar (1965)4, however, found that agricultural labour would have formed roughly around 10-15% of the entire population and 17-25% of the agricultural population of the Madras Presidency during 1800.
Tom Brass (1999)5 explains that during the period 1870-1940, landholders in the area of United Punjab (which includes Haryana) utilized four kinds of labour, namely, sepidars, peasant smallholders, sirisand casual workers. All these categories of labour suffered some degree of economic unfreedom. During the 1970s and 1980s, there was immigration of cheap migrant labourers from Bihar and Uttar Pradesh in Punjab. Labour contractors recruited tribals from North Bihar and transported them to Punjab. Migration of rural labourers has been a feature of the Indian economy for more than a 100 years; till Independence, the British economic policy and the process of uneven development influenced its character and pattern. While better employment opportunities and higher wages in economically developed regions (pull factors) attract labour, non-availability of employment opportunities and consequent economic hardships in the underdeveloped regions act as push factors in the migration process. Middlemen or jobbers (i.e. labour contractors) are called by different names in the country, namely: ardas, mistry, mukddam, thekedars, lambardars etc. Workers in the unorganized sector, including migrant labourers, are denied minimum wages and female workers get lesser wages than male workers.
Rural labour constitutes the most marginalized section of the Indian society. It benefited the least during the last 60 years of development, which happened under the Indian five years planning. Dependence of rural agricultural labour on big landowners and moneylenders for consumption credit quite often results in bondage. Bonded or forced labour are called by different names in various parts of India, for e.g. gothi, vethi or bhagola in Andhra Pradesh, kamiyain Bihar, jeetha in Karnataka, hali in Rajasthan, vet or beggar in Maharastra. Rural labour markets are segmented and segmentation could be based on gender, race or caste. Such labour market segmentation leads to differential wage rates and immobility of labour from one occupation into another (Lal, 1984)6. The fragmentation of the
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Indian labour market is considerably reinforced by caste or community identity at the local level (Rodgers, 1993)7.
Wage payment system is not the only system as there can be existence of alternative contractual arrangements like sharecropping, attached laboour system and bonded labour system. The issue of unfreedom has been expressed in the form of credit-labour linkage i.e. perpetual indebtedness of the labourers. Under the neo-institutional economic framework, inter linkages (or interlocking) arise as a result of imperfections like uncertainty, asymmetry of information, absent markets or transaction cost. Within the Marxian framework,interlocked markets represent different modes of exploitation. The existence of a certain type of contractual arrangement is within a historical context, and not based merely on rational choice.
Young girls, below the age of 15 years, bear the brunt of poverty-induced child labour. Almost 86.4 per cent of employed Indian women live with their families on less than US$ 2 per person per day, as compared to 81.4 per cent of employed men (ILO, 2009)8. According to the NCEUS (2007), Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector:
Agricultural labourers, estimated at 87 million in 2004-05, constituted 34 per cent of about 253 million agricultural workers i.e., farmers and agricultural labourers.
The unemployment rate for agricultural labourers by the CDS (current daily status) is quite high in rural areas by any standard; 16 per cent for males and 17 per cent for females.
The underemployment of usual status agricultural labourers by CDS rates increased during the decade 1993/94-2004/05. In fact, the CDS unemployment rate was exceptionally high at 16 per cent in 2004-05.
Overall, wage levels of agricultural labourers have been very low and their growth rates decelerated through the decade 1993/94-2004/05.
The Minimum Wages Act, 1948 is the only statutory legislation, which ensures minimum wages to agricultural workers. In 2004-05, about 91 per cent of the agricultural labourmandays received wage rates below the National Minimum Wage and about 64 per cent below the NCRL minimum wage norm in rural areas.
The total number of agricultural workers in India has been estimated at 259 million as of 2004-05. They form 57 per cent of the workers in the total workforce. About 249 million of them are in rural areas and that works out to be 73 per cent of the total rural workforce of 343 million. Their share in total rural unorganised sector employment is 96 per cent while in unorganized agricultural sector it is 98 per cent.
Nearly two-thirds of the agricultural workers (64 per cent) are self-employed, or farmers as we call them, and the remaining, a little over one-third (36 per cent), wageworkers. Almost all these wage workers (98 per cent) are casual labourers.
Agricultural workers constituted 56.6 per cent of the total workers in 2004-05, down from 68.6 per cent in 1983. In rural areas, agricultural workers constituted 72.6 per cent of the total workers in 2004-05, down from 81.6 per cent in 1983.
Farmers form a major share within the agricultural workforce though there has been a gradual decline in their percentage from 63.5 in 1983 to 57.8 in 1999-00. Between 1999-00 and 2004-05, the percentage of cultivators increased to 64.2, the highest level achieved in 15 years
A comparison of employment growth rates between 1983/1993-94 and 1993-94/2004-05 shows that the growth rate of agricultural employment decelerated sharply in the last decade, from 1.4 to 0.8 per cent. Although the growth of total employment also declined
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from 2.1 per cent during 1983/1993-94 to 1.9 per cent during 1993-94/2004-05, this deceleration was clearly not so sharp.
The proportion of households with no land possessed increased from 13 per cent in 1993-94 to 14.5 percent in 2004-05. The share of landlessness among the agricultural labourers was 19.7 per cent in 2004-05. More than 60 per cent of the agricultural labourers had sub-marginal holdings up to 0.4 hectares and that remained more or less constant over the period. Landlessness or small size of holdings forces the workers to engage as labourers to maintain their subsistence levels.
b. Political economy of Indian agriculture:-Boudhayan Chattopadhyay (1991)9 finds: “…In more than one sense, the depression and
deflation in 1929-33 was the overture to the funeral march of the Bengal peasant, fisherman and the artisan, of which the denouement was inflationary war economy of the 1942-44, with its toll of the 3 million plus dead…”
During the colonial rule until the First World War, surplus was extracted from agriculture, which was partly transferred to the home economy, partly invested in the military and bureaucratic machinery to sustain, and partly to strengthen the sources of revenue through public investments in railways, canals etc (Patnaik, 1984)10. He explains that in an underdeveloped economy, the ‘potential economic surplus’ (using Paul Baran’s concept) is used not for productive investment but for conspicuous consumption, unproductive investment, or is simply siphoned off abroad as tribute, dividends or remittances. The zamindari system adopted in some parts of Bengal gave rise to the class of moneylenders, traders and absentee landlords, which prevented productive investment in agriculture, unlike the case of ryotwariareas in Punjab. Commercialization of Indian agriculture during the British rule, comprised of two different processes: a. a shift in the agrarian economy from production for consumption to production for market; and b. land started acquiring the features of commodity, which could be bought and sold. Demand for raw materials in order to sustain the Industrial Revolution compelled the Indian peasantry to shift to crops that had better market value. The process of de-industrialization started since the Indian goods manufactured by the artisans could not compete with the cheap machine-made goods imported from England.
Prior to Independence, Indian agriculture suffered from what Daniel Thorner termed as ‘built-in depressors’. Big landlords used to extract huge rents during the days of zamindari. After Independence, the Nehru-Mahalanobis Plan placed more emphasis on industrialization by treating agriculture as ‘bargain basement’. However, a decisive shift in agricultural policy happened after the demise of Nehru. Agriculture became the focal point of State intervention under Agriculture Minister Mr. C Subramaniam. The miracle technologies of Green Revolution, which was backed by input subsidies helped the rich peasants at the expense of small and marginal farmers. The rich peasantry class gained wealth and political powers overtime. Farmers’ movements led by the rich farmers attracted the small and marginal farmers. Such movements demanded for higher agricultural prices and greater subsidies from the State. The HYV (high-yielding varieties) package necessitated more expensive seeds, greater amount of controlled water (irrigation) and chemical fertilizers, and hence, there was demand for more subsidies. Because of the presence of Mr. Charan Singh in power during 1977, farmers’ voice directly entered the highest strata of policy formulation. The ‘new’ agrarian movement during the decades of 1970s and 1980s was not revolutionary but reformist in nature since it relied more on pressuring the State for remunerative prices, loan waivers and a better rural-urban balance in resource allocation instead of land and tenancy reforms in favour of small and marginal farmers and landless labourers. Post Manda land Mandir, India saw divisions in the name of caste and class among the farming community that affected farmers’ movements. Presently, agrarian interest is much more marginalized in the national policy agenda. Reforms of the 1990s and shift in economic priorities of the Indian government led to stagnation in agriculture and more hardships for
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farmers (Posani 2009)11. According to Patnaik (2003)12, the decade of 1990s not only saw a steady decline in the level of per capita food availability at the national-level, the absolute amount of per capita food availability during the year 2002-03 was even lower than during the years of the Second World War-years when the terrible Bengal famine took place.
c. Indian agriculture before and after liberalization:-There are 4 ways in which better agricultural productivity and output can contribute to an
economy’s development: a. by supplying foodstuffs and raw material to other expanding sectors of the economy; b. by providing an ‘investible surplus’ of savings and taxes to support investment in other expanding sectors; c. by selling for cash a ‘marketable surplus’ that will raise the demand of the rural population for products of other expanding sectors; and d. by relaxing the foreign exchange constraint by earning foreign exchange through exports or by saving foreign exchange through import substitution.
Before the liberalization of the Indian economy, exports and imports were controlled through licensing, quantitative restrictions and canalizing (by state trading boards). There were controls on exports and imports: a. for maintaining stability in domestic prices; b. to help both producers and consumers; c. to ensure food security; d. to maintain sound balance-of-payments; e. exportables and importables acted as wage goods or inputs for wage goods. Since majority of the poors’ income were not index-linked, so it was necessary to keep the prices of the agricultural goods lower; and f. to protect and become self-reliant in production of oilseeds and sugar during the 1980s. India went for trade liberalization for a number of reasons: a. to move domestic prices closer to international prices; b. due to comparative advantage in foodgrains production, India would gain; c. agriculture was net taxed due to high effective rate of protection being given to the industrial sector; agricultural products were not allowed to be exported; and, d. Indian currency was over-valued, which hampered exports of agricultural commodities. It has been apprehended that free trade is likely to lead to greater price inflexibility in the Indian domestic market and would lead to an increase in the relative domestic prices of most crops, most importantly rice. World prices of rice and cotton would fall but their domestic prices would rise. If cotton prices go up, then the domestic textile industry was likely to suffer. With the cut in input subsidies, there would be decline in the profitability for growing sugarcane and oilseeds. However, with the cut in input subsidies, poor rice growing regions would gain. Intellectual property rights (IPRs) would not allow the newer varieties of seeds to be diffused to rural hinterlands. Smaller farmers would not be able to pay higher prices for genetically modified (GM) seeds (Sen and Nayyar, 1994)13. The member countries of World Trade Organisation (WTO) are committed to follow a set of rules embodied in Agreement on Agriculture (AoA), which covers: (i) Domestic support; (ii) Market access i.e., tariffs, and restrictions on imports and exports; and, (iii) Export subsidies. The agreement required reduction in trade distorting domestic support like price interventions and subsidies; reduction in export subsidies; replacing quantitative restrictions and quotas on trade with tariffs, and reduction in tariffs to encourage more and freer trade. It was predicted that trade liberalisation and implementation of AoA would result in positive gains to the developing countries like India, through improved access to the developed countries’ markets, increased trade and better pricing structure for tropical and other products of interest to the developing countries (NAAS, 2006)14.
Most of the cultivable land in India was brought under cultivation by the mid-1960s. To the total rise in agricultural production, the contribution of area increase was around 70% and the contribution of yield increase was nearly 30%. India continued high production with the help of high pay-off inputs. Government invested in R&D of seed technology but it was irrigation dependent. Expansion of area happened through rise in population pressure, land reforms, implementation of community development programmes, and investment in irrigation. Land reforms in India revolved around: removal of landlordism, providing land to the tenants, putting ceilings on land, consolidation of land 11
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and co-operative farming. India went for adoption of biochemical technology (since it was a land scarce economy), which was a combination of high yielding varieties (HYVs), chemical fertilizers, insecticides, pesticides and irrigation. The technology was prone to pest and insect attacks, and was too much dependent on irrigation. The technology required a high working capital. Despite the increase in cost of cultivation, increase in profit was manifold. Subsidization of agriculture has been a major policy of the Government of India after the introduction of the new biochemical technology. Subsidy was provided to ensure quick adoption of the new technology by the farmers and to reduce uncertainties in production. Some have argued that subsidies disturbed efficient allocation of resources. However, if subsidies were removed, then investment in agriculture would go down, small and marginal farmers would get affected and the prices of agricultural commodities would shoot up.
Government’s investment in agricultural R&D (i.e. biochemical technology) was dependent on the market situation, and hence its response was endogenous and not exogenous. Economic behaviors and decision-making of not only private but also public sector suppliers of scientific knowledge and technology are treated as endogenous (induced)15 rather than exogenous to the economic system, according to Hayami and Ruttan (1971)16. Inducement to develop a technology depend on economic conditions i.e. the relative availability of labour and land, which in turn determines the relative prices of labour and land. The sources of power in traditional agriculture are: labour power, bullock/ horsepower. Mechanical technology means mechanization of irrigation, mechanization of harvesting, tractors replacing labour and bullocks etc. If the supply of labour and bullock power is higher than its demand then the traditional technology’s cost is lower as compared to the mechanical technology. Certain features of mechanical technology are: a. It is time saving; b. It has a high fixed cost but low variable cost; c. It is labour displacing; and, d. Labour productivity goes up when mechanical technology is used since it displaces labour. Mechanical technology is a substitute for biological technology, which comprises of labour power and bullock power. Biological sources of technology will be preferred over mechanical technology if its prices were lower compared to the latter. Certain features of biochemical technology are: a. It increases yield; b. It absorbs labour; c. The variable cost is high; and d. It is a substitute for land.
Latin America is characterized by the presence of latifundios(very large landholdings) and minifundios(very small landholdings). There is high level of inequality in the distribution of land under cultivation. Studies show that value of output per hectare under cultivation is higher in the minifundios as compared to the latifundios, particularly in countries like Brazil, Argentina and Chile. As opposed to Latin America, in the case of Asia, there exists too little land for too many people. Land ownership in Asian countries like India, Pakistan and Bangladesh has been affected by European rule, introduction of monetized transactions, rise in power of the moneylenders, and rapid growth of Asian populations [Todaro and Smith, (2006)]17.
d. The rural farm economy:-Rural livelihoods refer to the various sets of entitlements before an individual, which can help
him or her in order to live. For too long, Indian farmers have seen rise in prices of agricultural inputs such as fertilizers, seeds, electricity, water etc. during the decade of 1990s and 2000s. Without a corresponding rise in market prices or the minimum support prices, rise in input prices affected the profitability of the farmers. As a result of this, farmers became interested either to leave agriculture in order to move towards other professions or occupations, or they have fallen prey to money-lenders and middle-men so as to get loans and credits at exorbitant rates of interests. The rising cost of production has made the farmers depend on informal sources of credit since the transactions costs are too high to receive formal credit along with the problem of moral hazards. Rising input prices and falling market prices have reduced the economic sustainability of Indian agriculture. Not enough
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livelihoods are generated in the rural non-farm economy, which can be a ray of hope for the majority dependent on agriculture.
According to de Haan and Zoomers (2005)18, “in the household studies, increased attention was paid to household strategies as a means of capturing the behaviour of low-income people. The concentration on households was considered useful for its potential to bridge the gap between micro-economics, with its focus on the atomistic behaviour of individuals, and historical structuralism, which focused on the political economy oif development. The household also came into vogues in a more practical sense; it was considered a convenient unit for the collection of empirical data”.
Graph 1: Agricultural production in India (in million tones)
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Source: Handbook of Statistics on Indian Economy, RBI
Rates of growth of foodgrains and cereal production have increased from 2003-04 onwards, as could be seen from the graph 1. However, there was stagnancy in the growth rates of production of pulses and coarse cereals over the years.
Livelihood units such as the individuals, families or businesses change the composition of livelihood ‘portfolios’ to reflect changing opportunities, hazards, risks and constraints. Such behaviour falls under the broad term of livelihood diversification. In the case of India, there was lesser opportunity for such diversification. The increasingly urban nature of a national economy has turned out to be at odds with the increasingly rural nature of a particular enterprise or family strategy. Unlike the tied patron-client labour relationship during the olden days, many jobs nowadays are temporary in nature. Livelihood diversification is considered to be both a coping and a thriving mechanism–thriving where it is driven by a growing and more flexible economy. But the ‘coping’ dimension usually dominates where diversification is an enforced response to failing agriculture, recession and retrenchment. And, this is what has been happening in the case of India (Start and Johnson, 2004)19.
