Ashok Gulati & Siraj Hussain
Last month, NITI Aayog released its three-year action agenda (TYAA) for the government as a road map for reforming various sectors of the economy, including agriculture. Here, we look specifically at its agriculture agenda, and how best it can rescue agriculture, whose growth has plunged to just 1.8% per annum in the first three years of NDA government. In doing so, we also touch upon the recommendations of major official committee reports of the current government in the agri-food space. In particular, these are: High Level Committee (HLC) on Management of Foodgrains and restructuring FCI (headed by Shanta Kumar, January 2015); Task Force on Agriculture headed by vice-chairman of NITI (May 2016) and four volumes (out of 14) of the Committee on Doubling of Farmers’ Income (August 2017). Thus, the government has ample action points for reforming its food and agriculture sector.
The TYAA basically talks of action for (1) increasing productivity of land and water; (2) reforming agri-markets on the lines of e-NAM; (3) reforming tenancy laws; and (4) relief measures in the event of natural disasters. There is nothing new, and nothing wrong, in these recommendations as they have already been made by committees cited above. The TYAA, however, does not prioritise policy actions, nor does it talk about the role of trade policy in agriculture, or reforming the massive system of food and fertiliser subsidies. Nevertheless, the hard question is whether the government is ready to bite the bullet?
We think, in order of priority, urgent action in needed on five fronts. First is improving profitability in cultivation by ‘getting markets right’; second is investing in water to fulfil its slogan of ‘har khet ko pani’ and ‘more crop per drop’; third is Direct Benefit Transfer (DBT) of food and fertiliser subsidies to the accounts of targeted beneficiaries, which can release resources for investments; fourth is ensuring that the new Pradhan Mantri Fasal Bima Yojana (PMFBY) delivers compensation to farmers well in time; and lastly, freeing up land lease markets. Let us elaborate these a bit.
By now, it is clear that the policy of minimum support prices (MSP), and the promise of 50% profits over costs in BJP’s election manifesto of 2014, has not improved profitability in cultivation in the last three years. In fact, it has gone down in most of the crops. The situation is worse for producers of basic vegetables like potatoes, onions and tomatoes, as their prices at harvest time plunged to about Rs 2/kg in the last season while consumers were still paying Rs 15-20/kg. Attempts to reform APMC markets on the lines of model Act of 2003, and now of APLM, 2017, have not succeeded much. But as India showed in the case of milk, through Operation Flood, a la AMUL model, that farmers can get 70-80% of the price paid by consumers why can’t we have “Operation Veggies” on similar lines?
A beginning can be made with at least onions, potatoes and tomatoes. That would require buying directly from farmers’ groups (FPOs), setting up logistics from grading, storage to movement, and linking them to organised retail (including e-retail), large processors and exporters. But to do all this, the government will have to commit not only enough resources as it did for Operation Flood, but also change certain laws, including ECA. The e-NAM scheme, which is supposed to create an all India market ensuring better prices to farmers, has not succeeded in its mission so far. It is still installing softwares in mandis to switch auctions from shouting platform to electronic ones. Inter-mandi and inter-state transactions are very rare. However, one easier way to improve farmers’ profitability is to open up exports of all agri-products, without any restrictions, and allowing storage by private trade to build global value chains, keeping ECA in abeyance. This would require a change in the mindset from pro-consumer to pro-farmer approach.
Then, there is the issue of investments, especially in water. Pradhan Mantri Krishi Sinchayee Yojana is already mandated to achieve completion of 99 irrigation projects by 2019, which will bring an additional 76 lakh ha under irrigation. NABARD, with the Rs 40,000 crore Long-Term Irrigation Fund is to help states in completing these projects. If the government can complete these as planned, it would be a commendable achievement. But open canal system with flood irrigation doesn’t have a high water-use efficiency. It is time accord micro-irrigation (drip and sprinklers) a higher priority to achieve the objective of ‘more crop per drop’. Israel and the US may be good examples to follow. Israel has highest proportion (99%) of its irrigated area under micro-irrigation while the US has the largest absolute area (15 m ha) under micro-irrigation.
The third area for action should be DBT of food and fertiliser subsidies. The HLC has already given roadmap of how that can be done, and Rs 30,000-50,000 crore can be saved each year, which can be invested in water and upgrading marketing infrastructure. The fourth area is ensuring Pradhan Mantri Fasal Bima Yojana (PMFBY) delivers. Currently, several states don’t pay premium in time, don’t conduct crop cutting experiments in time, and as a result, farmers suffer long delays in getting any compensation. These lacunae can be fixed through modern technology and better governance, provided there is a champion in the government to deliver. The last suggestion would be to free up land lease markets for long periods. China allows land lease for 30 years so that corporate bodies can work with farmers bringing in their best expertise, inputs and investments. Can India do it?
Gulati is Infosys Chair professor of agriculture, and Hussain, former Union agriculture secretary, is Senior Visiting Fellow, ICRIER