By Ashok Gulati
Even before the parliamentary elections were held in 2024, the Modi government had asked all secretaries to prepare a policy agenda to be announced in the first 100 days of Modi 3.0. They were pretty sure that Modi would be coming back with a thumping majority. The actual results of the elections were humbling to the Bharatiya Janata Party (BJP) as they fell way short of their target of 370. Yet, the enthusiasm of the first 100 days has not waned.
The BJP now is running a coalition government, and therefore it is imperative for it to accommodate the demands of its major allies, especially Chandrababu Naidu and Nitish Kumar, so that government keeps doing its job without much hurdles. What has it done differently? While there is an overall thrust on manufacturing, especially high-tech chip making etc., there are also many changes in other sectors.
I cannot cover all that in this short column, nor do I have the expertise to analyse and assess the efficiency of the steps being undertaken in those areas. I would limit myself to agriculture and rural development, which affects the welfare of the masses the most.
On the agriculture front, the Modi government (Modi 3.0) started off with a new Union minister for agriculture and farmers welfare, Shivraj Singh Chouhan, and he was also given the additional charge of rural development. This was a much better choice than what was done under Modi 1.0 or even Modi 2.0. Bringing a minister with ample experience as longest serving chief minister of Madhya Pradesh, and who transformed the state’s agriculture, signalled a high priority that agriculture and rural development may get under Modi 3.0.
The first major decision that was taken was to distribute Rs 20,000 crore under PM-KISAN, a commitment that it made in 2019 to give Rs 6,000 a year to most of the deserving agriculture households. It signalled clearly that direct cash transfer under the PM-KISAN scheme will continue under Modi 3.0. Although I had expected that its nominal value will be adjusted for inflation over the last five years, and Rs 6,000 amount will be increased to at least Rs 8,000 per household, that hope was belied. In the Union Budget for 2024-25 too, we had expected a major increase in agri-R&D allocations to deal with climate change issues, but there too not much real increase in allocation was made. It seemed business as usual.
But the major announcements came later, somewhat as a surprise, when the Union government approved seven schemes for agriculture — including digitalisation of agriculture (land records, farmers’ identity cards, etc.), crop science for food and nutrition security against the backdrop of climate change, horticulture for nutrition and profitability, livestock health and production for sustainability and profitability, natural resource management for climate resilience and clean environment, agriculture education for skilled human resources, and Krishi Vigyan Kendras for better outreach for farmers.
A sum of roughly Rs 14,000 crore is allocated for these schemes to be implemented in the next two or three years. All these are steps in the right direction, and if implemented properly and quickly, they can bring rich returns, economically and politically.
Let me explain with the example of the digitalisation of agriculture. Identification of farmers is the first step.
Distinguishing between an owner-operator and tenant is the next step. India’s official figure of around 17% tenancy is way below what micro-surveys reveal. It could be anywhere around 25-30%, if not more. The problem with oral tenancy is that those farmers have very limited access to institutional credit at 7% or 4%, which owner-operators get. Borrowing at interest rates of 24-36%, tenant farmers can never make agriculture a profitable business. They don’t get even the benefits under PM-KISAN.
This problem of proper identification of who is the actual tiller needs to be resolved as soon as possible and giving them access to institutional credit at lower rates of interest is essential.
But digitalisation of agriculture has to go way beyond just identifying farmers. It needs to know what crops they are growing, whether they are insured or not, how much fertilisers they are using, what is the status of their soils, and whether they are also receiving food subsidy (free rice and wheat) etc. What is needed is a triangulation of various data sets related to agriculture, which are fragmented today, into a common agri-stack. For example, soil health cards are not linked to their fertiliser purchases.
Why does a rice grower, for example, need to be given free rice from the public distribution system? If we can triangulate various data sets and use that to tweak our fertiliser and food subsidies, it can lead to massive savings and higher efficiency in the use of public resources. The marginal rates of returns from digitalisation of agriculture then can be more than ten times the investment being made.
That would be a tremendous boost to this sector. It would also make public expenditure more efficient. Similar returns can come from investment in other schemes of agriculture, especially those focused on creating climate-resilient agriculture.
On the rural development front, Modi 3.0 announced an additional 20 million houses to be built with government support. That would give another boost to the rural economy, creating jobs for masons, carpenters, electricians, etc., besides giving much needed dignity and hygiene to poor people. That will be a commendable welfare step for masses, and may also give political mileage to the government.
Lastly, under PM-Gramin Sadak Yojana, Modi 3.0 has announced its intention of investing Rs 75,000 crore. Research at ICRIER reveals that investments in rural roads gives high returns in terms of agri-GDP and poverty alleviation, as it opens up markets for rural people.
All this brings some hope for agriculture and the rural economy.
The author is Distinguished professor, ICRIER.
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