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Earlier, the report by the National Commission on Rural Labour (NCRL, 1991) suggested that labourers and land-poor farmers have a high propensity to migrate as seasonal labourers. These migrants are highly disadvantaged as they are poverty ridden with too little bargaining power.
Table 1: Trend growth rate during the past three decades Trend growth rate per annum
1980-81 to 1989-90 1990-91 to 1999-2000 2000-01 to 2007-08Rice 3.55 2.00 1.86R square 0.65 0.81 0.23Wheat 3.50 3.51 1.36R square 0.73 0.92 0.34Foodgrains 2.70 2.07 1.99R square 0.67 0.82 0.34Source: Ministry of Agriculture, Government of IndiaNote: The trend growth rate in the production of rice, wheat and food grains for separate periods have been calculated by the author
From the table 1, one could make out that trend growth rate in rice production declined from 3.55 percent during the period 1980-81 to 1989-90 to 2.00 percent during the period 1990-91 to 1999-2000, and further to 1.86 percent during the period 2000-01 to 2007-08. Trend growth rate in wheat production increased marginally from 3.50 percent during the period 1980-81 to 1989-90 to 3.51 percent during the period 1990-91 to 1999-2000, but fell down sharply to 1.36 percent during the period 2000-01 to 2007-08. Trend growth rate in foodgrains production declined from 2.70 percent during the period 1980-81 to 1989-90 to 2.07 percent during the period 1990-91 to 1999-2000, and further declined to 1.99 percent during the period 2000-01 to 2007-08.
Among other things, the sustainable-livelihoods literature identifies five types of capital assets as the basis of household livelihoods: (i) financial capital (e.g. income from employment or self-employment, pensions, credit, remittances from relatives abroad or in urban areas); (ii) human capital (e.g. skills, knowledge); (iii) natural capital (e.g. land, forests, water, genetic resources); (iv) physical capital (e.g. equipment); and (v) social capital (e.g. networks of social relations). Household livelihoods depend on diverse and evolving combinations of these different assets.
e. Agrarian crisis and ‘liberal’ policies:-It is increasingly felt that Indian agriculture is currently suffering from “technology fatigue”, due
to which the earlier gains made during the Green Revolution has withered away. Moreover, Green Revolution itself has been criticized for being Euro-centric, environmentally unsustainable and being apolitical (it never addressed the issues of land and tenancy reforms, and other related institutional reforms). Green Revolution actually tried to improve yields and production, without taking into account the needed change in rural and social institutions. Since it offered a high-valued package, so it helped only the rich farmers (owning large landholdings) from assured irrigated areas. Areas where rainfed irrigation takes place could not gain much from the Green Revolution. Green Revolution only promoted production of certain crops, which are agro-climatically suitable for certain regions, which some say have affected biodiversity. It relied excessively on major irrigations (instead of minor irrigation and rainwater harvesting), chemical fertilizers and pesticides. In order to sustain Green Revolution, huge subsidies were given on inputs (for producers of inputs—firms, and consumer of inputs—farmers) like electricity, fertilizers etc, thus making the entire effort economically unsustainable. It was the large farmers, which benefited from the subsidies provided at the cost of the small and the marginal farmers. The Bollgard But cottonseed and other such seeds, which have recently been introduced, have failed to cater the needs of the rural farming community who belong to the lower income group (as well as socially backward groups), and possess small-sized farmlands and cropping fields. In fact, there are allegations that due to the liberalization of the Indian economy,
multi-national corporations (MNCs) from the North got the opportunity of plundering the farmers of the global South, by patenting and giving 'new names' to the indigenous varieties of plants (such as turmeric, basmati rice) and animals (via genetic engineering) from the South, thus leading to bio-piracy. Issues and debates surrounding bio-ethics, bio-piracy and violation of intellectual property rights (IPRs) have come to the forefront during the recent years, which are still needed to be resolved at international forums like World Trade Organisation (WTO).
The 59th round of the National Sample Survey states that agrarian distress is severe in Andhra Pradesh, Karnataka, Maharashtra, Punjab and Rajasthan. High levels of indebtedness are also reported from these states. The influence of moneylenders appears to be strong in Bihar and Rajasthan in terms of extending informal credit to farmers. Traders also have extended loans to indebted farmers (Ghosh and Chandrashekhar, 2005)20.
The Plant Variety Protection and Farmers' Rights Act (PVPFR) 2002, which was formulated under the sui generis option of the WTO recognises farmers' rights to save, use, sow, exchange, share or sell his farm products including the seed of a variety protected. The International Union for the Protection of New Varieties of Plants (UPOV), on the other hand, which came into being in 1961, has the scope and potential to restrict the age-old traditional right of the farmer to "plant back seeds" in order to safeguard the vested interests of western seed manufacturing corporations. Hence, one can say that UPOV and the PVPFR cannot co-exist in the Indian context (Krishnan, 2002)21. Many have argued about the adverse impact of private seed manufacturing companies, which made their inroads into the rural Indian economy, after the formulation of the National Seed Policies in 1988 and 2002. The National Seeds Bill, 2004 has been criticized by the All India Kisan Sabha (AIKS) and the Bharat Krishak Samaj(Saggi, 2006).
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Graph 2: Yield in agriculture (kg per hectare)
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Source: Handbook of Statistics on Indian Economy, RBI
Rate of growth of wheat yield has fallen down since 2001-02, as could be made out from the graph 2. There was stagnancy in the rate of growth of pulses yield. Growth rate in rice yield has increased marginally during the recent years.
Subsidies should be cut to step-up investments in irrigation and for increasing outlays on poverty alleviation programmes, according to Rao (1995)22. Intensive use of inputs in limited pockets, have led to lowering the productivity of inputs, reducing employment elasticity of output through substitution of capital for labour, and environmental degradation such as water logging and salinity, on one hand and lowering of water table, on the other hand.
The National Agricultural Policy (NAP) (2000) announced by the Government of India, sought to give a prominent role to contract farming. However, it is said that contract farming has led to 'corporatization' of Indian agriculture, which has adversely affected the small and marginal farmers. Contract farming has been criticized as being a tool for the agribusiness firms to exploit an unequal power relationship with growers. However, advocates of contract farming view it as a way to create a synergy between agribusiness firms and small farmers that benefit both without sacrificing the rights of either. It is seen as a mechanism to modernize small peasant holders through transfer of technology.
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Reducing Poverty and Hunger in India : The Role of Agriculture
India’s strategy for reducing poverty and hunger has always placed a great deal of importance on the agricultural sector, reflecting the fact that 70 percent of the population live in rural areas and the overwhelming majority of them depend upon agriculture as their primary source of income. The focus of attention has of course changed over time.
Early Focus on Food Self Sufficiency:-In the 1960s India was deficient in foodgrain production and dependent on imports of wheat, financed by PL480 assistance from USA. Understandably, the focus of Indian policy in this period was to increase foodgrain production with a view to ensuring food security. This objective was successfully achieved by the spread of the Green Revolution in the 1970s, beginning with wheat and then expanding to rice. This achievement must count as one of the major success stories in development, considering that influential groups such as the Club of Rome, in the early 1970s, had despaired of India being able to feed its growing population.
Agricultural Growth for Poverty Alleviation:-In the 1980s, Indian policymakers shifted their focus from food self sufficiency to generating additional income in rural areas as a means of tackling the problem of poverty, which was concentrated in rural areas. Acceleration of agricultural growth, with a special focus on improving the position of small farmers and extending the productivity revolution to non-irrigated areas was seen as a critical part of the strategy for poverty alleviation. This effort was supplemented targeted anti poverty programs to address the needs of vulnerable groups who may not benefit sufficiently from general agricultural growth. India achieved considerable success with this approach in the 1980s. Growth of agricultural gross domestic product (GDP) accelerated to about 4.7 percent in the 1980s, compared with only 1.4 percent in the 1970s. This, agricultural growth, together with the beginning of economic reforms in the nonagricultural sector, pushed up the growth rate of overall GDP to around 5.8 percent in the period 1980-81 to 1989-90 compared with about 3 percent in the 1970s.
India’s growth was disrupted at the start of the 1990s by a major balance of payments crisis which led to the adoption of an extensive process of structural reforms. It took time to regain momentum and it was only in 1993-94 that the economy got back on track, clocking an average growth rate of 6.8 percent in the three years 1993-94 to 1995-96. This acceleration in growth in the post reform period led policymakers to set a more ambitious GDP growth target of 8 percent a year for the Ninth Plan period (1997-98 to 2001-2002), to be supported by a growth rate of 4 percent a year in agriculture.
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The projected growth of 4 percent per year in agriculture was clearly inline with the average growth of 3.8 percent achieved in the period 1990-91 to 1996-97.
However, actual performance since the mid 1990s hasbeen disappointing. Agricultural growth slowed to 2 percent a year in the Ninth Plan period, and overall economic growth was only 5.5 percent, well below the 8 percent target. Since agriculture accounted for about 25 percent of GDP, the shortfall of more than 2 percentage points in agricultural GDP growth compared with the target accounts directly for a shortfall of about half a percentage point in GDP growth. If the indirect effects of more rapid agricultural growth on other sectors are taken into account, the total impact on GDP growth may have been as much as one percentage point.
These shortfalls were known, when the Tenth Plan (covering the period 2002-03 to 2006-07) was formulated, but it was assumed that the poor performance of agriculture was due to temporary factors such as poor monsoons and depressed agricultural commodity prices in world markets following the East Asian meltdown. The Tenth Plan therefore adopted the same targets of 8 percent growth in GDP and 4 percent growth in agriculture. Experience in the first three years of the Tenth Plan period has sounded some alarm bells. GDP growth has
averaged about 6.5 percent, but agricultural GDP in these years (2002-03 to 2004-05) has grown by only 1.1 percent per year. The loss of dynamism in agriculture explains most of the shortfall in aggregate GDP growth.
Slower growth in agriculture also has direct implications for poverty reduction in rural areas. Official figures suggest that the incidence of poverty fell from 36 percent in 1993-94 to 26 percent in 1999-2000. The comparability of these numbers has been questioned because of recent changes (ostensibly improvements) in the methods for measuring consumption in household surveys, but there is a broad consensus that if corrections are made to ensure comparability, the percentage of the population in poverty has declined significantly, though less than in the official figures. However, even the official figures show less decline than what had been targeted, and this is undoubtedly a reflection of the slowdown in agricultural growth. Slow growth in agriculture is also at the root of growing evidence of distress in the farming community. Surveys show that a large percentage of farmers want to leave farming because they find it is no longer sufficiently profitable. The uncertainty associated with farming has also increased and farmers lack effective means of insuring against such risks. There are larger market uncertainties associated with new crops and poultry because of greater vulnerability because of falling ground water levels. There is evidence of increased indebtedness arising from the inability to cope with risks.
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Recognizing these problems, the Government has undertaken a comprehensive review of the strategy for agriculture in order to come up with a new deal for agriculture and the rural economy in general. Remedial action will be needed on several fronts including increased public investment in irrigation and rural roads, better management of existing irrigation systems and of water resources in dry land areas, a strengthened agricultural research system and more effective extension, improvements in the production and distribution of certified seeds, improvements in the credit delivery system, and innovative steps in marketing and contract farming to support the diversification of Indian agriculture.
Irrigation:-
Water is a critical constraint on raising agricultural productivity and much of the success of the Green Revolution came from improved productivity in areas of assured irrigation provided through canals or (much more significant) through ground water utilization. The scope for expanding irrigation through large and medium scale projects has yet to be fully exploited. Out of the total of 59 million hectares that could be irrigated through such projects only 40 million hectares have been irrigated. The slow pace of exploitation of irrigation potential is due to lack of resources in state governments and the tendency to spread available resources thinly over too many projects. Additional public investments in this area are therefore essential for early utilization of the potential.Effective maintenance of the existing system of canal irrigation also suffers because the irrigation departments of the states lack resources. This in turn is because water charges are kept too low, covering only 20-25% of the operations and maintenance cost of the system in most states. Poor maintenance leads to loss of water through seepage, with the result that water use efficiency is very low – around 25 to 40 percent instead of 65 percent that should be attainable. Low water charges also encourage highly water intensive crops at the upper end of the canal network, leaving tail-end portions starved of water. The solution lies in rationalization of water rates to ensure adequate financial resources to cover maintenance and resort to participatory irrigation management to give farmers a stake in the operation and maintenance of the system. Some interesting experiments in these have promise. Maharasthra has recently established a Water Regulatory Authority to set water charges in a non-political manner. Several states are also experimenting with involving water user associations (WUAs) in the operation of the canal systems. Ideally the WUAs should be empowered to collect water charges and to retain a portion of the collection to maintain the portion of the distribution network operating in their area. Ground water utilization played a major role in expanding irrigation in the 1980s but uncontrolled exploitation of groundwater has led to serious depletion of the water table in many parts of the country. Overexploitation is encouraged by the policy of massive under pricing of electricity for agricultural use, with a few states having made electricity for farmers completely free. Even where it is not free, the charge for electricity is a fraction of the average cost, and is not based on metered use. Instead there is a fixed charge for presumed usage, based on the capacity of the pump, an arrangement which implies that the marginal cost of electricity for pumping ground water is zero. Under pricing canal water and electricity are clearly highly distortionary, given the need to conserve water use. They are also distributionally unfair because the benefits of under priced water accrue disproportionately to upper end farmers whereas under priced power enables those able to afford larger pumps to lower the water table denying water to farmers who can only afford shallow wells.
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The investment requirements of irrigation are massive. Completion of all unfinished projects alone is estimated to cost approximately US$ 20 billion. In addition, provision must be made for new irrigation projects (large, medium and small), which together will require about US$ 45 billion. The total requirement is therefore about US$ 65 billion.
Water Management in Rainfed Areas:-About 60 percent of India’s cultivable area will remain dependent on dry land farming even after all irrigation potential is fully exploited. Productivity growth in these areas is obviously critical for rural income growth and poverty alleviation, and it depends critically upon better moisture conservation and the development of varieties suited to dealing with moisture stress. Schemes for water retention, moisture conservation and groundwater recharge have been implemented for many years in India but with mixed results. Experience suggests some pointers for the future. Greater use of technology inputs can help a great deal. Satellite mapping by the Indian Space Research Organisation (ISRO) has been particularly helpful in planning watershed management schemes to achieve optimal results. It is also important to adopt a holistic approach. For example, if deforestation problems upstream are not tackled, water retention structures downstream will quickly silt up. Community participation is critical to impart ownership and ensure an acceptable distributional outcome. In the past, these multiple factors were not effectively integrated into watershed development schemes. Now a National Rainfed Area Authority has been proposed to help coordinate the work of different implementing agencies. The cost of treating rainfed areas to ensure optimum use of available water is approximately Rs.10,000 per hectare and the untreated area is about 80 million hectares, yielding a total cost of approximately US$20 billion. If this amount is added to the cost of irrigation development and the target to be achieved over a 10-year period it would require a doubling of public investment in irrigation.
Other Inputs:-Increasing agricultural productivity also depends on the efficient delivery of several other inputs. The quality of seeds and planting material needs to be greatly improved, and this calls for strengthening the research effort to make it more effective. Two expert committees have recently reported on how to restructure the agricultural research system to make it more results oriented and their recommendations are under consideration. The system for producing and marketing certified seeds of existing varieties at reasonable prices also needs to be improved. Seed replacement rates in most parts of the country are only one-third to one-half of what they should be, a situation which reflects partly a lack of knowledge of the importance of seed replacement and partly also a lack of availability of reliable seeds.There is evidence that the use of fertilizers is at present highly imbalanced suggesting that scientific application of fertilizers holds potential for raising productivity. Nitrogen fertilizers are oversubsidized compared with phosphorus and potassium fertilizer. The structure of fertilizer subsidies should be rationalized to avoid excessive and wasteful use of nitrogen fertilizers. Lack of knowledge of micronutrient deficiency in the soil is also a serious problem. There is need for much more extensive soil testing to encourage balanced application of nutrients needs. Underlying these problems is the deterioration of the extension services, which makes it difficult to disseminate best farming practices. Strengthening the extension system therefore needs special attention.
