Rajasthan farmer Gajendra Singh’s unfortunate and tragic death in Delhi triggered a political debate concerning agrarian distress. Interestingly, each one was swearing on the welfare of farmers. Political parties across the spectrum have also recognised that something solid needs to be done. The government has swung into action, preparing a contingency plan to tackle any drought, if the rains turn out to be sub-normal this monsoon season. Prime minister Narendra Modi has commented that agrarian distress is a deep-rooted problem, and it has been there for quite some years, and that we need to find a satisfactory and sustainable solution.
What has caused farm distress and what could be its possible solutions? Before one tries to diagnose the causes and suggest remedies, one thing needs to be set aside: The current distress has nothing to do with the land acquisition Bill.
Although one can spell out several factors that have been causing farm distress from time to time, the central issue is low viability and high volatility of the farm sector. Low viability comes from small size of average holding in India (only 1.15 ha), with 85% of holdings being less than 2 ha in size. Low productivity adds to this low viability. More than half the land cultivated is rain-fed. But even an irrigated plot of 2 ha, with two crops a year and reasonably high productivity, will not be sufficient to give the farmer ample income to feed a family of five, unless high-value crops, like grapes, etc, are being grown. That is why almost half the income in rural households comes from non-farm sources today.
Therefore, we must recognise that people will have to move out of agriculture in due course, as has happened in almost all countries. The only thing to care for is that it should be a ‘pull factor’, inviting rural farming population to higher productivity jobs in the manufacturing and services sectors, and not a ‘push factor’ resulting from distress in agriculture. Movement to high productivity jobs will depend on the overall growth of the non-farm sector as well as skills that are developed for masses in rural areas. And this is going to take time, may be 15-20 years. In the meanwhile, our policymakers have to answer a central question: Is it acceptable to have overall growth of 7-9% in the economy, with less than 2% growth in agriculture? If the answer is ‘yes’, then there is a deeper problem in the model of development. But if the answer is ‘no’, there is still some hope.
It is incumbent for us to ensure at least 4% growth in agriculture, if not more, to make a smooth transition from agriculture to non-agriculture over the next 15-20 years. And to have that, we need to invest in raising productivity as well as ensuring an all-India market access for farmers. This calls for reforms in agri-R&D, extension services and irrigation on the one hand and marketing institutions (APMC, Essential Commodity’s Act) on the other. Successive governments have talked about these, but not one carried it forward in any serious manner. The reason is that our political and bureaucratic system is more tonnage-centric than farmer-centric. We are happy and satisfied when production goes up, but don’t care whether farmers have gained from it. This attitude needs to change.
The other cause of current distress is high volatility, either coming from vagaries of nature or tumbling prices. Today, it is not only unseasonal rains and hailstorms, but also crash in prices of several agri-commodities, be it potatoes or corn or cotton. Their tumbling prices have slashed farmers’ incomes substantially, and the MSP system is benefiting less than 10% of the farmers. We need to fix these, if we want to make Indian agriculture somewhat more viable.
In my last column in this paper, on April 13, I had given some details about a proposed insurance system that can be put in place. The technology to capture each farm’s details on pixels (satellite imagery), and to link to farmers’ accounts for delivering benefits (Aadhaar number) is available. Through satellite-generated images, agronomic experts can assess the extent of damage in a particular area, by-passing the time consuming (and often corrupt) patwari system. If there is a hailstorm tonight in any area, within 24-48 hours, all damages can be identified and the compensation money transferred to farmers’ accounts. This is quite feasible, and India’s pride will be in this innovation, where high-end IT and satellite technology can be used for the benefit of those who are at the bottom of the economic pyramid. Sums insured can be raised to at least R40,000/ha of irrigated crop. The government will have to subsidise premium (50% paid by the Centre and 25% by the state, with remaining 25% coming from the farmer). This is what the practice is in countries like China and the US. Resources for this premium subsidy can be raised through a 2% cess on the agricultural inputs industry. Can the Centre take up this plan?
In 2014, P K Mishra submitted an excellent report to the government on reforming the crop insurance sector. Had it been adopted, we would not be as panicky as we are today. Mishra is now in the Prime Minister’s Office, and he has been an agriculture secretary earlier in his career. If he can get the proposed crop insurance scheme implemented, it would be a great service to the Indian peasantry. Of course, the report can be fine-tuned and even extended from weather-based insurance to income insurance. The income insurance will cover the risk of nature’s fury as well as the risk of markets.
It is high time a serious and sustained effort is made to reform agriculture, to make it economically viable and reduce its exposure to risks. The current agrarian crisis needs to be converted into an opportunity for change, and for the benefit of millions of our farmers.
The author is Infosys Chair Professor for agriculture, ICRIER