The concerns for transforming agricultural sector are getting louder, as the last chance of presenting the full-fledged Union budget of the current political regime is getting closer. Given the formidable challenge of the government to double farmers’ real incomes in the next six years, the farm sector deserves to be the nucleus of the Union budget. During the last three and half years, agriculture has received utmost attention and a good number of measures have been taken to expedite growth and forestall distress faced by farmers in several states. Large investments in irrigation along with key initiatives, such as Pradhan Mantri Krishi Sinchayee Yojana, Soil Health Card Scheme, Pradhan Mantri Fasal Bima Yojana, E-NAM (electronic national agriculture market) and ‘price deficiency payment’ system, to address gaps in minimum support price are expected to yield benefits in due course. However, the push required for strengthening agricultural research & development (Agri-R&D), which is critical for the long-term growth in this sector, remains elusive . The three-year agenda document, brought out by the NITI Aayog, has laid considerable emphasis on accelerating agricultural productivity through the use of high-yield seeds, improved irrigation techniques, precision farming and related technologies. But, the persistence of underinvestment in Agri-R&D remains worrisome.
Agriculture has made significant strides following the technological advancements initiated during the sixties and the seventies. The transformation of India from food deficiency to self-sufficiency and from a net importer to a net exporter of agricultural commodities is a matter of great pride. In fact, the outcomes have been incredible, as the country now boasts of producing about 276 million tonnes (mt) of foodgrains, 287 mt of horticultural crops, 164 mt of milk, and 11 mt of fish. Unequivocally, the budgetary outlays allocated towards the development of scientific infrastructure and human resources in the past have paid rich dividends. However, a deceleration in the rate of productivity growth experienced from the last decade, along with technology fatigue, will soon jeopardise such gains unless we make adequate investments in Agri-R&D. The allocations to the National Agricultural Research System (NARS) under the aegis of the Indian Council of Agricultural Research (ICAR), State Agricultural Universities (SAUs), and other organisations have largely been constricted. India spent Rs 6,238 crore on Agri-R&D in 2016-17, which is even less than 0.5% of total income earned from agriculture and allied activities, ie gross domestic product. The expenditure on Agri-R&D in India has been hovering around 0.3-04% since 2001, except in 2011 when it reached 0.52% because of higher plan allocations of the Union government. The allocations are minuscule in most of the poorer states situated in the eastern region. The amount spent on Agri-R&D is drastically low in comparison to many developed countries and also with comparable developing countries. Its share in Agr-GDP is much higher in Brazil (1.8%), Mexico (1.05%), Malaysia (0.99%), China (0.62%) and in the high income countries at 3.01%. Another worrisome trend in India is that more than 90% of the allocated amount is spent on salaries and day-to-day expenditures in the ICAR, agricultural universities and research organisations. A gross underinvestment calls for serious attention.
The contributions of the NARS towards an increase in exports in recent years deserve special mention. India is exporting basmati rice to the tune of Rs 25,000 crore, Pomegranate Rs 490 crore, Grapes Rs 1,780 crore, and Banana Rs 390 crore. Most of these exports are attributed to the efforts of the NARS. A single variety of basmati rice (Pusa 1121) released by the ICAR is fetching Rs 15,000 crore of export value. Research also shows that public spending on Agri-R&D in India is much more effective in accelerating growth and lessening poverty, compared to other economic and social expenditures. The returns on investments in Agri-R&D are high at 33%. Even at the disaggregated state level, we have mounting evidence to show much higher payoffs from additional investment in research, especially in the low-income agriculturally dominant states.
It is surprising that despite high dividends from Agri-R&D, the funds allocated in the budget continue to be low. Investment in Agri-R&D is crucial to fulfil government’s commitment to raise farmers’ income and overcome the agrarian crisis. Knowing that private investment in research is minuscule and mostly in-house by the seed companies, increased public resources to ICAR and SAUs are critical to raise capital intensity, technological upgradation and its transfer to the fields. The committee on doubling of farm income, ministry of agriculture and famers’ welfare, has recommended stepping up of public investment in agriculture by an additional amount of nearly Rs 240 billion by 2022-23 at 2015-16 base. As percentage of income from agriculture and livestock activities, the investment should increase from the current 1% to 2.3% in the next seven years. It goes without saying that the research activity must get its due share on a sustainable basis. The government in the upcoming budget can shift the composition of expenditures across various economic activities by allocating a larger proportion of additional revenues to investment in Agri-R&D. Concerted efforts should be made to raise expenditure on agricultural research up to 1% of Agri-GDP. Importantly, higher investments in research should be supplemented with extension services and institutional reforms to enable wider dissemination of research outcomes to the farmers.
By Anjani Kumar and Seema Bathla