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The government has also identified credit to farmers as a critical area for corrective action. The public sector commercial banks are being pushed to provide credit to agriculture and have responded commendably. However, the cooperative credit system which was meant to be the backbone of agricultural credit, has become financially weak. Part of the problem has been the politicization of cooperative institutions as a consequence of interference by state governments. The central government is considering ways of reviving the cooperative credit system by recapitalizing the cooperative banks provided state governments agree to changes in the system of governance that would ensure professional management of cooperative banks without state government interference.
Agricultural Diversification:-
India’s future agricultural strategy must also be oriented to the need for agricultural diversification. India’s foodgrain production capacity has increased significantly over the years and there is evidence that household consumption patterns are changing away from foodgrain towards higher value crops such as vegetables, fruits, milk, eggs, etc. Future growth in agriculture must come from diversification into these non-food grain areas and this will pose a special challenge because marketing these perishable products is much more complicated than marketing food grains.
Horticulture development is currently constrained by poor marketing arrangements. The gap between prices received by the farmers and those paid by urban consumers is large, reflecting inefficient marketing arrangements. Horticultural produce is typically collected from farmers by market agents, who sell it organised markets established under the Agricultural Produce Marketing Acts. Unfortunately these markets are controlled by a few traders and operate on highly non transparent basis. Facilities for grading and handling are poor and methods of price discovery in the markets are nontransparent. Wastage is high owing to poor logistics and the absence of cold chains. The net result is much lower realisation by the farmer.
It is necessary to amend outdated laws restricting the establishment of markets to allow cooperatives and private entrepreneurs to set up modern markets with grading facilities, cold storages and transparent auction procedures. Half a dozen states have already amended their existing laws on agricultural marketing to allow such markets to be established and a dozen others are in the process of doing so. These changes are being resisted by those who control the existing structure but this opposition will weaken over time.
Contract farming is another innovation that has been introduced in many states and could accelerate diversification. India’s laws on agricultural land do not allow corporate bodies to purchase land and operate large-scale farms – a national policy to prevent displacement of a large number of small farmers. – but corporate buyers who know what is needed in export markets, in high end domestic markets or in agro-processing, can engage in contract farming to procure high quality produce. Buyers select areas suitable for the crops they are interested in and organize farmers to produce these crops under contract, while providing planting material of the right quality and technical supervisory. The process enables the farmer to eliminate marketing risk while allowing the corporate buyer to ensure quality supplies by selecting planting material, and provide access to scientific advice on disease and other types of stress.
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The development of agro-processing will be a spur agricultural diversification and the government is paying special attention to this area. At present, the proportion of India’s agricultural output that is processed is very small compared with that in most developing countries and the demand for processed food is bound to increase as incomes rise. There are several obstacles to the more rapid development of food processing. Taxation structures often discriminate against food processing because processed food is the first stage for application of indirect taxes and the absence of tax rebate on taxes paid on inputs means the effective tax on value added is very high. Another impediment is the reservation of certain categories of products for small scale production. The absence of a modern food processing law has meant that this sector is governed by multiple laws, making it difficult to operate effectively. An Integrated Food Processing Law has been introduced in Parliament to replace and the passage expected in the current year will make a qualitative difference to the operating environment.
Targeted anti-Poverty Programs:-
While efforts to increase agricultural productivity and thereby increase farm incomes and employment are a major instrument for poverty alleviation, they will need to be supplemented by special targeted program aimed at improving the welfare of vulnerable groups in rural areas. Employment programs in rural areas have been the most important of these anti poverty programs and India has a long history of such programs. Building on this tradition, a
Rural Employment Guarantee Act has been enacted which provides assurance of up to 100 days of employment at the minimum wage to each household in rural areas wishing to make use of it. The employment would be provided on projects chosen by the elected village councils and the guidelines specify that top priority should be given to irrigation and water management schemes. Unlike earlier employment programs, this scheme includes a guarantee in the sense that if employment cannot be provided, unemployment compensation will be provided at least 25 percent of the wage. Although the program open to each household, actual demand for employment is expected to be limited to households below the poverty line. The coverage of the Act will initially be implemented to 200 of the most backward districts (about one-third of the total districts in the country). Together with other special programs relating to provision of housing for the poor, old age insurance, and schemes for supporting self employment, this program will provide an element of social security that should help to reduce poverty.
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The Role of Public Investment:-
An important implication of the new agricultural strategy is that it involves a substantial increase in public investment. This is an area where past trends need to be reversed. Public investment in agriculture began to decline in the 1980s, but initially the decline was offset by the fact that private investment in agriculture was increasing. Since the mid 1990s private investment in agriculture has stagnated while public investment has continued to decline. It is essential to reverse these trends, especially for public investment in irrigation and water resource management. It is also essential to increase public investment in rural roads and rural electrification. Success in these areas will stimulate private investment and contribute to a revival of growth momentum in agriculture.
NATIONAL AGRICULTURAL POLICY 2000
INTRODUCTION :-The Government of India announced a National Agricultural Policy on 28th July, 2000, with the objectives of establishing an appropriate and ideal environment to achieve a higher growth rate. The policy seeks to tap the vast potential of Indian agriculture, strengthen rural infrastructure, ensure food and nutrition to the country’s billion people, accelerate the growth of agro-based industries by ensuring regular supply of raw materials, create employment in rural areas and secure fair remuneration to the farming community. Thus, the NAP aims to achieve the following objectives :
1) A growth rate of over 4% per annum in agriculture.2) Efficient use of resources that conserves our soil, water and biodiversity.3) Growth with equity, i.e. growth which is wide spread across regions and farmers.4) Growth that is demand driven and caters to domestic market.5) Maximize benefits from exports of agricultural goods.6) Encourage investments in agriculture – both public & private.7) Growth that is sustainable technologically, environmentally and economically.
FEATURES OF NAP 2000 :-
1) Sustainable Agriculture : To promote sustainable agriculture, the following measures are suggested :(a) To reduce the pressure of population on land.(b) To control unnecessary diversion of land for non-agricultural uses.(c) To use wastelands for agriculture and afforestation.
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(d) To increase cropping intensity through multiple cropping and inter-cropping.(e) To follow a long term policy of rain fed agriculture through water shed approach.(f) To rationalize the use of surface and groundwater and also to popularize drip and sprinkler
irrigation.(g) To involve farmers and labourers in development of pastures, forestry programmes.
2) Food & Nutritional Security : Special efforts will be made to raise productivity of crops to meet the demand for food. New crop varieties with higher nutritional values will be given special attention.
A major thrust will be given to development of rain fed irrigation, horticulture, floriculture, roots & tubers, plantation crops, aromatic & medicinal plants, bee keeping and sericulture.
Development of animal husbandry, poultry, dairying and aquaculture will receive high priority. Efforts to increase animal protein availability in food basket will be increased.
Cultivation of fodder crops and fodder trees will be encouraged to meet the growing need for feed and fodder requirements.
3) Generation & Transfer of Technology :The Government will promote application of biotechnology, pre and post harvest technologies, energy saving technology and technology for environment protection. Private sector investment is also to be encouraged in agricultural research, human resource development and post harvest management and marketing.
4) Credit Facilities : The policy provides for easy availability of credit to the sector. It seeks progressive institutionalization of rural and farm credit to ensure timely and adequate credit to farmers. Credit should be made available on the pledge of farmer’s produce.
5) Incentives For Agriculture :The government will make efforts to get better prices for agricultural raw materials. At the same time the farm sector machines and equipments will be made available at lower rates. The taxes on food grains and other crops will be removed. The Agriculture Minister promised to keep agriculture outside the purview of taxes. The present regime of agriculture subsidies will be continued. The excise duty on equipments, farm machinery and fertilizers will be rationalized.
6) Investment In Agriculture : Public investment will be stepped up for narrowing regional imbalances and accelerating development of agricultural infrastructure.
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7) Land Reforms :(a) Consolidation of holdings all over the country.(b) Redistribution of surplus lands and waste lands among the landless farmers and
unemployed youth.(c) Speeding up tenancy reforms to recognize the rights of tenants and share croppers.(d) Updating and improvement of land records and issue of land pass books to farmers.
LIMITATIONS OF NAP 2000 :-
1) Impossible Target of Growth Rate : It must be emphasized that the aim of achieving a rate of 4% for a period of 20 years is almost impossible. During the 1990s the growth rate of agricultural production averaged 2.1% and that of food grains production, 1.8% per annum. This is almost equal to the rate of growth of population in the country.
2) Fails to Identify States : The policy talks of growth with equity covering all regions. But it has failed to identify the states which have lagged behind in the utilization of their agricultural potential.
3) Private Sector Involvement : There is no doubt that private investment in the form of tube wells, agricultural implements, human resource development are very helpful, but the small farmers who constitute the bulk of Indian farming community are unable to undertake private investment in a major way. They need the support of public investment in the form of water shed facilities, irrigation facilities, storage and warehousing etc.
4) Problems of Contract Farming : The policy seeks to involve the corporate sector through contract farming by land leasing arrangements. This will definitely increase production but will result in contraction of employment.
5) Lack of Machinery for Implementation : The policy has not outlined any machinery for the implementation of the various suggestions. Agriculture is a state subject and the role of state governments is very critical in implementing the various projects and programmes. If the centre intends the states to implement it, it must provide for schemes of sharing programmes between the centre and the state governments.
To sum up, the policy is very appropriate in several aspects but it is also wanting in some important ways.
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CRITICAL EVALUATION OF NAP 2000 :-
1) Laudable Aims : The policy with a time frame of two decades has set before itself tasks that are necessary to be achieved. The aims of a high rate of growth of agriculture (over 4%), a strengthened infrastructure, large value additions in production, faster growth of agro business, more employment, better standard of living for cultivators and facing challenges of globalization and liberalization are very commendable.
2) Reform Oriented : The policy provides for the much needed reforms in the agricultural sector. Removal of controls and regulations and restriction on the movement of agricultural goods are good signs. The private sector participation in the agricultural sector can also help in improving the conditions. They can bring in the much needed capital for investment in research and technology, skill formation and extension services like agricultural clinics.
3) Very Comprehensive : The policy covers almost all the aspects which need to be attended. It covers farming, animal husbandry and agro business activities. The crucial aspects of better credit and speedier land reforms have been covered.
New Agriculture Policy
Agriculture is a way of life, a tradition, which, for centuries, has shaped the thought, the outlook, the culture and the economic life of the people of India. Agriculture, therefore, is and will continue to be central to all strategies for planned socio-economic development of the country. Rapid growth of agriculture is essential not only to achieve self-reliance at national level but also for household food security and to bring about equity in distribution of income and wealth resulting in rapid reduction in poverty levels.
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Indian agriculture has, since Independence, made rapid strides. In taking the annual foodgrains production from 51 million tonnes in early fifties to 206 million tonnes at the turn of the century, it has contributed significantly in achieving self-sufficiency in food and in avoiding food shortages.
Over 200 million Indian farmers and farm workers have been the backbone of India’s agriculture. Despite having achieved national food security the well being of the farming community continues to be a matter of grave concern for planners and policy makers. The establishment of an agrarian economy which ensures food and nutrition to India’s billion people, rawmaterials for its expanding industrial base and surpluses for exports, and a fair and equitable reward system for the farming community for the services they provide to the society, will be the mainstay of reforms in the agriculture sector.
The National Policy on Agriculture seeks to actualise the vast untapped growth potential of Indian agriculture, strengthen rural infrastructure to support faster agricultural development, promote value addition, accelerate the growth of agro business, create employment in rural areas, secure a fair standard of living for the farmers and agricultural workers and their families, discourage migration to urban areas and face the challenges arising out of economic liberalization and globalisation. Over the next two decades, it aims to attain:
The salient features of the new agricultural policy are:
Over 4 per cent annual growth rate aimed over next two decades.. Greater private sector participation through contract farming. Price protection for farmers. National agricultural insurance scheme to be launched. Dismantling of restrictions on movement of agricultural commodities throughout the country. Rational utilization of country's water resources for optimum use of irrigation potential. High priority to development of animal husbandry, poultry, dairy and aquaculture. Capital inflow and assured markets for crop production. Exemption from payment of capital gains tax on compulsory acquisition of agricultural land. Minimize fluctuations in commodity prices. Continuous monitoring of international prices. Plant varieties to be protected through legislation. Adequate and timely supply of quality inputs to farmers. High priority to rural electrification. Setting up of agro-processing units and creation of off-farm employment in rural areas.
Sustainable Agriculture
The policy will seek to promote technically sound, economically viable, environmentally non-degrading, and socially acceptable use of country’s natural resources – land, water and genetic endowment to promote sustainable development of agriculture. Measures will be taken to contain biotic pressures on land and to control indiscriminate diversion of agricultural lands for non-agricultural purposes. The unutilized wastelands will be put to use for agriculture and afforestation. Particular attention will be given for increasing cropping intensity through multiple-cropping and inter-cropping.
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Rational utilization and conservation of the country’s abundant water resources will be promoted. Conjunctive use of surface and ground water will receive highest priority. Special attention will be focused on water quality and the problem of receding ground-water levels in certain areas as a result of over-exploitation of underground aquifers. Proper on-farm management of water resources for the optimum use of irrigation potential will be promoted.
Erosion and narrowing of the base of India’s plant and animal genetic resources in the last few decades has been affecting the food security of the country. Survey and evaluation of genetic resources and safe conservation of both indigenous and exogenously introduced genetic variability in crop plants, animals and their wild relatives will receive particular attention. The use of bio-technologies will be promoted for evolving plants which consume less water, are drought resistant, pest resistant, contain more nutrition, give higher yields and are environmentally safe. Conservation of bio-resources through their ex situ preservation in Gene Banks, as also in situ conservation in their natural habitats through bio-diversity parks, etc., will receive a high priority to prevent their extinction. Specificmeasures will also be taken to conserve indigenous breeds facing extinction. There will be a time bound programme to list, catalogue and classify country’s vast agro bio-diversity.
Sensitization of the farming community with the environmental concerns will receive high priority. Balanced and conjunctive use of bio-mass, organic and inorganic fertilizers and controlled use of agro chemicals through integrated nutrients and pest management (INM & IPM) will be promoted to achieve the sustainable increases in agricultural production. A nation-wide programme for utilization of rural and urban garbage, farm residues and organic waste for organic matter repletion and pollution control will be worked out.
Agro-forestry and social forestry are prime requisites for maintenance of ecological balance and augmentation of bio-mass production in agricultural systems. Agro-forestry will receive a major thrust for efficient nutrient cycling, nitrogen fixation, organic matter addition and for improving drainage. Farmers will be encouraged to take up farm/agro-forestry for higher income generation by evolving technology, extension and credit support packages and removing constraints to development of agro and farm forestry. Involvement of farmers and landless labourers will be sought in the development of pastures/forestry programmes on public wastelands by giving financial incentives and entitlements to the usufructs of trees and pastures.
The history and traditional knowledge of agriculture, particularly of tribal communities, relating to organic farming and preservation and processing of food for nutritional and medicinal purposes is one of the oldest in the world. Concerted efforts will be made to pool, distil and evaluate traditional practices, knowledge and wisdom and to harness them for sustainable agricultural growth.
Food and Nutritional Security
Special efforts will be made to raise the productivity and production of crops to meet the increasing demand for food generated by unabated demographic pressures and raw materials for expanding agro-based industries. A regionally differentiated strategy will be pursued, taking into account the agronomic, climatic and environmental conditions to realize the full growth potential of every region. Special attention will be given to development of new crop varieties, particularly of food crops, with higher nutritional value through adoption of bio-technology particularly genetic modification, while addressing bio-safety concerns.
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A major thrust will be given to development of rainfed and irrigated horticulture, floriculture, roots and tubers, plantation crops, aromatic and medicinal plants, bee-keeping and sericulture, for augmenting food supply, exports and generating employment in rural areas. Availability of hybrid seeds and disease-free planting materials of improved varieties, supported by a network of regional nurseries, tissue culture laboratories, seed farms will be promoted to support systematic development of horticulture having emphasis on increased production, post-harvest management, precision farming, bio-control of pests and quality regulation mechanism and exports.
Animal husbandry and fisheries also generate wealth and employment in agriculture sector. Development of animal husbandry, poultry, dairying and aqua-culture will receive a high priority in the efforts for diversifying agriculture, increasing animal protein availability in the food basket and for generating exportable surpluses. A national livestock breeding strategy will be evolved to meet the requirements of milk, meat, egg and livestock products and to enhance the role of draught animals as a source of energy for farming operations and transport. Major thrust will be on genetic upgradation of indigenous/native cattle and buffaloes using proven semen and high quality pedigreed bulls and by expanding artificial insemination network to provide services at the farmer’s doorstep.
