1. Editorial: India’s farm crisis

Editorial: India’s farm crisis

Two years of bad rain makes even Punjab vulnerable

By: | Published: August 21, 2015 12:19 AM

When a Punjab is flagged as an area of some risk following bad rain, it is time to get seriously worried. The state may have, as ratings agency Crisil points out in its latest report on Indian agriculture, as much as 98.8% of its cropped area under irrigation, but with a 50.4% shortfall in rain last year and a likely 15% shortfall this year (as of August 16, the shortfall was 28.5%)—with unseasonal rains in March—its reservoir levels are roughly half of what they should be. Combine all of this with dramatically lower global prices of agricultural commodities, and you have a potential crisis in Punjab, apart from that in the entire country. None of this is new, but as Crisil points out, the frequency of agricultural crises is rising, with not too many signs of alleviating measures.

So, India had a drought in 2009 and a delayed and erratic monsoon in 2012, but after that, the gap has shortened—there was another delayed and deficient monsoon in 2014 and, after unseasonal rains in March this year hit the crops, there is the possibility of another deficient monsoon. While the IMD is looking at a 12% shortfall, private forecaster Skymet is looking at a near-normal monsoon with a 2% shortfall as compared to a 2% excess prediction at the start of the monsoon. This shortening cycle of normal monsoons should ordinarily have been followed by measures to increase irrigation of land, greater crop insurance, use of less water-intensive crops, more research/use of hybrid seeds including GM ones to both increase productivity as well as make agriculture more drought-proof. Indeed, as Crisil points out, of India’s 73% rural households, roughly 58% are engaged in agriculture, and of these, around 63%—that’s 27% of all Indian households—rely heavily on income from agriculture. In even richer states like Maharashtra, the proportion dependent upon agriculture is quite high but, as compared to the all-India average of 47%, the proportion of area covered by irrigation is a mere 18.7%—and just 6% of the cropped area is insured.
Which is why, it is unfortunate that agriculture reform has been accorded such low priority. As Ashok Gulati, one of the foremost agriculture experts in India points out, the most important policy is to get incentives right—right now, with FCI focused on just buying wheat and rice, from a handful of states, farmers have preferred to largely grow these. Though there are many other problem areas—excessively high government-mandated cane prices have brought the industry to ruin, for instance—FCI reform was meant to stimulate further farm reform. The money saved from this was to be used to give cash subsidies to farmers to grow other crops and to shift wheat/rice to more suitable regions and to fund crop insurance. As part of this process, the mandi stranglehold was to be broken and exports policy liberalised, among a host of other initiatives. With little changing on the ground, however, India’s best hope for right now is that the government’s IMD is wrong and the private Skymet is proved correct.

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