Seven Decades of Farming Scenario – A Review & Way Forward

By BNV Parthasarathi
India is basically an agricultural economy and its economic evolution was primarily driven by agriculture. However, if one looks at the economic growth in India and compares the same with pre- and post- Independence one will find certain interesting observations.
Share in GDP
% of population employed

BNV Parthasarathi
One can find from the above data that India’s economic evolution has progressed from agro based economy to service sector propelled growth in terms of GDP whereas the majority of the population still continues to be engaged in agro based activities. On a detailed analysis one will also find that manual and traditional cultivation methods have given way to mechanized farming and therefore the number of people employed in agricultural and allied activities should have come down substantially whereas the data proves it is not so. One can also observe that the quantum of agricultural production has in fact increased to meet the needs of the expanding population post-Independence though the percentage of share of agriculture in GDP has declined.  In other words one can say that by and large the agricultural productivity has increased post-Independence in India though there is still a long way to go as per the global standards. Mechanisation, green revolution, white revolution, blue revolution are some of the major factors that have contributed to the increase in agricultural production and allied activities as well as the agricultural productivity in India. As a consequence to the above, one must conclude that the number of people deployed in agriculture and allied activities must have come down whereas in reality it is not so. Economists call this phenomenon as under employment and disguised unemployment.

Methods of cultivation
Farmers have been tempted to go for inorganic farming as it gives better scope for greater agricultural production and productivity. Therefore, usage of chemicals and fertilizers has been on the increase in line with the above thinking leading to unhealthy food production. While the financial cost of organic food production may be relatively high compared to the inorganic food, social cost-benefit analysis indicates organic food production is highly beneficial compared to inorganic food. Unfortunately due to various reasons, not many efforts are made in India to encourage the farmers to go in for organic cultivation. India ranks 15 in terms of World’s Organic Agricultural land (2013 data as per FIBL & IFOAM Year book 2015). India’s total area under organic certification is 5.71 million hectare (2015-16). Share of agricultural land in the total land in India increased from 59.6% in 1965 to 60.4% in 2014. As per Agriculture Census 2010-11, small and marginal holdings of less than 2 hectare account for 85 percent of the total operational holdings and 44 percent of the total operated area. This is one main reason for low level of agricultural productivity in India. At present, some 11 percent (1.5 billion ha) of the globe's land surface (13.4 billion ha) is used in crop production (arable land and land under permanent crops). According to the World Factbook of the CIA in 2014, India ranks second in terms of global agricultural output ($.367 billion). Dairy, horticulture and inland fisheries are high value segments and India has huge potential to expand in these sectors. India ranks first in terms of milk production accounting for 18.5% of world milk production (2014-15).       
Cropping patterns many times are not in line with the market demand and availability of the water resources which in turn predominantly depends on the rainfall. Government departments and agencies like – meteorology department, agricultural ministry, and agricultural marketing federations do not function in collaboration and coordination with each other thereby leading to avoidable wastages caused by wrong cropping patterns.

Water Resources
India has unfortunately followed the practice of excessive focus on highly expensive mega and large irrigation projects/ dams/ reservoirs rather than giving preference to check dams, small canals and ponds in the villages which cost less but are more effective in storage of rain water and improving the ground water levels. Mega and large irrigation projects are mostly mired in controversies in terms of cost escalation, environmental and other hazards leading to time and cost overruns quite often. In spite of this experience the policy makers and government agencies continue to spend more funds on mega and large irrigation projects. These misplaced priorities have led to several fertile lands turning into barren lands and deserts over a period of time as the villages have neglected the conservation of rain waters through check dams, small canals and ponds in their region hoping that the large irrigation projects will give them access to water resources for cultivation. It is high time that Indian government realizes this mistake and takes swift corrective measures to encourage the villages to go in for check dams, small canals and ponds. Countries like Israel have proved that shortage of water resources will not be a constraint for food production if scientific measures like drip irrigation are followed. The recent bilateral agreement between India and Israel recognizes this aspect and has included the same as one of the priority areas under the bilateral agreement for sharing of the Israel’s expertise in the areas of drip irrigation and sewage waste management projects with India.

Poor Infrastructure
Studies indicate poor infrastructure like bad roads and shortage of godowns and cold storage centres is resulting in around 10 percent additional transport and storage costs to the Indian farmers. Food loss in India is estimated at ₹ 920 billion per annum (harvest and post harvest losses). Globally the food loss is estimated at 24% during production, 24% during handling and storage and 35% at consumption. Therefore, strengthening the rural infrastructure can save the annual food loss of ₹ 220 billion in India.  This is one of the major areas of grave concern yet not much of concerted effort is made in this direction.