Generation and dissemination of appropriate technologies in the field of animal production as also health care to enhance production and productivity levels will be given greater attention. Cultivation of fodder crops and fodder trees will be encouraged to meet the feed and fodder requirements and to improve animal nutrition and welfare. Priority will also be given to improve the processing, marketing and transport facilities, with emphasis on modernization of abattoirs, carcass utilization and value addition thereon. Since animal disease eradication and quarantine is critical to exports, animal health system will be strengthened and disease-free zones created. The involvement of cooperatives and private sector will be encouraged for development of animal husbandry, poultry and dairy. Incentives for livestock and fisheries production activities will be brought at par with incentives for crop production.
An integrated approach to marine and inland fisheries, designed to promote sustainable aquaculture practices, will be adopted. Biotechnological application in the field of genetics and breeding, harmonal applications, immunology and disease control will receive particular attention for increased aquaculture production. Development of sustainable technologies for fin and shell fish culture as also pearl-culture, their yield optimization, harvest and post-harvest operations, mechanization of fishing boats, strengthening of infrastructure for production of fish seed, berthing and landing facilities for fishing vessels and development of marketing infrastructure will be accorded high priority. Deep sea fishing industry will be developed to take advantage of the vast potential of country’s exclusive economic zone.
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Generation and Transfer of Technology
A very high priority will be accorded to evolving new location-specific and economically viable improved varieties of agricultural and horticultural crops, livestock species and aquaculture as also conservation and judicious use of germplasm and other bio-diversity resources. The regionalization of agricultural research, based on identified agro-climatic zones, will be accorded high priority. Application of frontier sciences like bio-technology, remote sensing technologies, pre and post-harvest technologies, energy saving technologies, technology for environmental protection through national research system as well as proprietary research will be encouraged. The endeavour will be to build a well organized, efficient and result-oriented agriculture research and education system to introduce technological change in Indian agriculture. Upgradation of agricultural education and its orientation towards uniformity in education standards, women empowerment, user-orientation, vocationalization and promotion of excellence will be the hallmark of the new policy.
The research and extension linkages will be strengthened to improve quality and effectiveness of research and extension system. The extension system will be broad-based and revitalized. Innovative and decentralized institutional changes will be introduced to make the extension system farmer-responsible and farmer-accountable. Role of Krishi Vigyan Kendras (KVKs), Non-Governmental Organizations (NGOs), Farmers Organizations, Cooperatives, corporate sector and para-technicians in agricultural extension will be encouraged for organizing demand-driven production systems. Development of human resources through capacity building and skill upgradation of public extension functionaries and other extension functionaries will be accorded a high priority. The Government will endeavour to move towards a regime of financial sustainability of extension services through effecting in a phased manner, a more realistic cost recovery of extension services and inputs, while simultaneously safeguarding the interests of the poor and the vulnerable groups.
Mainstreaming gender concerns in agriculture will receive particular attention. Appropriate structural, functional and institutional measures will be initiated to empower women and build their capabilities and improve their access to inputs, technology and other farming resources.
Inputs Management
Adequate and timely supply of quality inputs such as seeds, fertilizers, plant protection chemicals, bio-pesticides, agricultural machinery and credit at reasonable rates to farmers will be the endeavour of the Government. Soil testing and quality testing of fertilisers and seeds will be ensured and supply of spurious inputs will be checked. Balanced and optimum use of fertilizers will be promoted together with use of organic manures and bio-fertilizers to optimize the efficiency of nutrient use.
Development, production and distribution of improved varieties of seeds and planting materials and strengthening and expansion of seed and plant certification system with private sector participation will receive a high priority. A National Seed Grid will be established to ensure supply of seeds especially to areas affected by natural calamities. The National Seeds Corporation (NSC) and State Farms Corporation of India (SFCI) will be restructured for efficient utilization of investment and manpower.
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Protection to plant varieties through a sui generis legislation, will be granted to encourage research and breeding of new varieties particularly in the private sector in line with India’s obligations under TRIPS Agreement. The farmers will, however, be allowed their traditional rights to save, use, exchange, share and sell their farm saved seeds except as branded seeds of protected varieties for commercial purpose. The interests of the researchers will also be safeguarded in carrying out research on proprietary varieties to develop new varieties.
Integrated pest management and use of biotic agents in order to minimize the indiscriminate and injudicious use of chemical pesticides will be the cardinal principle covering plant protection. Selective and eco-friendly farm mechanization through appropriate technology will be promoted, with special reference to rainfed farming to reduce arduous work and to make agriculture efficient and competitive as also to increase crop productivity.
Incentives for Agriculture
The Government will endeavour to create a favourable economic environment for increasing capital formation and farmer’s own investments by removal of distortions in the incentive regime for agriculture, improving the terms of trade with manufacturing sectors and bringing about external and domestic market reforms backed by rationalization of domestic tax structure. It will seek to bestow on the agriculture sector in as many respects as possible benefits similar to those obtaining in the manufacturing sector, such as easy availability of credit and other inputs, and infrastructure facilities for development of agri-business industries and development of effective delivery systems and freed movement of agro produce.
Consequent upon dismantling of Quantitative Restrictions on imports as per WTO Agreement on Agriculture, commodity-wise strategies and arrangements for protecting the grower from adverse impact of undue price fluctuations in world markets and for promoting exports will be formulated. Apart from price competition, other aspects of marketing such as quality, choice, health and bio-safety will be promoted. Exports of horticultural produce and marine products will receive particular emphasis. A two-fold long term strategy of diversification of agricultural produce and value addition enabling the production system to respond to external environment and creating export demand for the commodities produced in the country will be evolved with a view to providing the farmers incremental income from export earnings. A favourable economic environment and supportive public managementsystem will be created for promotion of agricultural exports. Quarantine, both of exports and imports, will be given particular attention so that Indian agriculture is protected from the ingress of exotic pests and diseases.
In order to protect the interest of farmers in context of removal of Quantitative Restrictions, continuous monitoring of international prices will be undertaken and appropriate tariffs protection will be provided. Import duties on manufactured commodities used in agriculture will be rationalized. The domestic agricultural market will be liberalized and all controls and regulations hindering increase in farmers’ income will be reviewed and abolished to ensure that agriculturists receive prices commensurate with their efforts, investment. Restrictions on the movement of agricultural commodities throughout the country will be progressively dismantled.
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The structure of taxes on foodgrains and other commercial crops will be reviewed and rationalized. Similarly, the excise duty on materials such as farm machinery and implements, fertilizers, etc., used as inputs in agricultural production, post harvest storage and processing will be reviewed. Appropriate measures will be adopted to ensure that agriculturists by and large remain outside the regulatory and tax collection systems. Farmers will be exempted from payment of capital gains tax on compulsory acquisition of agricultural land.
Investments in Agriculture
The agriculture sector has been starved of capital. There has been a decline in the public sector investment in the agriculture sector. Public investment for narrowing regional imbalances, accelerating development of supportive infrastructure for agriculture and rural development particularly rural connectivity will be stepped up. A time-bound strategy for rationalisation and transparent pricing of inputs will be formulated to encourage judicious input use and to generate resources for agriculture. Input subsidy reforms will be pursued as a combination of price and institutional reforms to cut down costs of these inputs for agriculture. Resource allocation regime will be reviewed with a view to rechannelizing the available resources from support measures towards assets formation in rural sector.
A conducive climate will be created through a favourable price and trade regime to promote farmers’ own investments as also investments by industries producing inputs for agriculture and agro-based industries. Private sector investments in agriculture will also be encouraged more particularly in areas like agricultural research, human resource development, post-harvest management and marketing.
Rural electrification will be given a high priority as the prime mover for agricultural development. The quality and availability of electricity supply will be improved and the demand of the agriculture sector will be met adequately in a reliable and cost effective manner. The use of new and renewable sources of energy for irrigation and other agricultural purposes will also be encouraged.
Bridging the gap between irrigation potential created and utilized, completion of all on-going projects, restoration and modernization of irrigation infrastructure including drainage, evolving and implementing an integrated plan of augmentation and management of national water resources will receive special attention for augmenting the availability and use of irrigation water.
Emphasis will be laid on development of marketing infrastructure and techniques of preservation, storage and transportation with a view to reducing post-harvest losses and ensuring a better return to the grower. The weekly periodic markets under the direct control of Panchayat Raj institutions will be upgraded and strengthened. Direct marketing and pledge financing will be promoted. Producers markets on the lines of Ryatu Bazars will be encouraged throughout the width and breadth of the country. Storage facilities for different kinds of agriculturalproducts will be created in the production areas or nearby places particularly in the rural areas so that the farmers can transport their produce to these places immediately after harvest in shortest possible time. The establishment of cold chains, provision of pre-cooling facilities to farmers as a service and cold storage in the terminal markets and improving the retail marketing arrangements in urban areas, will be given priority. Upgradation and dissemination of market intelligence will receive particular attention.
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Setting up of agro-processing units in the producing areas to reduce wastage, especially of horticultural produce, increased value addition and creation of off-farm employment in rural areas will be encouraged. Collaboration between the producer cooperatives and the corporate sector will be encouraged to promote agro-processing industry. An interactive coupling between technology, economy, environment and society will be promoted for speedy development of food and agro-processing industries and building up a substantial base for production of value added agro-products for domestic and export markets with a strong emphasis on food safety and quality. The Small Farmers Agro Business Consortium (SFAC) will be energized to cater to the needs of farmer entrepreneurs and promote public and private investments in agri-business.
Institutional Structure
Indian agriculture is characterized by pre-dominance of small and marginal farmers. Institutional reforms will be so pursued as to channelize their energies for achieving greater productivity and production. The approach to rural development and land reforms will focus on the following areas:
Consolidation of holdings all over the country on the pattern of north-western States; Redistribution of ceiling surplus lands and waste lands among the landless farmers,
unemployed youth with initial start-up capital; Tenancy reforms to recognize the rights of the tenants and share croppers; Development of lease markets for increasing the size of holdings by making legal provisions
for giving private lands on lease for cultivation and agri-business; Updating and improvement of land records, computerization and issue of land pass-books to
the farmers, and Recognition of women’s rights in land.
The rural poor will be increasingly involved in the implementation of land reforms with the help of Panchayati Raj Institutions, Voluntary Groups, Social Activists and Community Leaders.
Private sector participation will be promoted through contract farming and land leasing arrangements to allow accelerated technology transfer, capital inflow and assured markets for crop production, especially of oilseeds, cotton and horticultural crops.
Progressive institutionalization of rural and farm credit will be continued for providing timely and adequate credit to farmers. The rural credit institutions will be geared to promote savings, investments and risk management. Particular attention will be paid to removal of distortions in the priority sector lending by commercial banks for agriculture and rural sectors. Special measures will be taken for revamping of cooperatives to remove institutional and financial weaknesses and evolving simplified procedure for sanction and disbursement of agriculture credit. The endeavour will be to ensure distribution equity in the disbursement of credit. Micro-credit will be promoted as an effective tool for alleviating poverty. Self Help Group – Bank linkage system, suited to Indian rural sector, will be developed as a supplementary mechanism for bringing the rural poor into the formal banking system, thereby improving banks outreach and the credit flows to the poor in an effective and sustainable manner.
The basic support to agriculture has been provided by cooperative sector assiduously built over the years. The Government will provide active support for promotion of cooperative-form of enterprise and ensure greater autonomy and operational freedom to them to improve their functioning. The thrust will be on:
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Structural reforms for promoting greater efficiency and viability by freeing them from excessive bureaucratic control and political interference;
Creation of infrastructure and human resource development; Improvement in financial viability and organizational sustainability of cooperatives; Democratisation of management and increased professionalism in their operations, and Creating a viable inter-face with other grass-root Organizations.
The Legislative and regulatory framework will be appropriately amended and strengthened to achieve these objectives.
Risk Management
Despite technological and economic advancements, the condition of farmers continues to be unstable due to natural calamities and price fluctuations. National Agriculture Insurance Scheme covering all farmers and all crops throughout the country with built-in provisions for insulating farmers from financial distress caused by natural disasters and making agriculture financially viable will be made more farmer-specific and effective. Endeavour will be made to provide a package insurance policy for farmers, right from sowing of crops to post-harvest operations, including market fluctuations in the prices of agricultural produce.
In order to reduce risk in and impart greater resilience to Indian agriculture against droughts and floods, efforts will be made for achieving greater flood-proofing of flood prone agriculture and drought-proofing of rainfed agriculture for protecting farmers from vagaries of nature. For this purpose, contingency agriculture planning, development of drought and flood resistant crop varieties, watershed development programmes, drought prone areas and desert development programmes and rural infrastructure development programmes, will receive particular attention.
The Central Government will continue to discharge its responsibility to ensure remunerative prices for agricultural produce through announcement of Minimum Support Prices policy for major agricultural commodities. The food, nutrition and other domestic and exports requirements of the country will be kept in view while determining the support prices of different commodities. The price structure and trade mechanism will be continuously reviewed to ensure a favourable economic environment for the agriculture sector and to bring about an equitable balance between rural and urban incomes. The methodology used by the Commission on Agricultural Costs and Prices (CACP) in arriving at estimates of cost of production will be periodically reviewed. The price structure of both inputs and outputs will be monitored to ensure higher returns to the farmers and bring about cost effectiveness throughout the economy. Domestic market prices will be closely monitored to prevent distress sales by farmers. Public and cooperative agencies undertaking marketing operations, will be strengthened.
The Government will enlarge the coverage of futures markets to minimize the wide fluctuations in commodity prices as also for hedging their risks. The endeavour will be to cover all important agricultural products under futures trading in course of time.
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Management Reforms
Effective implementation of policy initiatives will call for comprehensive reforms in the management of agriculture by Central and State Governments. Central Government will supplement/complement the State Governments’ through regionally differentiated Work Plans, comprising crop/area/target group efforts specific interventions, formulated in an inter-active mode and implemented in a spirit of partnership with States. Central Government will move away from schematic approach to Macro-Management mode and assume a role of advocacy, articulation and facilitation to help States in their efforts towards achieving accelerated agricultural development.
The Government will focus on quality aspects at all stages of farm operations from sowing to primary processing. The quality of inputs and other support services to farmers will be improved. Quality consciousness amongst farmers and agro-processors will be created. Grading and standardization of agricultural products will be promoted for export enhancement. Application of science and technology in agriculture will be promoted through a regular system of interface between S&T institutions and users/potential users, to make the sector globally competitive.
The database for agriculture sector will be strengthened to ensure greater reliability of estimates and forecasting which will help in the process of planning and policy making. Efforts will be made to significantly improve and harness latest remote sensing and information technology to capture data, collate it, add value and disseminate it to appropriate destinations for managing the risk and in accelerating the growth process. The objective will be to engage in a meaningful continuous dialogue with the external environment in the changing scenario and to have on-line and real time system of ‘Agriculture on-line’ capacity to analyze signals emanating from the farms and markets for the benefit of farmers.
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Agriculture Strategy
Indian agriculture is constrained by weak linkages between agricultural training and extension, crop
production, credit, processing, marketing, and insurance. The report presents an integrated strategy
for bringing together all these elements in a synergistic manner by
Establishment of village-based Farm Schools to demonstrate and impart advanced technology to
farmers on their own lands.
Establishment of a network of sophisticated soil test laboratories capable of high volume precision
analysis of 13 essential plant nutrients coupled with development of expert computer systems to
interpret soil test results and recommend individualized packages of cultivation practices for each
crop, location and soil profile.
Establishment of Rural Information Centers to act as a medium for transmission of soil test data and
recommended practices, access to current input and market prices, and other essential information
for upgrading agriculture.
Policy and legal measures to encourage contract farming arrangements between agri-business firms
and self-help groups in order to increase small farmers' access to advanced technology, quality
inputs, bank credit, processing, marketing and crop insurance.
Measures to strengthen farm credit and insurance programmes, including creation of linkages
between crop insurance, crop loans, and farm school training to encourage farmers who seek credit
and crop insurance to adopt improved cultivation practices.
5. In order to ensure ready markets for the crops that are produced, the report focuses on the
potential for linking crop production with huge untapped markets and specific agro-industries,
including energy plantations to fuel biomass power plants, bio-diesel from jathropa, ethanol from
sugarcane and sugar-beet, edible oil from Paradise Tree, horticulture crops and cotton.
