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  1. Addressing the root causes of farm distress

Addressing the root causes of farm distress

It is expected that the measures announced in the Budget will boost agricultural output and rural incomes

By: | Updated: March 8, 2016 2:45 AM
The rural economy requires a big push in the form of interventions because of dented output—which is an outcome of two consecutive years of poor monsoon rainfall, meltdown in agricultural commodities at the global level. The rural economy requires a big push in the form of interventions because of dented output—which is an outcome of two consecutive years of poor monsoon rainfall, meltdown in agricultural commodities at the global level. (Reuters)

It appears that Budget FY17 has not generated enough excitement in media, academics and the masses, including farmers. Currently, farm distress is a serious concern in the country. The livelihood security of the rural population is in peril. Farmers are in dire need of substantial help to come out of the crisis-like situation.

The rural economy requires a big push in the form of interventions because of dented output—which is an outcome of two consecutive years of poor monsoon rainfall, meltdown in agricultural commodities at the global level and muted growth in wages of human labour.

All these together have impacted growth in agriculture, which has measured a measly 0.4% in the last four quarters. It has also negatively affected rural incomes, in turn reducing the purchasing power and spending by the rural people on consumables and assets. Even the consumption of inputs in farming has come down.

The government has announced a slew of measures for rural India. These include, among others, expansion of roads, electrification, irrigation and creation of market clusters. In addition, some favourable measures for the commodity markets have been announced. A common e-platform for farmers in 585 wholesale markets is an additional announcement.

The allocation for agriculture and farmer welfare has almost doubled—from Rs 25,917 crore in 2015-16 to Rs 44,485 crore in 2016-17. The expenditure on rural development has been increased by 10%—from Rs 79,279 crore in 2015-16 to Rs 87,765 crore in 2016-17.

The doubling of expenditure on the Pradhan Mantri Gram Sadak Yojana (PMGSY) is expected to connect the currently unconnected remote villages to markets, where farmers can fetch higher prices for their produce. The two important schemes—the Pradhan Mantri Krishi Sinchai Yojana and the Krishi Unnati Yojana—have bagged Rs 18,697 crore; their objective is increasing irrigation coverage in rain-fed areas. This is very important since India has less than 50% of cultivated area as irrigated, and the rest depends on monsoon rainfall.

Further, the crop insurance scheme was allotted Rs 5,500 crore to save Indian agriculture from vagaries of uncertain weather and other natural calamities, which result in lower-than-normal production. This causes losses to farmers and severe hardships. If implemented efficiently, it can lessen the problem.

Several other significant aspects such as water conservation, promotion of balanced use of fertilisers and organic manure, soil heath cards and easy access to credit have been focused upon. The allocation for MGNREGA has been increased to Rs 38,000 crore, with the objective of job and asset creation in rural areas.

Other interventions in the Budget include the allocation of Rs 500 crore for increasing the production of pulses in the country under the National Food Security Mission. India is dependent on imports of pulses to bridge the demand and supply gap—the country imports 2-3 million tonnes of pulses on a regular basis. There are serious supply constraints in importing pulses because a few countries produce and export the varieties consumed by Indians. With the anticipated increased pulses production as a result of this programme, the common man may get a reprieve from soaring prices of this important protein crop. In addition, Rs 900 crore has been set aside for price stabilisation fund to check unwarranted price increases in the common man’s daily use commodities.

Ensuring better prices to producers from the sale of farm products is a serious concern in agricultural policy. In order to solve this problem, free agriculture markets and a safety net in the form of government procurement of foodgrains and pulses in individual states at MSPs have been announced. This provision aims to benefit farmers equally in each state rather than in agriculturally-developed states such as Punjab and Haryana.

Dairying is a subsidiary occupation and additional source of income for rural families in India. Particularly, it is helpful in raising the income of weaker sections and landless labourers in rural areas. It is an important source of self-employment for rural women. In order to boost this sector, four projects have been announced and a provision of Rs 850 crore has been made to implement these projects.

In order to fund new initiatives to revive the rural economy, it has been proposed to impose the Krishi Kalyan Cess of 0.5% on taxable services.

It is sanguinely hoped that the measures announced in the Budget will provide a boost to agricultural output and rural incomes. These may also help in coping with farm distress. The level of success, however, would depend on the efficiency of governance in implementing these interventions and the outcomes achieved. This is a challenging task. At the end, let us pray for a good monsoon this year, which is still the most important determinant of farmer fortunes in India.

The author is acting director, Agricultural Economics Research Centre, University of Delhi

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