By Hemant Sikka
Budget 2024 balanced fiscal prudence with growth and set the tone for the next wave of reforms for India’s growth. Besides, it focused on youth, women, the weaker sections, and promised to strengthen our farmers.
Water is one of the most critical farm inputs. Recent research indicates that monsoon timings and spatial patterns have dramatically changed due to global warming. In the past 15 years, we have seen an increasing amount of rainfall in the pre- and post-monsoon periods (especially in the last four-five years), but less rain during the traditional period of June-September. Also, historical data (1951-2023) suggests that in nine years when La Niña was preceded by El Niño years, southwest monsoon rainfall was above normal in two years, excess in five, and slightly over normal in two years. In other words, and as suggested by several reports, India is expected to have an above-normal monsoon in 2024.
Monsoon supplies nearly 70% of India’s annual rainfall, crucial for agriculture which provides a living for roughly 60% of India’s working population. Last year recorded one of the strongest El Niño occurrences; India witnessed the third consecutive year of abnormally high temperatures. This had an impact on the output of essential crops like rice, pulses, and soya bean, and horticultural crops, as well as the livelihoods of those dependent on them.
In FY24, India’s agriculture gross value added grew by only 1.4%, as against 4.7% in FY23. Gaps between employment demand and generation for rural households under the Mahatma Gandhi National Rural Employment Guarantee Act fell short by 34 million. Restrictions on exports further aggravated the issue, leaving less residual income for the farmer. If monsoon uncertainties persist, they will not only hinder agricultural production, but also industrial and corporate growth and overall economy.
So, in a good monsoon year, what are the broad conditions that can improve India’s agricultural production, rural consumption, and GDP beyond 2024?
Capacity building in water conservation: India has about 150 major reservoirs, but they are not enough for a large country like ours. Allocations for soil and water conservation account for just 2% of the government’s budget. Hence capacity building in water conservation should be fast-tracked.
Ensuring proper water management such as improving irrigation systems, water harvesting, and efficient drainage systems can ensure water needs of farming are met. Andhra Pradesh, Telangana, and Punjab have ensured water throughout the year, through canals, for farmers. In India, drip irrigation has also been quite successful in providing crops with the right amount of moisture and nutrients while minimising water use.
Private investment to drive resilience: A smartly invested rupee is a rupee earned, and when opportunities beckon the private sector makes a big difference. The government can encourage the sector to invest more in agriculture and build climate-resilient storage systems, including seeds. It could lead to the development of essential mechanisms that help conserve valuable resources, reduce carbon footprint, and boost farm profitability.
A fifth of all grains produced in India annually are wasted due to insufficient and inadequate storage. With food storage accounting for just about 8% of total agri outlay, private participation can enable India to become a net exporter of grains, enhancing agriculture revenues. Similarly, the private sector can design and develop well-thought-out value systems for efficient and profitable farming ventures. The Netherlands is a great example of a country that stores and manages its grains in silos, ensuring enough food for its people for more than two years.
Mechanising farms to increase production: India is tractorised, but not mechanised, at 40-45%, compared to 97% in the US, 95% in Western Europe, and 48% in China. With labour scarcity and persistent labour cost escalations, widespread adoption of mechanisation will increase pace and farm productivity, and according to the Indian Council of Agricultural Research it could take India 75 years to be completely mechanised. Like tractors, sustainable growth of overall farm mechanisation requires R&D and manufacturing for Indian conditions and pricing. Rental business of equipment can ensure affordability, accessibility, and adaptability through a pay-per-use model.
For example, growing rice — one of the most important crops in India — manually is back-breaking and time-consuming. Rice transplanters make paddy farming easy and quick by automating sowing of about 10,000 square metres per day, compared to 700 sqm manually.
Reduce greenhouse gases (GHGs), educating farmers, and incentivising sustainable farming: For sustained output and profitability, farmers should be conscious of the impact they have on environment and conservation of water, and accredited for crop management and GHG reduction.
Farmers urgently need to understand their trade better, with exposure to progressive practices. Hence, there is a need to drive investments for skill training in emerging technologies, as well as reskilling existing practices. Such programmes must also provide digital and professional skill training focused on communication and critical thinking to make rural youth “job-ready” and employable in sectors like automobile, information technology (IT), IT-enabled services, and hospitality.
Also, there are few takers for crop insurance schemes. An understanding of how insurance works can go a long way in helping farmers plan their investments for the season, ensuring resilience.
To manage stubble better, the Haryana government incentivises farmers with `1,000 per acre for adopting non-burning practices and converting paddy residue into bales. Well-thought-out programmes such as this can also be linked to the PM’s Green Credit Programme for tradeable credits.
The author is Co-chair, Ficci, National Agriculture Committee, and president, farm equipment sector, Mahindra & Mahindra.
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