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6. The report argues that the India labour force suffers from a severe shortage of employable skills at
all levels and that intensive development of vocational skills will act as a powerful stimulus for
employment and self-employment generation. In addition to Farm Schools to impart advanced skills
in production agriculture, the report recommends establishing a network of government-certified, rural
vocational institutes providing training and certification in hundreds of vocational skills not covered by
the ITIs. In order to offset the shortage of qualified trainers and the costs of replicating institutions
throughout the country, the report advocates creation of a national network of 'Job Shops' linked to
the Rural Information Centres and offering televised multimedia training programmes and
computerized vocational training programmes.
7. The report recommends that the National Commission on Farmers arrange for employment
surveys to provide accurate information on the growing demand for different occupational categories,
the natural rate of employment generation by category and skill level, and other issues required to
promote full employment in the country.
The first Prime Minister of India, Shri Jawaharlal Nehru had said that “Everything else can wait but agriculture cannot wait”. Agriculture continues to be the lifeline of the Indian economy and central to our economic development in the long term. Indeed, the last six decades have seen the dramatic transformation of Indian agriculture from shortages to surpluses. This has happened simultaneously with a decrease in the share of agriculture in the GDP from over 50 per cent at the time of independence to around 15 per cent today.
The nation has achieved food grain self sufficiency by enhancing production from around 50 million tonnes in 1950 to over 230 million tonnes today. This was achieved through the Green Revolution that brought about through strong political will and environment of favourable infrastructure, new technology induction, policy support and energized agricultural extension system.
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Yet, recent trends of the last fifteen years are a cause of concern. After improving steadily from 1980 to 1997, the terms of trade turned against agriculture since 1999. The Eleventh Five Year Plan documents the problems as:
Ø A deceleration in agricultural growth and widening economic disparities between irrigated and rain-fed areas;
Ø Increased vulnerability to world commodity price volatility following trade liberalization;
Ø Uneven and slow development of technology, and inefficient use of available technology and inputs;
Ø Lack of adequate incentives and appropriate institutions;
Ø Degradation of available natural resource base, including decline in ground water table with adverse impact on small farmers;
Ø Increased non-agricultural demand for land and water due to urbanization and economic growth
Ø Aggravated social distress due to cumulative impact of all these factors leading to upsurge in farmer suicides.
To counter this trend, the Eleventh Five Year Plan has suggested measures for a “more efficient, sustainable and inclusive” growth in Indian agriculture that addresses the ‘technology fatigue’, sustainability question and the ‘yield gap’, with a sharp focus on rain-fed areas and 85 per cent of farmers who are small and marginal farmers, and increasingly, women. It also recommended increasing systems support while rationalizing subsidies, encouraging diversification while protecting against food security concerns, and fostering a group approach to ensure that the poor are able to access land, credit, skills and scale.
The Plan targeted a 4 per cent growth per annum in GDP from Agriculture and Allied Sectors, in the knowledge that agriculture-related GDP growth is twice as effective in alleviating poverty as compared to GDP growth from other sectors. The Government of India had also announced a “New Deal to Rural India” focused on reversing the declining trend in public investment in agriculture with a special emphasis on irrigation, waste-land development, agricultural research and extension.
The Mid Term Appraisal of the Eleventh Five Year Plan has some disturbing facts and conclusions:
1. It notes that “it would be safer to assume that agricultural growth in the Eleventh Plan may fall short of the 4 per cent per annum target” in view of the severe drought in 2009.
2. Not all aspects of the Plan strategy are doing well and much more needs to be done on the supply side. The current high GDP growth is increasing demand for agricultural products and putting pressure on food prices, especially in the ‘hottest and driest decade’.
3. Farm income variability rose after agricultural trade was opened up under WTO since this ended the negative correlation between output and prices, and existing price stabilization measures were inadequate to cope with volatile global prices of agri-commodities.
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These results must be seen in a larger socio-economic context that is characterized by the following:
First, according to FAO, over 250 million Indians are chronically undernourished, constituting 22 per cent of our population. This is anomalous looking at record food grain production in recent years. What is becoming clear is that food security and self-sufficiency should be measured not just in terms of production, but in terms of access to, and actual consumption of, food grains.
Second, agriculture provides employment to around 52 per cent of our workforce. Around half of all those engaged in agriculture are illiterate and a miniscule 5 per cent of them have completed higher secondary education. It thus has a disproportionately important role in achieving a higher and inclusive GDP growth, food security, employment expansion and poverty alleviation.
Third, it is now well recognized that the Indian growth story is driven by the strong, entrepreneurial and innovative private sector. Private sector investment in agriculture in the last decade in real terms has only increased by 48 per cent, in comparison to public sector investment which has witnessed 180 percent increase. As the Economic Survey 2009-10 notes: “Consistent decline in the share of private sector investment in the agriculture sector is a matter of concern.”
The broad policy and implementation challenges that we need to face to transform Indian agriculture are well etched. State Agricultural Universities have an important role to play in agricultural research. The Eleventh Plan speaks of these State Universities as “the key to regionally relevant research and for generating quality human resources”. It calls upon state governments to substantially fund their research expenses, in addition to salary and establishment costs, to bring their work in line with local agricultural concerns and needs.
Orissa is blessed with a diverse range of agro-climatic conditions, flora and fauna. At the same time, the state is also vulnerable to natural calamities such as drought, floods and cyclones, which have had an adverse impact on agricultural productivity. The role of this University in developing viable adaptation and mitigation measures to deal with this and to capitalize on the rich bio-diversity is thus of prime importance.
University’s role in the areas of crop improvement, crop production, natural resource management, crop protection, post-harvest technology and extension education would always be remembered. It is particularly notable that it has developed 127 high yielding crop varieties including 50 rice varieties suitable for different agro-ecological situationsof the State. It has also developed technologies related to livestock, fish, mechanized farming and management of land and water.
Agriculture Sector Policy for the 11 th Plan
The transition towards faster and more inclusive growth calls for significant new initiatives in many sectors. In some we need to build on policies that are working well but need further strengthening in critical areas to build the additional momentum needed. In others we need a more comprehensive restructuring since it is evident that business as usual will not do.
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Accelerating Agricultural Growth:-
The crisis of stagnation in agriculture needs urgent attention. This sector still provides livelihood to nearly 60 percent of our people and remains vital for food security. To ensure a better life for women and men engaged in agriculture, it is necessary to double the growth rate achieved in 10th plan and put agriculture on a growth path of around 4 percent. To do this and at the same time maintain prices and profitability, a corresponding increase in demand for agricultural output matched with the supply side response based on productivity improvements is required. As pointed out by the National Commission on Farmers, we need a new deal that rebuilds hope about farming. Apart from larger public resources that this requires, state level policy makers need to identify critical areas of support and reform that will instill confidence in farmers to undertake more investment.
Increasing Demand for Agricultural Output:-
In recent years our farmers have been hesitant in expanding production because (a) per capita domestic food consumption has stagnated in recent years and (b) world prices turned weak for many crops. Consequently agricultural product prices received have failed to keep pace with overall inflation and production costs, thus reducing farm profitability. Various models suggest that even with 8 to 9 percent GDP growth a 4% growth in agriculture will not be sustainable from the demand side unless agricultural exports pick up or consumption by the poor grows beyond what is likely as a result of GDP growth alone.
This means that, although more rapid agricultural growth is the key to more inclusive growth, this in itself requires that other initiatives be in place to ensure that the poor are able to improve their nutrition and contribute to growth of agricultural demand. The recently introduced National Rural Employment Guarantee Programme, will help increase income of the poor directly and reduce expenses incurred on distress migration. The emphasis on expanding access and improving quality of public sector schools and health facilities may also help by reducing the need to pay privately for these services. Improved rural connectivity envisaged through the Bharat Nirmanprogramme can also trigger growth of an integrated national market where rural people are more able to meet each others’ demand. In its sheer size and scope, the broad based expansion of such rural-rural trade is likely to be much more important in the initial years than other efforts to create demand support such as promoting agricultural exports or support to domestic processing for agricultural diversification. Over time, importance of diversification is likely to grow as infrastructure is put in place, with added advantage of being able to attract private corporate investment into rural areas.
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The demand side also requires renewed focus on the Minimum Support Price (MSP) policy and the need for a supportive tariff policy to deal with import price variability. Implementation of MSP policy is very weak except for a few crops in a few regions, and has often failed when farmers were most in need. There have also been too many cases in recent years when world prices have declined very sharply and compensating changes in tariffs have been unduly delayed. All this has lent credence to the view that WTO and globalization are against farmers’ interests and that the government is no longer committed to supporting farm prices though, on the contrary, our tariff bindings in WTO are in most cases adequate to prevent prices falling below costs of production through WTO- compatible interventions. We need to consider ways of strengthening the MSP policy especially ensuring coverage of relevant crops and of new areas where production increases are likely to take place. We also need to evolve clearer understanding of how best to adjust import tariff to insulate farmers from collapses in international prices. This may require an internal mechanism that includes the Commission for Agricultural Costs and Prices for signaling automatic tariff revision. This will buoy farmer confidence without precluding longer term reform.
Strategy to Increase Supply:-
The supply side challenge of doubling agricultural growth is even more formidable. No dramatic technological breakthrough comparable to the first green revolution is presently in sight. And yet the target requires that we achieve higher agricultural growth than has ever been attained in the past, starting at a point where agricultural price cost ratios are lower than in earlier periods of relatively rapid growth. Moreover, the world oil price scenario could turn price-cost ratio further adverse since higher oil prices not only increase costs of production but also push farm output prices further below consumer prices by increasing transport margins.
Sustained long-run growth depends critically upon technological progress and steps are therefore needed to strengthen research in agriculture. However, research has long time legs and it must be recognized that most of the gains realizable during the 11 th plan will have to come by exploiting the potential of existing technology. There is enough scope for increasing productivity using existing technology, particularly since Bharat Nirman should ease infrastructure constraints significantly.
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Most of the growth required in cereals, pulses, and oilseeds is possible merely by narrowing the gap between actual yields and those obtained in trials. But further region-wise, crop-wise analysis is necessary to identify the specific constraints and policy distortions that have resulted in these yield gaps. Development of appropriate strategies for different agro-climatic zones requires a strong data base with regard to soil characteristics, soil health, water availability, weather parameters etc. Improvement in land and water management, much enhanced extension support, quality planting material, and better animal breeds etc., are also required to overcome the yield gaps. Supply or quality problems with fertilizers and pesticides, or higher costs of inputs requires that cannot be met due to insufficient credit may also have to be addressed. In effect, it is necessary to revive and improve the whole range ofsystems support that a small farm economy requires, but which appears to have deteriorated because State governments have cut-back in the course of fiscal consolidation. There must be informed advice on farm practices and recommended inputs, particularly seeds, must be easily available and affordable. The quality of all inputs should also be regularly monitored. In some cases, the private sector may be able to provide superior support, for example, through PPPs to revive sick State seeds farms or contract farming, but for most part this is a responsibility that State governments must fulfill.
Further, because the basic strategy is to exploit existing technology more intensively, it will require either much more effort from farmers or more labour saving machinery. Mechanization has accelerated during the last decade despite slow agricultural growth (for example tractor numbers went up to 70% between 1997 and 2003 Livestock Censuses) and this trend will normally intensify if growth increases, particularly because young males in relatively better off farm families now prefer off-farm work. But while higher labour productivity is desirable, and so is voluntary exit from farming to better non-farm alternatives, NSS reports a rapid rise in involuntary unemployment among agricultural wage workers due to large absolute decline in days of agricultural wage employment. There is evidence too of increase in unrecorded tenancy. Despite this more land is being left fallow. Current land distribution and laws governing tenancy need to be re-examined.
Taking all the above into account, the 11 th Plan strategy to raise agricultural output will be based on the following elements:
Double the rate of growth of irrigated area; Improve water management, rain water harvesting and watershed development; Reclaim degraded land and focus on soil quality; Bridge the knowledge gap through effective extension; Diversify into high value outputs such as fruits, vegetables, flowers, herbs and spices,
medicinal plants, bamboo, bio-diesel etc, but with adequate measures to ensure food security;
Promote animal husbandry and fishery; Provide easy access to credit at affordable rated; Improve the incentive structure and functioning of markets; Refocus on land reforms issues.
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Water Management and irrigation
Water is a critical input for agricultural and this calls for more effective utilization of existing irrigation potential, expansion of irrigation where it is possible at an economic cost and better water management in rainfed areas where assured irrigation is not possible. This is clearly an area where past policies have been inadequate. Performance in expanding irrigation has been disappointing with resources being spread thinly over many projects and a large number of irrigation projects remaining under construction for many years. At the same time, flood forecasting, control and management are also vitally important for many parts of the country.
The Bharat Nirman programme envisages creation of 10 million hectares additional assured irrigation during the 4 years period (2005-2009). To achieve this, the pace of potential creation will have to increase from 1.42 million hectares per year in recent years to 2.5 million hectares per year. Of the new potential envisaged under Bharat Nirman, about half is planned for 2007-08 and 2008-09 that is first 2 years of the 11th plan. Assuming the same rate continues thereafter, a total of about 11 million hectares of new potential can be expected in the 11 th plan consisting of 5.5 million hectares in major & medium irrigation, 3.5 million hectares through minor irrigation and about 2.0 million hectares through ground water development. In addition, another 3-4 million hectares of land is to be restored through modernization of major, medium, and minor projects and restoration of tanks.
Investments in the major and medium irrigation sector will require large resources from the state governments supported by Central Assistance under AIBP. However, prioritization by proper cost-benefit analysis and timely implementation of these projects by state governments is also important. Besides regular monitoring by Central Water Commission, it is proposed to expand usage of remote sensing techniques for this purpose which has been initiated on a pilot basis in the 10th plan.
Along with expansion of irrigation facilities, it should be ensured that water is distributed equitably and used efficiently. The pattern observed in the past where tail-enders are denied water because upper end-users appropriate it for highly water intensive crops must be avoided. Participatory Irrigation Management (PIM) by democratically organized water user associations empowered to set and collect water charges, and retain a substantial part of the collection, would help to maintain field channels, expand irrigated area, distribute water equitably and provide the tail enders their just share of water. Experience in Andhra Pradesh and Gujarat has shown the effectiveness of such PIM. The 11th plan must expand reliance on PIM on a large scale.
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Water is also critical for rain fed as well as unirrigated land which accounts for more than 60% of cultivable area. Water conservation and ground water management is critical for these areas and will therefore need much more focused attention. In some regions, particularly the lower Gangetic plains and Assam, there is vast scope to utilize the abundant ground water which can quickly add to output. Tapping this potential must be an essential part of 11th plan strategy. In other regions, the urgent need is for discipline on groundwater use to avoid the deepening agricultural crisis in dry land areas. Some policies being followed by state governments encourage wasteful use of water. As the NCF has pointed out, having access to cheap power use almost doubles the amount of water per unit of crop compared to farmers using diesel pump sets. Continued provision of free power by some states, and highly subsidized power by all states, encourages excessive use of ground water. This reflected in the fact that semi-critical, critical and over exploited areas of groundwater use are increasing and already cover 29% of the blocks in the country.
Watershed management, rainwater harvesting, and ground water recharge can help augment water availability in rainfed areas. Micro irrigation is also important to improve water use efficiency. Building structures for water management and managing them provides immediate opportunities for employment generation in rural areas. The enhanced productivity of land will generate further sustainable demand for labour in rural areas. The National Rainfed Areas Authority, which will be set up shortly would provide for developing concerted action plans for rainfed areas in close consultation with state governments.
Serious efforts at addressing water management issues will require a substantial commitment of public resources. With an estimated 80 million hectares needing treatment, and average expenditure of Rs. 10,000 per hectare, the total requirement of funds is about Rs. 80,000 crore. For this magnitude of funds to be available during the 11th Plan, it is essential that these programmes be converged with or at least supplemented by the Employment Guarantee Programme Funding.
Reclaim Degraded land and focus on soil quality
Due to expansion of urban areas net sown area has reduced significantly in recent years. While conversion of agricultural to non-agricultural land in an unavoidable concomitant of the development process, we need to ensure that this does not put undue pressure on agriculture or lead to inefficient land- use, for example loss of water bodies and speculative land purchase that reduces cultivation without any productive use for several years. Existing regulatory procedures need to be reexamined since delay in converting land from farm use to more productive non-farm use does have costs. But this must go hand-in-hand with the creation of a new regulatory framework governing such conversion, based transparently on principles of sound land-use planning.
