Agriculture Sector occupies centre stage in Indian economy embodying three thrust areas as (1) to promote inclusive growth, (2) to enhance rural income, and (3) to sustain food security. It accounts for nearly 16% of GDP, about 13 % of exports and supports half of the country’s population as its principal source of income. As per Census 2011, the total number of agricultural cultivators and agricultural laborers increased to 26 crores in 2011.
The growth in Indian agricultural sector post independence has had its moments of glory. Green Revolution, which was a pioneering work undertaken by agriculture scientists like Noble Laurette Norman Borlaug & Dr. MS Swaminathan at the instance of great Prime Minister Lala Bahadur Shastri and the efforts of farmers had helped achieve a breakthrough in the agriculture sector in the 1960s and has been the major success story of free India similar to Operation Flood or White Revolution done for milk later by stalwarts like Tribhuvandas Patel, Dr. V Kurien and others. The nation that was frequently plagued by famines and chronic food shortage before green revolution, today faces surplus.
Achieving “self-sufficiency” (or being "Atmanirbhar") in food grains has been Independent India's biggest achievement. From receiving food aid in the 1950s and 1960s to becoming a net exporter, India has seen a turnaround in food production. The total food production, which stood at 54.92 million tonnes in 1950, rose to 305.44 million tonnes in 2020-21 (5.5-fold increase). Unlike developed nations, agriculture still remains the backbone of our country.
However in 74 years of independence, with the growth of Indian economy the share of Agriculture in GDP has declined over the years and even today productivity of some agricultural products is lower compared to countries like USA & China. Let’s evaluate some macro data over this timeline:
· India's GDP stood at ₹ 2.7 lakh crore at Independence. 74 years on, it has reached ₹ 135.13 lakh crore (50-fold increase). India is now the 6th (or 5th?) largest economy in the world and is on its way to becoming the third-largest by 2031, as per various estimates. An unmissable fact is that there has been a 10- fold increase in the GDP (at constant prices) since the reform process began in 1991.
· However, agri GDP as a proportion of total GDP for the country has declined considerably from almost 50% at the time of independence to around 16% now as detailed with steep decline in graph below:
However in the same period, employment in agriculture as a proportion of total employment has reduced very little from almost 70% to 42% now:
· Total no. of farmers (with farm land on their name or operational holdings as defined by Agriculture Census) are continuosly increasing since the first census in 1970-71 and has more than doubled from 7 crore to 15 crore as of now. During the same period however, total farm area (operational area as defined) has decreased from 162.3 million hectares in 1970-71 to almost 155 million hectares now; primarily due to diversion of agricultural land to non-agricultural uses like housing, industry and infrastructure. Small and marginal farmers (below 2 hectare) constituted 86% of total farmers.
· Most importantly, average farm size has reduced considerably from 2.28 hectares to 1.08 hectares in 2015-16. Further, the proportion of irrigated area to net area sown was 48.73% in 2015-16 and this includes irrigation through various means like Canals, wells, drip irrigation, etc.
· So, absolute farm area available has declined and individual farm also got divided between offspring over generations leading to this precarious situation of 1 hectare average farm.
So, what do we have?
1. We have 42% of the population contributing less than 16% of the GDP and its share is declining year on year. But over 90% of the country’s GDP is affected from its consumption. Around 50% of the consumers in the country are either farmers or households that earn primarily from agriculture.
2. Farmers not only sustain themselves but also feed the country; one of the world’s largest consumers of food grains. India’s food self-sufficiency is because of them and in the last seven years, they have been ensuring a bumper harvest of food grains non-stop. Agriculture is the only sector in Indian GDP that has grown in 2020-21 despite the COVID-19 pandemic.
3. We have one of the smallest farmers in the world with average landholding at 1.08 hectares; a farmer would typically sustain four to eight persons. Smallholders now cultivate 42 per cent of operated land and constitute 83 per cent of total landholdings.
4. We have every second farmer in the country as indebted. An average Indian farmer earns Rs 6,426 per month while the expenditure is Rs 6,223. Also, only 15 per cent of farmers earn 91 per cent of the total agricultural income amid overwhelming inequality.
5. We have more than 50% farmers depending solely on rain for cultivation. And they are bearing the biggest brunt of climate change. Drought impacts nearly 30 crore farmer population every year.
6. In 1970, three-fourths of a rural household’s income came from farm sources and now it is less than one-third. Most of the households now earn more out of non-farm sources. In fact a daily wage labourer earns more than a farmer as evident from the MNREGA minimum wages provided right now.
And what we have done to support farmers?
Looking at a large voter base of farmers, almost 30% voter base, with poor economic condition and low education, successive dispensations have doled out freebies, which have harmed them more rather than helping. Few of the examples are cited below:
1. Free Electricity: Providing free electricity to farmers with an objective of giving them higher access to water have proved a death-knell for groundwater resources in the country with higher utilisation of groundwater for irrigation as evident from below chart:
This was a short cut taken by various Governments instead of investing in canal irrigation for providing rain-harvested waters from dams. In 1950-51, Canal irrigated area was 8.3 million hectares and it currently (2015) stands at 16.18 million hectares (hardly 2-fold increase). This shows that we have failed to provide required infrastructure to the farmers. Now, compare this with other infrastructure progress that we have done in the same period.
