Three years of Narendra Modi government: In Agriculture, the policy mix is right but implementation poor

April 24, 2017 6:52 AM

With the Modi government completing three years in office next month, it is time to look at its performance.

In the first three years of the present dispensation at the Centre, agri-GDP grew by just 1.7% per annum, which is less than half of what was achieved during the last three years of the UPA government (3.6%). (Reuters)

With the Modi government completing three years in office next month, it is time to look at its performance. Here, we focus on agriculture that engages 47% of the country’s workforce, as per the Labour Bureau—without its development, sabka saath, sabka vikas is not possible.

In the first three years of the present dispensation at the Centre, agri-GDP grew by just 1.7% per annum, which is less than half of what was achieved during the last three years of the UPA government (3.6%). Such a poor performance is primarily because of the droughts in 2014 and 2015. In order to tackle droughts more effectively, the Modi government tweaked and improvised existing schemes and launched Pradhan Mantri Krishi Sinchayee Yojana (PMKSY) and Pradhan Mantri Fasal Bima Yojana (PMFBY). Also, a new scheme, e-National Agriculture Market (e-NAM), was launched to link 585 regulated agri-markets across the country.

Obviously, things cannot change overnight. But based on our careful analysis, one can only say that these steps are in the right direction though implementation in most cases has been rather weak. Also, we firmly believe that without a champion for agriculture in the government, these schemes may fall much short of their promises and claims. This would be clear if we examine these three flagship schemes in some detail.

PMKSY was launched on July 1, 2015, to give har khet ko pani and improve water-use efficiency through “more crop per drop”. But implementation of various components of this scheme depends on three different departments, namely agriculture, water resources, and rural development. However, a new mission directorate for PMKSY has been set up under the ministry of water resources. The government identified 99 projects for early completion under Accelerated Irrigation Benefit Programme (AIBP), which together will irrigate 76 lakh hectares (ha) upon completion. Of these, 23 projects (Priority-I) were shortlisted for completion by March 2017, another 31 projects (Priority-II) during FY18, and the remaining 45 projects (Priority-III) are to be completed by December 2019. Financial support was to be given through Nabard’s Long Term Irrigation Fund of `40,000 crore. Of the 99 projects, 26 are in Maharashtra—they are beset by long delays and allegations of large-scale corruption. And as for progress, out of targeted the 23 projects to be completed by March 2017, none actually were, although many are expected to be completed soon.

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The component of micro-irrigation (MI) in PMKSY has done better—8.13 lakh ha more is said to have been brought under MI. Total area under MI is thus about 90 ha while the potential is of almost ten times higher. The government would do better if MI is treated on a par with AIBP in terms of funding. MI can move faster with much better results in terms of water-use efficiency.

PMFBY is another flagship programme of the Modi government. For the first time, the farmer’s share in the premium was pegged at 2% for kharif crops and 1.5% for rabi crops. As a result, area covered under insurance increased from 27.2 million ha in kharif 2015 to 37.5 million ha in kharif 2016, and sum insured increased from `60,773 crore to `1,08,055 crore over the same period. However, the system of crop damage assessment has not changed much and most of the states could not even procure smartphones that were supposed to facilitate faster compilation of crop cutting experiments. Some state governments did not take cost of cultivation as the amount to be insured with a view to save their outgo on premium subsidy. Many state governments did not pay premium on time as a result of which the farmers’ claims could not be settled expeditiously. In sum, there is still much work to be done on the implementation-side; else, large resources from government kitty will be spent without commensurate benefits to farmers.

The third mega scheme launched by Modi govt in April 2016 is e-NAM. The idea was to enable buyers located in distant places to purchase agri-commodities from any mandi. The GoI also decided that state governments can apply for a grant of `30 lakh per mandi (enhanced to `75 lakh from this year) for related infrastructure and hardware, provided they undertake some reforms in their APMC rules. These included a single trading license to operate in any mandi in the state, single point levy of market fee and provision for e-auction of agricultural commodities in the rules and regulations of the state.

So far, 417 mandis located in 13 states are claimed to have been connected to the e-NAM portal. In most mandis, the sales done through traditional auction are being shown as turnover through e-NAM. Out of a turnover of approximately `15,605 crore in e-NAM, Haryana alone is showing a turnover of `8,237 crore. But our enquiry into this revealed that very few auctions are being conducted by using the software. So far, there is no inter-mandi auctions and there is no evidence that farmers have gained from this system either in terms of reduced commissions to arhatiyas or better price realisation.

The ambition of creating an all India agri-market, therefore, still

remains a distant dream. e-NAM can be a game-changer only if it is steered as diligently as GST.

But all these flagship programmes are dwarfed when one looks at the money being spent on food and fertiliser subsidies—exceeding `300,000 crore (including arrears) in 2017. One had hoped that the Modi government will take bold decisions to streamline these by moving towards Direct Benefit Transfer (DBT) to the beneficiaries’ accounts. But, the progress on this front has been tardy and one doubts whether any bold reforms in this are coming soon.

To sum up, although the Modi government has made right moves, its flagship schemes have not made much difference to lives of farmers so far.

-By Ashok Gulati & Siraj Hussain

Gulati is Infosys chair professor for agriculture, and Hussain, former Agriculture Secretary (GoI), is senior visiting fellow, ICRIER

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