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Since land-use patterns will change, it is necessary to offset the loss of agricultural land by bringing more land under cultivation. As noted above, there is a large amount of degraded land that can be reclaimed through watershed development. There is also a considerable amount of saline and sodic land, which can be brought back to cultivation with treatment. Although schemes exist, these have so far suffered from lack of funding. As with watershed development, state governments should upscale using all the scope for convergence with other rural development programmes including, where possible, National Rural Employment Guarantee Programme (NREGP).
The scope for improving the quality of land that is currently being cultivated also needs further exploitation. Vast areas of cultivated land are acidic, where significant yield increases are possible through treatment using waste material from industry. There is sulphur deficiency in large parts of the country, but this can be treated effectively, resulting in better yield, particularly for pulses and oilseeds. More generally, Indian soils are relatively deficient in organic matter and are suffering inadequate manuring and composting, aggravated in many regions by unbalanced use of chemical fertilizers, especially excessive application of nitrogen. This raises serious issues of long-term sustainability, but also offers the possibility that fairly large yield increases can be obtained in the short-run by applying the other nutrients, including micro-nutrients, that have been seriously depleted. Subsidies are, to a considerable extent, responsible for excessive use of some fertilizers, for example, Urea. Fertilizer pricing therefore requires urgent reform to end the present irrational discrimination across nutrients.
Bridging theKnowledgeGap
The National Commission on Farmers (NCF) has drawn attention to the knowledge deficit that exists at present and explains much of the difference between yields realized in experiments and what farmers actually get. One reason for this is the virtual collapse of extension services in most states, with 30-40% of positions remaining vacant. Farmers are not fully aware of the adverse consequences of unbalanced fertilizer use or of benefits of micronutrient application and soil testing to determine optimal nutrient requirements is hardly practiced on a regular basis even by State Agriculture Departments. Similarly, although many new varieties of seeds and pesticides have entered the market during the last decade and farmers are using these, they do not appear to have significantly higher productivity and there are frequent complaints about quality. A problem is that input dealers, who have narrow commercial interests have emerged as the main vehicle for technology diffusion and farmers do not have access to reliable third-party advice which an effective and knowledgeable extension service should be able to provide. Lack of credit also pushes farmers to purchase inputs from local suppliers who often provide sub-standard inputs.
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To overcome information gaps and for advice in contingencies such as pest-attacks, it is necessary to revitalize the extension system in a manner that links universities and best practices effectively to farmers. States need to take urgent steps in this area. Central initiatives on this also need to be strengthened. Krishi Vigyan Kendras set up by Indian Council of Agricultural Research (ICAR) ,have very little interaction with the Agricultural Technology Management Agency (ATMA) model extension being promoted by the Department of Agriculture & Cooperation (DAC). Due to this lack of coordination not only are farming practices in large parts of the country sub-optimal, our plans and programmes are failing to converge technical and development aspects even across Centrally Sponsored Schemes (CSS) of the Ministry of Agriculture (MoA), let alone converging effectively with those of other central ministries, such as on watershed development. The lack of synergy between different public efforts must be addressed urgently to multiply returns to plan expenditure.
The NFC has suggested ways to synergize at the village level, for example, through Farmer Knowledge Centres, which is already being implemented in some places with PRI and NGO help. Since synergies between line departments and CSS can be derived best through district plans, the Planning Commission and Ministry of Panchayati Raj have begun strengthening the process of district planning. The recent MoA initiative to set up technical bodies such as the National Fisheries Board and the National Rainfed Areas Authority should help to improve synergy.
The nature of technical constraints and crop/livestock development possibilities vary considerably across different agro-climatic zones and the agricultural strategy for the 11 th Plan will have to aim at evolving packages specific to zones. In this context, there is a need to bring a much more regionally focused technical content into all CSS of MoA. However, while strategies can emerge through consultation between the Centre and the states, the task of implementing these on the ground falls almost wholly on the state governments. Administrative structures need to be optimized for region-specific implementation. One approach could be that MoA delegated many of the existing powers from Delhi by appointing Regional Production Commissioners based alongside ICAR Regional Co-ordinators.
Diversification to High Value Output While Ensuring Food Security
Faster agricultural growth will require diversification into higher value output, for example horticulture, floriculture etc. This is partly because demand patterns are shifting in that direction and also because in many cases this is the most efficient way to increase incomes of farmers from their limited land and water resources. Recognizing this, the newly launched National Horticulture Mission (NHM) is already the largest single plan scheme of MoA, which is even larger than the macro – management in agriculture (MMA) scheme that provides main support from the centre to almost all other crop activity. The NHM allocation is large because apart from including significant new interventions for ensuring availability of quality planting material; crop and regions-wise, the programme also provides for structural changes in the relationship between agriculture and non – agricultural sectors. Horticulture products are perishable commodities and therefore very efficient linkages need to be put in place between farms and final buyers. This requires modern methods of grading, post- harvest management, cold chains, etc. For this purpose, besides providing for direct public investment in marketing infrastructure, NHM incentives amendment of APMC Acts to enable larger private sector participation in marketing and processing. Many states have begun this process, which should be accelerated.
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Diversification also means that the produce must meet the specific requirements of the different markets being serviced, and these requirements vary depending on whether the market is domestic consumption, agro- processing or exports. Producer’ co-operatives are one way of achieving these linkages. Contract farming is another way of attracting corporate investors to help establish these linkages and also provide farmers with necessary in puts, extensions, and other advice. Many states have taken steps to facilitate contract farming as a way of assisting the process of diversification. A much greater focus is also necessary on enabling small farmer participation by encouraging group formation and providing suitable and effective regulatory frameworks. Entrenched interests dominating traditional trade channels often oppose change. But such opposition, if it seeks simply to restrict market competition or to hinder the growth of co-operation among the farmers, is against the interest of both farmers and consumers.
In a mission so demanding of public resources and with a scope that can alter how agriculture is carried out and how it relates to the rest of the economy, there are also bound to be genuine concerns. Some experts believe subsidizing shift of land from food grains to horticulture can be uneconomical and at the cost of food security. Such fears are somewhat exaggerated, but have become more relevant now that our food stocks have depleted to the point where large and high cost wheat imports have become necessary again. It is important that encouragement to diversification is not driven purely by subsidy but reflects a logical shift towards higher sustainable productivity. There is need to exploit fully the scope for co-operation between different agencies. The guidelines of NHM are silent on NREGP despite very large possibility of convergence. Also, horticulture involves greater female participation then in case of other crops, but there has been no follow –up on lessons from a UNDP- financed pilot that had demonstrated success with women’s co-operatives.
The 11th plan provides an occasion to re-examine policies to deal with these issues. The broad principle that will have to be followed is the one that was stated in the Mid-Term Appraisal of 10th Five year Plan: that priority must be on technology to improve yields and on post-harvest management, infrastructure and processing. The objective is not to attain any particular level of production for a particular horticultural crop but to enable farmers to earn the highest possible sustainable income. Therefore, as far as possible, subsidies should be neutral across crops, whether covered by NHM or other programmes such as MMA with this, food security will not be endangered by diversification if food grain yields grow at around 3% per annum. This rate of yield increase had actually been achieved during the 1980s and should be a specific 11th plan target. With a focus on east and central India, this can be achieved by tapping available ground water, better land and water management, and bridging the large yield gaps that exist. This region will get very sizeable additional resources through NREGP, Bharat Nirman, and Backward Area Grant Fund which if used properly can not only reduce costs of land and water development and improve village electrification and connectivity, but also create demand and allow PRI level capacity building. The main tasks on the side of agriculture proper will be to; (a) converge effectively with these programmes of other departments; (b) massively step up technology demonstration; (c) ensure regular and timely provision of credit and of quality inputs (primarily suitable seeds and fertilizers); (d) and build up the presently almost non – existent price support system. A potential obstacle will be the semi – feudal land relations that exist in some parts of this region.
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Animal Husbandry and Fishery
The livestock and fisheries sectors together account for about 30% of the output of Agriculture & allied sector and provide full time and part time employment to 5.5% of the total working population, the majority of whom are women. The 11th plan must evolve viable strategies for these sectors to expand rapidly.
India continues to be the largest producer of milk in the world with a total production of 91 million tonnes in 2005-06 and the contribution of milk was higher than paddy, wheat, and sugarcane in the year 2003-04. Yet the per capita availability of milk at 231 gm. per day during 2003-04 is still very low compared to nutritional requirement suggesting scope for further expansion. Matters are even worse regarding meat, with abattoir conditions pathetic and utilization of by-products inefficient. Poultry development in the country has shown better progress over the years, primarily because research and development schemes of the government have been complemented with effective management and marketing by an organized private sector. The fisheries sector has also performed well but vast potential exists, particularly in inland fishery. The setting up of the National Fisheries Board should bring better technical focus.
The survival of pastoralism is crucial for sustainable land use. Besides conserving domestic biodiversity, it is a means of producing food in dry lands without depleting groundwater resources. However, there are many constraints on expansion in this area. Grazing permits are denied in traditional grazing sites that have been converted into protected areas/wildlife sanctuaries, national parks/Joint Forest Management (JFM) programme. Original pasture lands or stipulated animal drinking water ponds are encroached upon or used for other purpose. Bio-diesel (Jatropha) planting is being promoted through state agencies without seeing all the consequences such as blocking the migration routes of animals and encroaching upon herd-passing pathways. It is vital to ensure that the commons are protected and women, who make up a substantial portion of the workforce in this sector, are given control over them. This will prevent their use for other purposes.
Some of the important initiatives that are needed are:
Promotion of appropriate crossbreeds while conserving indigenous breeds of livestock. Establishment of livestock marketing system. Promotion of rural backyard poultry in a cooperative marketing setup. Development of cooperative diary firms. Enhancing livestock extension services. Encouraging private veterinary clinic. Institutionalizing a framework for utilizing synergy between restoration and creation of water
bodies for water harvesting and fishery. Provision of an insurance package to avoid distress.
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Access to Credit and Risk Management
1.2.31 Access to financial resources enables the poor to exploit investment opportunities, reduces their vulnerability to shocks, and promotes economic growth. But lack of credit at reasonable rates is a persistent problem, in large part, reflecting the collapse of the cooperative credit system. The failure of the organized credit system in extending credit has led to excessive dependence on informal sources usually at exorbitant interest rates. This is at the root of farmer distress reflected in excessive indebtedness. There are of course some recent positive developments, for example, the acceptance by the government of the Vaidyanathan Committee report on co-operatives and the success of commercial banks to almost double the flow of agricultural credit after 2003. Nonetheless, problems still persist. Implementation of the Vaidyanathan report has been slow because of the reluctance of states to cede control over co-operatives. Problems of the long-term credit structure have hardly been addressed, and the large increase in commercial bank credit does not appear to have significantly improved access in either regions with poor banking support or for small/marginal farmers and tenants.
There is evidence that farm debt is increasing much faster than farm incomes and the larger issue of the overhanging dept stock, as distinct from credit flow, has not even been on the agenda except of a few state governments. Admittedly, there are limits to the extent that banks can be expected to play a purely social role in today’s more competitive environment. However, too conservative an approach on settling debt that has turned bad due to contingencies of poor weather or prices is not even prudential banking if this serves only to show bank balance sheets to be better than they are, and prevents profitable new lending. There are several suggestions, ranging from a Stabilization Fund to be run by the Centre for automatic write-off under some specified conditions, to the setting up, by states, of standing professional Debt Commissions to examine individual debt (including to non-institutional sources) on a case-by-case basis for one time settlement. The 11 th Plan will examine in detail the impediments which now stand in the way of social and developmental banking and suggest innovations that can Improve access and speed up one-time settlements while maintaining credit discipline and financial prudence. As farmers adopt new and untried technology and increase input intensities, they also face larger risks. These risks are often not well understood owing to lack of knowledge of the specific requirements of new seeds and other new technology for achieving productivity gains. All farmers do not have the ability to bear downside risks and this is evident from the spate of farmer suicides when new seeds fail to deliver expected output, or expenditure on bore wells proves infructuous, or when market prices collapse unexpectedly. Farmers should be protected against such risks by appropriate measures. Insurance is one way of doing this, but only 4% of farmers are currently covered by any crop insurance. The financial cost of existing and proposed crop insurance schemes is considerable, as well as recurring. Moreover, current crop insurance is only against yield loss and does not cover price risk. Farmers also lack cover against other risks, for example accidents which can also prove crippling. These and related issues of risk management are again largely non-Plan areas but need to be addressed during the 11 th Plan. This should ideally be done by concentrating on innovations in design which could help expand insurance in a manner that is financially viable without excessive subsidy.
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Land Reforms
Land relations can have a major impact on agricultural productivity and production. Inequality in land distribution and insecurity of tenure etc., are often at the bottom of many forms of social discrimination and domination based on gender, caste, minority and tribal affiliations. The National Commission on Farmers has placed the unfinished agenda in land reform first in its list of five factors central to the present agrarian crisis, and states “the first and foremost task of the National Policy for Farmers should be in the area of land reform with particular reference to tenancy laws, distribution of ceiling surplus land, attention to common property and wasteland resources and the consolidation of holdings. Following the conferment of land rights to women under the Hindu Succession Amendment Act (2005), the provision of appropriate support services to women farmers has become urgent. Joint Pattas are essential for women to get access to credit. Also, there should be stringent restrictions on the diversion of prime farmland for non-farm purposes.”
Since migration and feminization are increasing trends, land reforms that make tenancy legal and give well defined rights to tenants and to women are now more necessary than ever not only to reduce distress but also to increase agricultural growth. Facilitating Leasing of land for cultivation is necessary to prevent cultivated land from turning fallow due to migration of owners to urban areas. Lack of recognized tenancy rights makes it difficult for de facto tenants to get credit from formal sources. Tenants without legal rights do not have proper incentive to develop the land and this explains part of the yield gap. Similarly, a woman without property title is unable to get credit when the male member is away. Giving access to land and homesteads not only reduces poverty but is the most powerful way to bring dignity in the lives of today’s excluded. This, along with the more general need to record land titles properly where these are weak, is also one way to deal effectively with encroachment and non-participation that plague watershed and wasteland development programmes. With EGA in place, such programmes can be stepped up very substantially to address natural resource regeneration but the incentive issues related to land will have to be addressed.
Agricultural ResearchSince the green revolution in the sixties there has been no major technological innovation
which could give fresh impetus to agricultural productivity. The absence of productive technology which also reduces risks is particularly serious for rain fed, dry land situations. In the longer run, growth in agricultural productivity can be sustained only through continuous technological progress. This calls for a well considered strategy for prioritized basic research, which is now all the more urgent in view of mounting pressure on scarce natural resources, climate change and also the shrinking availability of spill-overs from international public research. For ushering in a second green revolution, a strategy that frees us from the past binds is called for. The strategy should be operationalized in the form of challenge programmes in which central institutes and the state agricultural universities work with organic integration.The 11th Plan must energise the National Agricultural Research System and improve its capacity to develop and deliver innovative and effective technologies relevant to the current context and needs. We should not only undertake strategic research to tackle well identified problems in a good directed way but also strengthen basic research that may contribute to growth. The recently established fund for National Strategic Agricultural Research must be expanded in the 11 th Plan and oriented to stimulate research that responds to newer and more formidable challenges and provides region-specific problem solving capacity. A delivery-targeted operational mechanism will have to be designed for its meaningful operation. Clearly business as usual has no place whatsoever in this framework. The agricultural system also needs to be thoroughly revamped and restructured in the light of the recommendations of the high powered committees chaired respectively by Dr. M.S. Swaminathan and Dr.R.A. Mashelkar.
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The initiatives discussed above can, with sufficient effort and funding, raise the agricultural growth rate from 2 percent to 4 percent during the 11th Plan. About half of this, that is, 1 percent additional growth, is expected as a direct result of the new Plan programmes, including Bharat Nirman, that have been initiated since 2004 and which have already increased the combined Plan expenditure of Centre and states on agriculture and irrigation by over 60% in real terms as compared to the first two years of the 10th Plan. The remaining 1% additional growth would need to come mainly from better resource utilization and larger private investment, although of course some additional Plan expenditure may be required to facilitate this. Overall agricultural investment would need to be about 16% of the agricultural GDP, with public investment contributing 4 to 5%, during the 11th Plan.
Case StudyTHE DEATH TRAP
Faced with mounting debt, a failed crop for the second year and government indifference, cotton farmers in the Vidarbha region of Maharashtra are resorting to suicide as a way out of misery.
