Between 1972 and 1986, Punjab’s farmers were the pride of the nation, and agriculture in the state grew by 5.7% every year as compared to a mere 2.3% for the entire country. In the next two decades, though few noticed, the miracle of the green revolution had paled and, at 3% per annum, the state’s farm-sector growth was just a bit higher than the entire country’s 2.9%. In the decade after that, the erstwhile star performer has done so badly, its growth was less than half that of the rest of the country. While states like Madhya Pradesh grew by 9.7% between FY06 and FY15 and Jharkhand by 8.6%, Punjab grew by a mere 1.6%—the all-India number was 3.5%. Among the larger states, only Kerala fared worse than Punjab.
In such a situation, the usual prescription is to increase irrigation capacity or the roads network, but Punjab beats the rest of the country by a wide margin on most of these parameters. Almost 99% of the state’s land area is irrigated; at 3.77 hectares, its average land-holding is more than three times the all-India number and, at 2,128 km per thousand square kilometers, its road density is much higher than 1,317 for all-India. Punjab’s crisis, in fact, lies in its early success and the fact that this was dependent upon high procurement by the government—one big farmer risk was taken care of and, as the water table fell due to growing crops not suited to Punjab, the government took care of this by supplying electricity free to farmers. The problem, however, is that over a period of time, the rise in MSPs has been tempered, limiting the gains to farmers. But, the farmer who was used to a generous level of subsidy is now unwilling or unable to move to other crops where the risks are higher—close to 85% of Punjab’s area is devoted to two crop that sees a minor increase in MSPs each year.
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Which is why, as part of its recommendations on how to fix the state’s agriculture—28% of Punjab’s GDP comes from agriculture versus 18% for all-India—ICRIER has suggested ways to move out from foodgrains to crops like maize which are linked to poultry and silage for milch animals and starch. A greater emphasis is needed in fruit and vegetables—just 2.5% of the area is used for this but it contributed to over 6% of the state’s farm output—and dairy where the level of processing is still very low. Developing a vibrant food processing industry is critical both in terms of creating more value addition as well as jobs—imagine the possibilities for the bakery and chocolate/cheese industry in an area so rich in milk. All of this will require government subsidies such as for cold chains and processing units in the earlier years, so central support will be critical. Punjab spends a lot on its water/electricity subsidies and that can be moved to areas like fruit and vegetables—farmers can get per-acre cash payments to subsidise their costs—but till the switch takes place over five years or so, a central grant will be needed; perhaps that is something the new chief minister Amarinder Singh should discuss with finance minister Arun Jaitley.