Hit by drought, PM Narendra Modi govt scrambled to get agriculture back on track

After two successive years of drought, the news of normal rainfall in 2016 came as a big relief to farmers, government and consumers at large, who were reeling under unduly high prices of pulses.

After two successive years of drought, the news of normal rainfall in 2016 came as a big relief to farmers, government and consumers at large, who were reeling under unduly high prices of pulses. The severity of droughts in the opening years of the NDA government made prime minister Narendra Modi change some important agri-policies. First, he launched the PM’s Fasal Bima Yojana (PMFBY) on February 18, and then on April 14, he launched the e-National Agriculture Market (e-NAM). The idea behind these two schemes was to reduce the risks of farmers from vagaries of nature as well as from narrow local markets. Both these schemes were supposed to give a better return to the farmers.

During 2016, PM Modi also gave a clarion call to double farmers’ incomes by 2022, which was echoed in the Union budget. In order to realise this dream, several ongoing schemes were expedited and enhanced. The PM Krishi Sinchayi Yojana, soil health card scheme, neem-coated urea, etc, are some of these schemes which were stepped up to help farmers reap rich harvest.

How far were these dreams realised in 2016? Let us look at the pulses segment first. In the pre-monsoon season, pulses prices were ruling high, at around R180-200/kg for major kharif pulses. The government decided to tackle this and acted upon the report of Arvind Subramanian by increasing MSPs of kharif pulses by 8-9%, and giving a handsome bonus of R425 per quintal on tur, moong and urad. With normal rainfall and high prices of pulses, area under kharif pulses increased from 10.7 million hectare (Mha) in 2015 to 14.2 Mha this year, and production rose by 48% touching 8.22 (million metric tonne) MMT in 2016. The government also announced its decision to create a buffer stock of 2 MMT of pulses. However, many pulse farmers were again short-changed by failure of the government agencies to procure enough pulses even at MSP when bumper harvest arrived in the market. Market prices of moong and tur fell below the MSP in several states. So far, only 6.9 lakh tonnes of pulses have been procured this year. The Price Stabilisation Fund of R500 crore is not sufficient to build a buffer stock of 2 MMT. One needs to allocate minimum R8,000 crore for such a scheme.

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Similarly, the PMFBY got off to a promising start whereby number of farmers, area insured and sum insured increased significantly. PMO has recently tweeted that sum insured went up from R49,454 crore in kharif 2013 to R141,339 crore in kharif 2016, an increase of 186%. But the farmers were expecting that new scheme will also expedite settlement of their claims. However, due to inadequate budget provision, the Centre and the states have not released their share towards insurance premium and as a result, insurance companies have shown no urgency to settle the claims of farmers affected by floods in UP, Bihar and Assam.

Another promising initiative of the government this year was the launch of e-National Agriculture Market which has the promise of integrating the fragmented marketing structure of agricultural produce. In its first year itself 250 mandis in 10 states have been linked to e-NAM platform and till December 16, 31.13 lakh tonnes of agriculture produce worth R6,138.9 crore has been transacted on this platform. Several states have achieved significant success in using the platform for trading of agricultural produce. In subsequent years, e-NAM has the potential to become a game changer provided grading, standardisation, assaying, dispute settlement mechanisms are put in place. The momentum built in the country for digital transactions can be used to force commission agents and APMCs to make payments to farmers accounts directly. An integrated national market can bring good returns to farmers. In 2017, the central government should make every effort to bring Punjab fully on board of
e-National Agriculture Market.

The PM Krishi Sinchai Yojana is another scheme to contribute to farmers resilience to droughts and augment his productivity. It was a good decision to identify 23 projects which could be completed by the end of March 2017. Another 31 projects can be completed in 2017-18. The decision to create long-term irrigation fund with National Bank for Agriculture and Rural Development (Nabard) with a corpus of R20,000 crore was a visionary step as most state governments were not able to provide their share to complete the irrigation projects. With focussed attention on irrigation schemes which could be completed in next three years, instead of starting new projects, the government can increase irrigation cover in the country. But so far, as per the last report, less than R7,000 crore have been mobilised by Nabard. The budget allocation for micro irrigation continued to be much less than the requirement. In fact, the allocation came down from R882 crore in 2015-16 to R866 crore in 2016-17.

Overall, while the direction of agri-policy changes is right, it is not being matched by ample resources and effective implementation. The result is only partial gains to farmers.

Ashok Gulati, Infosys chair professor, ICRIER
Siraj Hussain, former Secretary, Agriculture & Visiting Senior Fellow, ICRIER

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