BALKRISHNA AJABRAO SAWAI, a farmer of Jagona village in Hinghanghat district in the Vidarbha region of Maharashtra, cultivated cotton on his eight acres (3.2 hectares) of land, and the returns were good until a couple of years ago. On October 30, he was found dead in his field. A visceral examination indicated the presence of a pesticide. He had apparently taken the step unable to face the local bankers and moneylenders who had loaned him money. Two successive failed monsoons, coupled with the non-payment of dues by an apathetic State government, left him with barely enough to feed his family and repay a debt of Rs.50,000. It is a situation that thousands of farmers in the cotton belt of Maharashtra are familiar with, and increasingly they are reaching for the pesticide can as a way out of the misery.
At the procurement centre in Wardha. Procurement has not yet begun and farmers wait for
private traders who grade the cotton and bid among themselves.
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More than 80 suicides have been reported since May 2001 in 12 districts, primarily in the Vidarbha region of eastern Maharashtra. A large number of deaths have been reported this year than last year after a second crop failure and dipping cotton prices left farmers with no chance to repay their loans. Even a hand-to-mouth existence was rendered difficult by the State government's irregular payments for the cotton it procured last year. In six weeks from early October to mid-November this year, nine suicides were reported in two districts, five of them from Ralegaon, a core cotton-growing area. In almost every case the reason for the suicide was the same - mounting debt owing to a crisis in the crop - as Frontline found out in several villages that it visited in Wardha and Yavatmal districts.
Although the suicide cases have been registered at police stations, the State government refuses to put out a figure or acknowledge the reasons for them. State Agriculture Minister RohidasPatil told Frontline that the administration had investigated the deaths and concluded that most of the deaths were from natural causes and not because of any crisis in agriculture. While Patil at least admits to the deaths, the District Collectors of Amravati, Yavatmal, Buldhana and Washim — where most number of suicides have been reported — either deny the deaths or attribute them to the run-up of bills for marriages or medical problems. To link these household financial burdens to an irregular and low income coming from crop sale "is completely inaccurate," says Parag Jain, the Collector of Yavatmal district. "We have conducted a detailed inquiry and found that their personal and psychological problems led them to this state. It is, therefore, not our concern."
Such official unconcern flew in the face of the list of suicides compiled by the Maharashtra Cotton Growers Farmers Sanghatana.Frontline visited the families of eight persons on the list, in eight different villages, and was able to confirm the deaths. Not a single official had visited any of the families — even in Yavatmal. In one case, a Tehsildar had demanded Rs.15,000 from the family if it wanted the case to be registered as suicide. In many cases the Collectors were dismissive of the deaths. "Suicides are quite common in these parts," said Wardha Assistant Collector A.E. Bansod.
In 1997, the Vidarbha region faced a similar crisis when approximately 80 suicide cases were registered officially. Untimely rain destroyed the kharif crop that year, leaving small farmers with little money and less hope to clear their debts. While the suicides both times may have been triggered by the vagaries of the weather, it is becoming increasingly clear that the root of the problem lies in the economic and other policies adopted by the government.
"Such a crisis of mounting indebtedness and despair is unprecedented in independent India and it is the direct result of trade liberalisation, exposure to global volatility and resulting price crashes," says economist UtsaPatnaik. "The cynicism of the aggressively pro-reform government in the Stateis revealed by its decision to stop making ex-gratia payments to the relatives of farmers who committed suicide, on the grounds that it `encouraged' suicide."
UtsaPatnaik, in a paper titled "Deflation and Deja Vu: Indian Agriculture in the World Economy", says the majority of cotton growers are small farmers. They are highly price-responsive and have been so since colonial times. She says that as world cotton prices improved in the early 1990s and unregulated exports were permitted, hundreds of thousands of farmers expanded the area under cotton. They took large cash advances from traders and loans from banks to meet the extra seed and input costs on vast tracts of rain-fed land.
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One and a half million hectares of land was diverted from foodgrains to cotton between 1991 and 1996, according to Utsa Patnaik. "Unfortunately, the cotton crop is susceptible to a large variety of pests and the unholy trinity of commission agents, fly-by-night pesticide dealers and seed suppliers," she says. Cotton prices started declining in 1995-96 from 75 cents a pound to an all-time low of 35 cents in October 2001. This, along with the lack of rain, spelt doom for the farmers. Worse still was
the condition of the farmers who had bought the expensive Bt cotton seed from multinational companies such as Monsanto. It did not germinate this year because of insufficient rain.
Champat Raut. He owns 25 acres of land but has "no money to feed his family".
Adding to the farmers' problems is the increase in cotton imports, particularly from the United States. With the government lifting quantitative restrictions under the World Trade Organisation (WTO) treaties, cotton imports from the U.S. increased from 21,221 tonnes in 1999 to 48,805 tonnes in 2000. "By permitting imports of cotton at 5 per cent duty, the Central government has destroyed the domestic market. Prices have fallen drastically and the only people who have gained are those in the textile industry," says Vijay Jawandhia, leader of the Kisan Sanghatana based in Wardha. "The powerful textile lobby is resisting any move to increase the import duty on cotton... Thirty lakh farmers have been squeezed to allow the textile industry to run profitably." In its defence, the Indian textile industry claims that the cheaper imported cotton is better suited to the export requirements of Indian textile mills.
There is a glut of cotton in the world market at present. With more than one million tonnes of stock remaining from last year, cotton prices during the current marketing season are at their lowest since 1973, says the Washington-based International Cotton Advisory Committee (ICAC), an association comprising 42 countries growing and consuming cotton. "These prices, along with a failed monsoon, have been crippling the Indian small farmer," says the ICAC, which assists members in framing policy and providing technical advice.
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Jawandhia says the government is so dead set on free trade, but no such thing exists. International commodity prices have fallen, he says, because countries like the U.S. provide their farmers with huge subsidies as well as impose exorbitant import duties. For instance, subsidies account for 30 per cent of producer prices in the U.S. Japan levies a 1,000 per cent duty on rice imports. The WTO agreement allows India to set import duties ranging from 100 to 300 per cent on agricultural goods. But the government is adamant on sticking to single digits, pandering to the rich countries, says Jawandhia.
In Maharashtra, the State government seems to pander to the sugar lobby, says Ashok Dhawale, a leader of the All India Kisan Sabha. "Why is it that the import duty on sugar is almost 60 per cent? And when the price of sugar fell, the government immediately announced subsidies for exports." It is well-known that Maharashtra's sugar lobby comprises some of the State's most powerful politicians. While cotton is almost entirely a dry-land crop, sugarcane fields drink the lion's share of irrigation water in Maharashtra. The Kisan Sabha is demanding a 150 per cent import duty on cotton. This could save lakhs of farmers from their present plight.
MORE than 30 lakh farmers are dependent on cotton cultivation in Maharashtra. Vidarbha accounts for 20 per cent of the cotton production in the country, which places Maharashtra second in cotton production in India. Approximately 30 lakh hectares, which is about 16.9 per cent of Maharashtra's net sown area, is under cotton. The region's growth took off when Britain sourced its cotton from here for its textile industry during pre-Independence days. It was Amravati cotton that was primarily exported. During the textile boom, Mumbai's mills used a large portion of the crop output. The proximity to Mumbai also helped exports.
Yet, for all its contribution, the State has paid little attention to the needs of this farming community. Irrigation, for instance, is virtually non-existent. Most of the area is under dryland farming. The region is almost entirely rain-fed. Insufficient rain brought down the harvest to 42 lakh bales this year from 52 lakh bales last year.
The State government's neglect of cotton farmers has played a large role in their falling fortunes. For the past three decades Maharashtra's cotton farmers have been protected by the State's unique Monopoly Cotton Procurement Scheme (MCPS). It is the only assurance of a fair price for this cash crop, but there was talk that it may be scrapped. If that happens, the farmers will have to compete in the open market. They will have no guaranteed income and will be at the mercy of private traders.
Citing financial difficulties, the Democratic Front government in the State announced that this year it will buy cotton at the Central government's minimum support price (MSP). Initially, Chief Minister Vilasrao Deshmukh stated that the State could not afford to pay the MCPS bonus in advance. But on the first day of the winter session of the Assembly in Nagpur, December 12, he relented to political pressure and announced that the government would pay the bonus in advance in two instalments. The price per quintal was fixed at Rs.2,300. The bonus is what makes the scheme so popular (see box).
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Over the last decade, the scheme has become heavily politicised. Successive governments tried to scrap it, yet it has survived. Ironically, when the MCPS was introduced, the free-market proponent, the BJP, labelled it protectionist and demanded its withdrawal. Now, with the media exposing the increasing number of suicide cases, Opposition politicians and also partners of the ruling coalition have sprung into action to exploit the situation. The Shiv Sena and the BJP have activated a campaign against scrapping the MCPS, which, they say, is the only way to protect cotton farmers.
Meanwhile, several Ministers from Vidarbha, who belong to the Nationalist Congress Party, the largest ally of the Congress(I) in the Democratic Front, threatened to resign from the party if the MSP was not increased and the promised bonus was not paid. Vilasrao Deshmukh, however, would not budge. He dismissed their threats as "drama" and said that if the Ministers were serious they would have tendered their resignations to the Speaker of the Assembly.
These political shenanigans and vote-bank politics were seen last December too. The Shetkari Sangatana, along with the BJP, had staged a rail-roko agitation demanding that the farmers be paid the full support price and the balance of the State-guaranteed price later. The government relented and offered to pay 90 per cent of the support price. The last payment of this was made to the farmers in early November.
The MCPS is a sort of benchmark price, says S.S. Sandhu, Chairman of the Maharashtra State Cooperative Cotton Growers Marketing Federation. "Private traders will not go much below the State government price, so farmers won't be completely swindled. Unquestionably, the MCPS is the only security farmers have," Sandhu told Frontline. "But we are buying the cotton at Rs.425 more than the Central government's MSP of about Rs.1,675 and selling the cotton at about Rs.1,500, which is causing us a 25-30 per cent loss. The scheme will work only if it makes a profit and if the farmers are paid the entire amount in one instalment," he says. The Federation has not begun buying this year's crop as yet. Some farmers are holding back from selling their crop because the MCPS price is a security. "We will wait and see what the price is, otherwise private traders can swindle us," says Namdev Kamble, a cotton farmer from Wardha.
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Some farmers cannot afford to wait for too long. Farmers like Champat Raut, who are in deep debt, have been forced to sell their produce to private traders, who often double as moneylenders. "I need the money to feed my family, pay workers, buy seeds, pesticide and fertilizer. I cannot wait for the government's instalments. Interest is accumulating at 50 per cent annually on my loan," says Raut. "Besides, the government deducts the bank loan amount from the payment. That leaves me with very little, so I might as well sell it to a private trader." Raut, who owns 25 acres (10 ha) of land, says that normally the moneylender is prepared to take the crop if he cannot repay the loan. "But this year the moneylender wants only cash."
Raut has sold 12 quintals of cotton to a private trader at Rs.1,875 a quintal, much lower than what he would get if he sold it to the Federation. He has a Rs.50,000 bank loan, on which he pays nearly 16 per cent interest. He owes another Rs.30,000 to a moneylender and has several credits pending at shops that have sold him seeds, pesticide and fertilizer. Raut attempted selling some of his land to pay his debts. But he found no takers. "I think it is better to leave this world than to carry on like this," he says. While his cost of production has gone up substantially, the price of cotton has only reduced. His cultivation costs are about Rs.3,000 an acre and this year he got hardly three quintals an acre. As cotton is highly susceptible to pest attack, a substantial amount of money is spent on pesticide.
"There is a growing sense of desperation this harvest season," says Jawandhia. "Unless the government declares the region drought-hit, there are very few options available." Farmers pay an 8 per cent premium on their bank loans towards crop insurance. Only if the drought is declared officially, the banks will allow them to claim insurance.
Furthermore, says Jawandhia, if a farmer wants to switch to a crop like soybean, he cannot afford it because the banks will not give him a loan until he repays the pending loan. But with no pressure groups to influence the government on their behalf, and with little sign of the Central government amending its liberalised policies, the future looks bleak for the cotton farmers of Vidarbha.
AbstractFor last few years every other day we read the news of farmers committing suicides. Thenumber of farmers who have committed suicides since 1997 has crossed 1 lakhs. In thiscontext the actual problems being faced are to be understood and analyzed. Innovativeremedies have to be thought of which are to be implemented with sincerity by theGovernment and the implementing agencies, along with putting in place ways to rehabilitatethe affected farmers. An attempt has been made in this article to address the issue of farmersplight leading to suicide and measures to address the issue have been suggested.Several studies have been conducted by the Government and social science organizations toanalyse the agrarian crisis and farmers suicides. Based on my experience as DistrictDevelopment Manager (DDM) in District Betul of Madhya Pradesh, which incidentally isadjacent to, identified distress districts in Maharashtra. I have tried to summarise causes ofsuicides and suggested remedies in the paper.Central and State Government have announced the relief packages to the suicide affectedfamilies in Maharashtra. NABARD is the implementing agency of the package provided byCentral Government. In the budget of 2008-09 Honourable Finance Minister has alsoannounced massive write off to the tune of Rs.60000 crore of the outstanding loan of small& marginal farmers and OTS for other farmers.
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1. Introduction:-Agriculture provides the principal means of livelihood for over 60% of India’s population.Despite a steady decline in its share to the gross Domestic Product (GDP) agricultureremains the largest economic sector in the country. Low and volatile growth rates under thesector and the recent escalation of an agrarian crisis in several parts of the country pose athreat not only to national food security but also to the economic well being of the nation asa whole.In 1947 the share of Agriculture in total GDP was 50%. Gradually it declined and has nowcome down to about 20%. Still however 60% population depend on agriculture for thesurvival. In 1988-89 i.e. prior to introduction of Financial Sector Reforms, growth rate inAgriculture in India was 15.4%, which has come down to 9.4%(2006-07). Due to rapidgrowth of rural population and division of families the farmland has undergone rapidfragmentation. Presently 80% of the farmland holding are with the small and marginalfarmers owning land up to 5 acres. For these category of farmers cost of production by wayof farm inputs has increased manifold over the years while the productivity of the landremained at the same level and sale price of farm produce has not commensuratelyincreased. These factors have driven farmers to the debt trap and have caused distressleading to suicide. My experience in the field has shown that smaller the landholding higheris the cost of production. The distressed economy of small scale crop cultivation is furtheraccentuated by lack of knowledge, scientific application of crop management, diversificationpractices, inappropriate system such as non availability of quality input material in time,inadequate irrigation facility, non-remunerative prices, dominance of middlemen inAgricultural Marketing Structure. It is encouraging to see that our country is one of thefastest growing economies in the world. Reform process in most of the economic sectors isin place. There is healthy competition in almost all the sectors leading to cost reduction.GOI has planned to achieve 10% growth by 2012, but all this cannot be achieved unless thetargetted growth is ensured for Agriculture sector.
2.StudiesOn Agrarian Crisis:-
(i) Case study on farmer’s suicides by Prof. K.Nagraj (Madras Institute of DevelopmentStudies)
According to the Report of Prof. K. Nagraj of Madras Institute of Dev. Studies, the GeneralSuicide Rate (GSR) (overall suicides per 1 lakh population) in the country between theperiod 1997 to 2005 was 10.6, whereas the Farmers Suicide Rate (FSR) was 12.9 and theRatio of FSR to GSR was 1: 1.2. In Maharashtra the position was alarming with GSR at15.1 and FSR at 29.9.According to Prof. Nagraj Annual Compound Growth Rate (ACGR) for all suicides at2.18% is lower than the Population Growth Rate. The data reveals that the worst position ofthe farmers in Maharashtra is in Vidarbha region. The Study also shows the alacrity of theproblem, so much so that on an average one farmer took his/her life every 53 minutesbetween 1997 and 2005. State wise position of suicides in other States in critical group wasAndhra Pradesh–16770, Karnataka–20093 & Madhya Pradesh (including Chattisgarh) –23588.
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(ii) Study of Agricultural Indebtedness by Expert Group – Prof. Radhakrishna
According to the study Agricultural indebtedness is not the main cause of farmers’ suicidesbut stagnation in agriculture, marketing risks, collapse of extension system, growinginstitutional vacuum and lack of livelihood opportunities are the primary causes. Accordingto the Report the decline in returns from agriculture has resulted in inability of farmers torepay debt and this has triggered Farmers suicide.