Indian farmers also face the problem of exploitation by middlemen and do not get remunerative prices for their crops/ produce. Absence of godowns and cold storage centres only compounds this problem further, leading to distress sale of their agricultural produce by the farmers. Farmers also do not get adequately compensated for the crop loss due to famine and floods, though crop insurance is very much available. Many small and marginal farmers are either unaware or not in a position to bear the premium cost of the crop insurance which is a matter of concern. Only 20 percent of the farmers in India are insured for crop losses. Expensive insurance premium and out of market methods of computation of crop losses for insurance claims are a few of the factors that deter many small and marginal farmers from taking the crop insurance cover.  

Banks in India lend to agriculture sector at concessional interest rates and in turn get compensated for interest subvention as well as refinance from NABARD which is the apex refinancing and regulating institution for agricultural banking. Small and marginal farmers have also been encouraged to form Self Help Groups (SHGs) to avail rural finance at concessional interest rates. NGOs and Micro Finance Institutions play an active role in rural lending by providing wide range of services like crop insurance, life and health insurance, capacity development and skill development apart from giving loans to the small and marginal farmers. Micro finance has succeeded in providing credit to the small and marginal farmers at lower interest rates than the money lenders in India though it is still expensive compared to the bank lending to agriculture. Political interference, multiple regulators are some of the major issues in micro finance and it is hoped that the Indian Government will bring a legislation enabling the RBI (Reserve Bank of India) as the sole regulating authority to stream line the micro finance sector in India as the draft micro finance amendment bill is ready and awaiting passage of the same in the Parliament. Micro finance has largely succeeded in bringing change in the mind sets of the Indian farmers, who have realised that financial discipline and prompt repayment of the loans will entail them to greater credit to expand their incomes whereas populist measures like loan waivers or subsidies will not sustain them in the long run.

Migration to cities    
Due to uncertainty of returns and unremunerative efforts in agriculture, people are migrating from the villages to urban localities in search of livelihood. This has only resulted in overcrowding of the cities posing challenges to the sustainability of the outdated and overburdened urban infrastructure. This migration of people from villages to cities has also led to paucity of agricultural workers/ labourers during the crop season in the villages.

Concerted efforts are not made to promote agro based industries barring a few like sugar, cotton and food processing units in a few clusters across the country; and as a consequence, the seasonal activity in agriculture is not effectively supplemented by other sources of income to the farmers leaving them high and dry to the vagaries of monsoons.

Indebtedness of the poor farmers in India is mainly due to crop failure, unremunerative prices and exploitation by middlemen leading to helplessness and frustration forcing certain sensitive farmers to take the extreme step of committing suicides. Unaffordable healthcare for medical emergencies also creates a distress situation to the rural poor. Though there are several government welfare schemes meant to address the above issues; at the ground level, one finds that due to implementation gaps, lack of effective coordination between various agencies and absence of an integrated policy framework, these problems are not fully resolved. Indian government has exempted the agricultural income from taxation in order to encourage the people to go in for agricultural activities. However this has not benefited the small and marginal farmers who suffer a lot since they do not fall under the tax net whereas the rich agriculturalists and landlords who get huge income from agriculture are fully exempted from paying income tax!

Clarity in policy measures not a charity
Indian farmer does not want charity. He considers agriculture as not only a livelihood but a passionate activity that he worships. He wants the necessary supporting infrastructure and remunerative prices for his toiled work and crop insurance at affordable premiums to have sustainable living. It is high time the Indian policy makers understood the mindsets of the Indian farmers and took long term policy measures with an integrated approach to address the above major issues to promote sustainable agriculture.


Feature: India@70
Setu, August 2017

1 comment :

  1. A high end view of facts which the author has collated it at one place. Unless transparency and accountability is mandated at all levels be it at policy levels, both at political and bureaucracy,at the market intermediaries, at financial institutions including regulatory authorities + farmer is giving the centre of focus, I am afraid, things will continue to remain in the downward spiral.

    We are a country with lopsided priorities with the media giving more importance to business interests and ratings, the citizen is apathetic and forgets his misfortunes in the soap serials,cricket scores and the affairs the film stars be it of Bollywood or the regional centers, the investing community is more interested in catering to the global markets and with small sachets, we can milk and sweat the existing assets in the rural hinterland, and without an enlightened leadership, I am afraid we will not be able to leverage the natural resources we have in this country _ climatic, human to modernize the agricultural sector and position it to gain 10X increase in GDP.


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