Roads have expanded exponentially in the last 75 years; from 0.4 million kilometres of roadways in 1950 to 6.4 million kilometres in 2021 (16-fold rise), making India's road network the second largest in the world. Only 3,061 villages had access to electricity in 1950 and in 2018, the Indian government announced that all of India's villages – 5,97,464 in total – had been electrified.
We have failed miserably in utilising the rainfed water collected through river-dams, inter-connecting rivers and making water available to masses both for agriculture as well as for drinking purpose, leaving people to extract ground water from maximum depth and leaving wells dry.
2. Fertiliser Subsidy: Subsidies on fertilisers have no doubt helped improve yields but rampant usage of chemical fertilisers have led to soil health deterioration across the country apart from degrading the quality of food fed to Indians all across. On the other hands, organic fertilisers like cow dung get wasted as it becomes uneconomical for individual farmer to use it appropriately. If farmers start paying full price of fertilisers, judicious usage of fertiliser would improve soil health as well as farm economics.
3. Loan waivers: Frequent farm loan waivers being announced by different Governments only help large land sharks and actual benefit to average farmer is almost negligible. What is required is providing support in farm inputs which helps this farmer improve his overall economics.
4. MSP & Mandi System: Minimum Support Price (MSP) mechanism is a necessary step to prevent direct loss to farmers. However, with flawed implementation, it has led to over-production of cereals like Rice & Wheat and severe shortage for products like Pulses and Oilseeds.
Lopsided MSPs have ensured higher shift towards cereal crops while required crops have been ignored. If we combine further the trends of canal irrigation and MSP of products together, we are not surprised to find that necessarily almost 85% of cereals like Wheat & Rice are produced by irrigated farms while it is exactly the other way round for oilseeds & pulses which are mostly grown in non-irrigated farms.
Similarly, Mandis (Farmers Market) have become cartels of aggregators, who are in turn controlled by political masters, which does not ensure fair price to the farmers all the time. We need better mechanisms of market access to realise higher returns.
5. Other schemes like Farm Insurance, PM-Kisan: Providing direct cash benefit to farmers is not a long-term solution. Basically a farmer is not a beggar, depending on support from taxpayers' money, but is the 'anna-daata' or food provider for the country and wants to live with pride. However, he needs support more in terms of education, awareness, availability of latest technology, market access, etc. to earn a decent living.
6. Myriad laws regulating farm have created more hindrances rather than promoting the agriculture in the country. For example, there are more than 40 laws applicable only for land revenue and tenancy across the country. Most of these laws being derived from earlier British rule, were created more in terms of regulating farmers and controlling agriculture and needs revamp considering agriculture as a free enterprise.
Technological interventions have not worked yet with farmers.
Bringing new technologies and practices to such a large number of smallholders scattered over a vast countryside and integrating them with the modern input and output markets is a huge challenge for Indian agriculture. Though the public extension system has undergone several rounds of reforms and has tried different models of service delivery, it remains limited in its penetration and impact. A large nationally representative survey on access to modern technology for farming, carried by the NSSO showed that just about 10% of farmers in India had accessed any institutional source of extension to learn about new agricultural technologies. However, some green shoots are visible for low-cost and smaller unit size interventions like drip-irrigation, mini-tractors, etc.
Participation of private entrepreneurs and enterprises in extension could help. It is expected to bring more experimentation and innovation in agricultural extension and increase its reach and impact. Reaching out to a large number of very small farmers, however, has high transaction costs, whereas these smallholders generate very little surplus and can hardly afford to pay for extension. Therefore, even private players have struggled to create a financially viable extension system that pays for itself. There are very few examples of financially successful private extension businesses in India. A common practice for many private (for-profit, which includes cooperatives) agribusiness firms is to use their extension services to promote their brand and boost sales or procurement of their products, equipment, or services. Best example in this regard are dairies and sugar mills and we have few more examples in cotton, oilseeds, etc. which could not sustain.
So, what is required to be done?
To improve agriculture sector in India, we need to have sound policies on the following areas:
1. Access to funds (credit),
2. Stopping Soil erosion & improving soil quality
3. Better Market Access (agriculture marketing)
4. Local infrastructure (irrigation, farm equipment, adequate storage facility, etc.)
5. Proper mechanism of pricing governed by costs as well as requirements
Shall discuss in detail about this in next posts.
Meanwhile, what is an average farmer doing today?
Farmers today are on the streets literally,
1. Either protesting or dumping their produce for not being able to get a return which is evident all across the nation.
2. Are committing suicides in droves. last year, every hour nearly two persons involved in farming committed suicide in the country.
3. Exiting the business. Census 2011 says every day 2,000 farmers give up farming.
Due to increased urbanisation, pressure on land has mounted manifold leading to much higher returns on farm land. In fact, the situation is such that if you are looking at starting agriculture by purchasing farm today, the prices being exorbitantly high, you won’t be even able to meet interest on your capital, leave alone proceeds from farm produce.
Similarly, new generation of farmers are least interested in farming due to non-existent returns and lure of cities to settle down with a secured fat-salaried job.
So, farmers find it lucrative to sell their land to a big landlord, an industry or for any infrastructure project to the Government. Will purchase a good kothi (pucca house) and definitely a SUV,
use some proceeds to set-up a dhaba (road-side restaurant) with an aim of having alternative profession but unskilled to operate such unit, mostly is used to kill free-time for few years till he exhausts:
4. Or continuing to toil hard in the fields hoping for better days ahead.
So, lets chant Jai Jawan, Jai Kisan till something worthwhile happens for the farmers!
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