Important measures suggested by thestudy group to address the issue includes following:
► Design and delivery system of credit should be strengthened.► Rescheduling of loans and waiving of interest up to two years where farmers areaffected by
natural calamities in rain fed areas.► Creation of `Moneylenders Debt Redemption Fund’.► Timely and hassle free delivery of credit by reducing transaction costs.► Increase in deployment of Rural Infrastructure Development Fund. (RIDF)► Government should make efforts to facilitate the Formation of Federation of SHGs ofsmall and
marginal farmers.► Allocation for expenditure on health of distress farmers and their family members.► Health Insurance Scheme `for the benefit of farmer’s livelihood.► Better monitoring and implementation of the existing package of relief.► The committee also recommended that the Banks should introduce the positive repaymentculture
by rewarding prompt repayments.
(iii) Tata Institute of Social Science (TISS) Report - (submitted in March 2005 study on sample of 36 (5%) of 644 suicide cases)
As per the direction of Mumbai High Court on a Public Interest Litigation, Tata Institute ofSocial Science (TISS) conducted a study on an agrarian crisis and the report was submittedin the year 2005.The salient features of the report are as under:
► Suicides occurred among large landholders & down to the landless► Cycles of debt and destitution led to suicide of the head of the family. The survivorswere reduced
to landlessness due to debt. Among those committed included mediumand large landowners who were also affected by a high level of un-payable debt.
► Farmers did not have access to extension machinery of the government in givingsound information on how to deal with pests and declining productivity of land.
► Farmers are dependent on agents of fertiliser and pesticide companies for advice onseeds and crop care. The information base of the farmers is, thus, limited to the dataprovided by the agents and their products. A false perception of prosperity is beingcreated in the minds of the cultivators that prompt them to take serious risks in terms of fertilizer based cropping pattern.
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► Minimum Support Price has not been available to all farmers, particularly the smalland marginal farmers.
Causes common across categories were:
Repeated crop failure, Inability to meet the rising cost of production (farmers have been spending more on fertilisers even
while crop performance has been showing a decliningtrend), and Indebtedness due to a host of reasons ranging from a daughter's marriage todigging a well which
eventually bore no water,
These causes arose out of a larger picture of globalization & the resultant neglect of agricultural community in India.
Short-term suggestions/ Recommendations for immediate relief and rehabilitations :
Immediate (adequate) compensation given on a priority basis to families of victims; Ex-gratia payment of Rs.2.5 lakh for families to meet loan repayments and live withsome level of
dignity; Comprehensive insurance safety net; Revamping of extension services in lines with e-choupals; and , Dissemination of information such as agricultural prices and methods of low-costorganic farming.
Long-term recommendations :
Fundamental policy changes to factor in the fluctuating production cost in theMinimum Support Price mechanism;
To integrate surface and groundwater irrigation schemes and integrate the linedepartments in order that the schemes are implemented efficiently;
Policy changes to focus on farmers rather than seed and fertilizer corporations; and Set up of a commission with statutory powers that takes decisions on issues such asgenetic
modification technology and its impact on Indian agriculture, agriculturepricing policy and cropping pattern.
Indira Gandhi Institute of Development Research (IGIDR) Report on Suicide ofFarmers in Maharashtra (Jan 2006):
For the study, interview of 116 suicide case households spread across 109 villages wasconducted covering mainly Wardha, Washim and Yavatmal.
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Major findings of the study are indicated in the following paragraph :
Farmers in the selected districts were exposed to both yield as well as price shocks for theircotton crops. In 2004, the selected districts experienced acute water problems due to deficitrainfall. However, there was record production in the state and rest of the country. Increasedsupply of cotton in 2004 was worldwide leading to a fall in its prices. Price risk in cotton gotfurther compounded due to large subsidy provided in USA, low import tariff of only 5% inIndia and failure of Monopoly Cotton Procurement Scheme (MCPS) in providing a fair priceto farmers in Maharashtra. In the absence of government extension service, farmers wereadvised by input traders leading to an increase in input costs through supplier-induceddemand.Share of input costs for seed, pesticide and fertilizer in cotton is higher than that fortheir crops. 90% of the total insecticide/pesticide usage in the five major crop groups inMaharashtra was in cotton.
Cotton's share of gross value addition in Maharashtra 's agriculture is much lowerthan its share of gross area under cultivation. Estimated cost of cotton cultivation in2004-05 would at best break-even with the price under Monopoly CottonProcurement Scheme.
Expenditure under public intervention programmes like the MaharashtraEmployment Guarantee Scheme (MEGS) is not commensurate to the regions share ofpoor.
Suicide/ mortality rate among male farmers in Maharashtra trebled from 17 in 1995to 53 in 2004. This is much more intensive in the selected districts of Vidarba region.
Farmers' suicides was neutral to education and social groups. The most important reason was found to be heavy indebtedness to both institutionaland non-
institutional sources. Reliance on the non-institutional sources has beenincreasing in the recent past.
Agricultural credit as a proportion of total credit disbursed by the CBs has beendeclining. Credit lines of co-operative societies are chocked. Data on credit flow through PACS indicate that loan per hectare gross cropped areais the lowest
in the Vidarbha region. Breakdown of formal credit structures has led to increased reliance on informalprivate sources of
credit with greater interest burden. Interest charged by private moneylenders was around Rs.25 or Rs.50 for a loan ofRs.100 that is
to be repaid in 4-6 months time.
3. Major Factors contributing to suicides in Maharashtra:-"Farmer takes the birth in debt and dies in the same condition". This was the position offarmers before independence and it still continue after 60 years of independence. If weanalyze the suicides by farmers in Maharashtra it is revealed that it is higher in Vidarbharegion of the State where farmers preferred cultivation of "white gold" i.e. cotton - a riskyventure that suffered due to non-availability of quality seeds coupled with the farmers orincapacity to buy costly Bt. cotton seeds. They could also not get remunerative price fortheir produce.
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According to Dr. M.S. Swaminathan, although 60% people in India depend on agricultureand Agriculture Sector contributes 25% of National Income over the period investment andproduction in agriculture has declined. In developed world the percentage of dependence ofpopulation on agriculture is much less e.g. in USA it is only 2% and income from agricultureis just 4%.
There are related issues of quality for export and competition in global market.The answer to the question as to why the farmers are committing suicides, lies in acombination of factors such as crop failure, shifting to more profitable but risky (in terms ofoutput, quality and prices) cash crops like cotton/ sugarcane/ soyabean, exorbitant rate ofinterest and other terms and conditions of loans availed from money lenders, lack of nonfarm opportunities, unwillingness to adopt to scientific practices, non availability of timelycredit from formal channel, absence of proper climate/ incentive for timely repayment ofbank loan, etc. At some places even though water is available but can't be exploited fullydue to insufficient power supply. Huge expenditure on children's education and suddendemand of money for health considerations and marriage, etc. in the family are also majorcontributors for stress in farming community. Inconsistency of rainfall during monsoon,absence of support mechanism for marketing of agriculture produce also contributed touncertainty and financial risk of the farmers.
To commit suicide is not normal but generally occurred for farmers due to fear of pressure ofmoneylenders e.g. if they fail to repay the loan their land will be forcibly taken away. Theireconomic condition in many cases changes to such as extent that the farmers are unable toface the society. In this situation of loneliness and in absence of any institutional or socialmechanism to fall back upon, farmers were forced to commit suicide. For farmers to comeout of the stressful situation a system to address the various issues discussed in the earlierparagraphs have to be evolved through an institutional mechanism with necessaryarrangement for review and follow up. A rehabilitation programme which addressesrepayment of overdue interest, supply of quality inputs for next crop, insurance againstnatural calamity, opportunity of supplementary income through non farm activities,provision of forward linkage such as marketing and storage, extension services, etc. has to bedevised and implemented.
4. Rehabilitation PackageFor rehabilitation of distress farmers and their family members Central as well as StateGovernment has announced the special packages in the State of Maharashtra.
i) Package of Central GovernmentPrime Minister visited the Vidarbha region in July 2006 and announced a package ofRs.3750 crores to the families of the farmers in Maharashtra. Under the package, anAdditional credit of Rs.1275 was earmarked for disbursement in the identified region. Entireinterest on overdue loan was waived and principal rescheduled for 3 to 5 years.
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The other important components of the package are as under:
PM’s Package – Goal & Means Establishment of sustainable and viable farming, livelihood support system through :
a. Complete credit cover through institutional credit sourcesb. Debt relief by restructuring overdue loans and interest waiverc. Assured irrigation facilitiesd. Effective watershed managemente. Seed replacement programf. Subsidiary income opportunities through horticulture, livestock, dairying, fisheries,etc.g. Better extension and farming support services and improved marketing facilities
Components & targets:
a. Ex-gratia assistance from PMNRF – Rs. 50 lakh per districtb. Debt relief to farmers – Re-scheduling of OD loan as on June 30, 2006c. Fresh credit to farmers.d. Interest waiver – Entire OD interest as on July 1, 2006,to be shared equally by Center and Statee. Assured irrigation facilities – Completion of all major, medium and minor irrigation projectssanctioned under AIBP and RIDF in 3 years’ time.
Seed replacement program:
50% subsidy for quality seed over 3 years (entitlement 1 ha / farmer)
Watershed Development:
a. Construction of check dams – 500 per district per year for 3 yearsb. Area treatment under watershed development - 15000 ha per district per year for 3years,c. Construction of rain water harvesting structures by SC/ST/SF/MF beneficiaries. With 50% bank loan and 50% back ended subsidy - 1000 beneficiaries per district peryear for 3 years
Horticulture Development:
a. All districts to be covered under National Horticulture Missionb. Launching of a Technology Mission on Citrus
Micro Irrigation – All districts to be covered under Scheme of Micro Irrigation forpropagation of Drip and Sprinkler Irrigation
Extension Services – All districts to be covered under ATMA (AgricultureTechnology Management Agencies)to ensure extension support and convergence at district level.
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Package of the State Government
Government of Maharashtra announced the special package of Rs.1075 crores for theaffected families as under :-
∎ Immediate relief to the family members of the farmers who committed suicide (Rs. 1lakh to each family)
∎ Rescheduling of the outstanding crop loan and subsidy on interest to the indebtedfarmers (Rs.225 crores).
∎ Ban on illegal private lending and legalizing of licensed moneylenders, limiting the interest payable to the original principal amount.
∎ Disbursing crop loan through Farmers Self Help Groups.∎ Enhanced subsidy on crop insurance premium (Rs. 30 crores).∎ Financial assistance (for land development) to acquire farm equipment, inputs likeseeds/ pest
control measures & bio-fertilisers (Rs.150 crores)∎ Promotion of agro based subsidiary livelihood options (Loans to farmers for Dairy,Goatery and
Poultry) (Rs.30 crores).∎ Promotion of agro-processing industries through cooperative system (Govt. share1:5)∎ Promotion of Joint cotton farming.∎ Financial assistance for mass community marriages (Rs.6 crores)∎ Repayment of amount of Capital Operation Fund (Rs.370 crores)∎ Financial assistance to cotton growers (Rs.134 crores)∎ Organic Farming Technology Mission (Rs.30 crores)∎ Vidarbha Watershed Mission (Rs.100 crores)∎ Establishment of Helpline for farmers
Loan Waiver Proposed in Budget 2008-09Highlights:-
All agricultural loans disbursed by scheduled commercial banks, regional rural banksand cooperative credit institutions up to March 31, 2007 and overdue as onDecember 31, 2007 will be written off in respect of small and marginal farmers.
In respect of other farmers, there will be a onetime settlement (OTS) scheme for allloans that were overdue on December 31, 2007 and which remained unpaid untilFebruary 29, 2008. Under the OTS, a rebate of 25 percent will be given againstpayment of the balance of 75 per cent.
Agricultural loans were restructured and rescheduled by banks in 2004 and2006through special packages. These rescheduled loans, and other loans rescheduled inthe normal course as per RBI guidelines, will also be eligible either for a waiver or anOTS on the same pattern.
The implementation of the debt waiver and debt relief scheme will be completed byJune 30, 2008. Upon being granted debt waiver or signing an agreement for debtrelief under the OTS, the farmer would be entitled to fresh agricultural loans from thebanks in accordance with normal rules.
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Government estimates that about three crore small and marginal farmers and aboutone crore other farmers will benefit from the scheme. The total value of overdueloans being waived is estimated at Rs.50,000 crore and the OTS relief on the overdueloans is estimated at Rs.10,000 crore.
It is proposed to create a fund of Rs.5,000/- crore in NABARD to enhance itsrefinance operations to short term cooperative credit institutions.
5.Conclusion:-
For upliftment of the farmers there is need for a joint initiative by State Government, CentralGovernment and Financial Institutions.
There is need of :i) Timely and adequate support by way of credit to farmers with focusing small and marginalfarmers to have them modern equipment for improved agricultural productivity.ii) To issue Kisan Credit Cards to all the eligible farmers to have them access to get ST, MTand LT loan from all the banks.iii) To form the SHGs of Tenant farmers/ share croppers & agricultural workers and givethem micro-credit through banks.iv) Encourage the farmers to adopt allied activities like dairy, fishery, poultry etc. withfarming activities.v) Diversification/crop rotation in agricultural production in changed scenario.vi) Adoption of upgraded technology inputs alongwith provision of infrastructure inputs likepower at subsidized cost, supply of inputs like seeds, fertilizers, tractors and credit provisionthrough all nationalized banks.vii) Adoption of Non-Farm activities with allied agricultural activities.viii) Arrangements of marketing /forward linkages /contract farming to sell their produce atremunerative prices.
If these facilities are given to farmers they may achieve self-sufficiency in agriculturalproduction. There is need for major review of agricultural policy to meet the changing needsof both producers and consumers.
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Importance of agriculture and investment in agriculture
The idea of 'food security' is basically important, and for that cause, agriculture is important. The task of nourishing its people has been possibly the main concern of its rulers throughout history. As such, agriculture is measured to be the very basis of political and social steadiness of a nation since times immemorial.In addition, the agricultural division plays an important role in the sphere of given that large scale employment to people. Large and fairly large farms employ workers to undertake the various jobs relating to farming of crops and care of farm animals. In most of the countries of the world, agriculture still remains the biggest division responsible for the employing and feeding a large percentage of the population.Agriculture is also important from the viewpoint of assessing the standard of a country's development, based on the capability of its farmers. Poorly trained farmers cannot apply the higher methods and new technologies. The importance of science and technology in the development of agriculture is fairly clear from the words of Deng Xiaoping -The growth of agriculture depends primary on policy, and next on science. There is neither any limit to developments in science and technology, nor to the role that they can play in the field of agricultural growth'.Even if agriculture frequently plays a contributory role in the 'Gross Domestic Product' - GDP - of most countries, it nevertheless requires a substantial increase from both the local and the international community.Agriculture is conventionally based on bulk manufacturing. Harvesting is done once a season, most of the times, and stocked and used later. In fact, some thinkers opine that people have begun to adopt 'batch processing' and 'stocking' in manufacturing, as a result of the practices from agricultural thinking. Before industrialization, people with the biggest stocks of food and other supplies were considered more stable, and they were able to face challenges of nature without having to starve.So important is the role of agriculture that new concepts keep 'cropping up' to give the traditional activity a modern turn. One such new idea the world is gibbering about these days is - the importance of 'organic farming'. There is evidence that, apart from their numerous other benefits, organic farms are more sustainable and environmentally sound, giving agriculture a new measurement.The importance of agricultural practices was further established when 'Organic food' began as a small movement decades ago, with gardeners and farmers refusing the use of conservative non-organic practices. With the growth of the Organic food market now outpacing much of the food industry, many big companies have ventured into it. With the emergence of multi-national companies, and with the creation of a legal certification structure such as the Soil Association, there is every hesitation that the very definition of natural food will change, making it more of a commercial activity than ever before!
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In fact, modern agriculture has already undergone a sea-change from the olden times. Nowadays, the importance of agriculture lies in the fact that it is practiced both for survival as well as profitable reasons!Investment in Agriculture is now an ordinary managed investment option for investors with a focus on a number of key Australian agricultural commodities such as forestry and horticulture. A key feature of agribusiness investing is the tax effectual feature providing substantial tax deductions supported by an Australian Taxation Office Product Ruling. Agribusiness is an alternative asset class that offers returns generated from a traditional income source. Agribusiness offers investors another level of diversification because it is not correlated with interest rates, sharemarkets, bonds or property markets.
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