By Dr Manoranjan Sharma Asymmetric development reflected in the steep decline in the share of Indian agriculture from 52% of the GDP in 1951 to about 18% in 2022 despite agriculture accounting for about 55% of total employment. This impacts both economic growth and distributive equity. Holistic Development: How? Holistically transforming consumption patterns, shifting agricultural […]
By Dr Manoranjan Sharma
Asymmetric development reflected in the steep decline in the share of Indian agriculture from 52% of the GDP in 1951 to about 18% in 2022 despite agriculture accounting for about 55% of total employment. This impacts both economic growth and distributive equity.
Holistic Development: How?
Holistically transforming consumption patterns, shifting agricultural practices from sowing to planting, drainage, irrigation, fertilizer, plant protection, harvesting, weeding and storage, diversifying agriculture from foodgrains to high-value items, such as horticulture, livestock, fisheries, and truly sustainable better livelihoods are necessary. Widely acceptable benchmarks developed by Lead Banks and Nabard can be used to assess verifiable quantifiable indicators.
Attention to timeliness, adequacy, security and cost of credit and convergence of BC-based financial inclusion initiatives with the SHG network and macro-level demonstration of banking technologies is needed. Other measures include enhancing productivity of crops and animal husbandry, checking soil erosion and promoting watershed development and a trans-disciplinary approach. Community participation will make groundwater management more effective with wider ownership and deliver longer term regionally sustainable groundwater.
Greater financial inclusion by developing aspirational districts, microfinance, sanction and disbursement of higher credit by banks and financial institutions, formation of Joint Liability Groups and their credit linkage and monitoring and evaluation of verifiable quantifiable indicators and accent on Farmers Producers Organisations will be useful. With record foodgrain production, horticulture diversification, greater significance of allied sectors and changing dynamics of agriculture trade, the key enablers, viz, productivity, mechanisation and irrigation, need strengthening.
The RBI has highlighted agricultural challenges of climate change, agriculture waste management, disguised unemployment and volatile food prices necessitating supply-side interventions like higher public investment, storage infra and food processing industries.
Food Prices
The Food and Agriculture Organization (FAO) shows a rise in food prices by 75% post-mid-2020. The CPI reveals doubling of rural consumer food prices in FY22 because of the Ukraine war, rising rural costs, which include food production and transport. The food sector is interconnected and interdependent.
The IMF stresses countries should allow hikes in food and fuel prices to pass through to domestic prices since food prices make up 44% of consumption in low-income countries, 28% in emerging market economies and 16% in advanced economies without being oblivious to the needs of vulnerable sections. IMF’s study in Sub-Sahara Africa shows external factors drive food price inflation but domestic factors can reduce their impact through monetary and fiscal policy, overall economic environment and transport constraint.
Transcending Credit
Agricultural credit disbursement rose from Rs 64,000 crore in FY2002 to Rs 17.09 lakh crore in FY22. While credit must grow quantitatively and qualitatively, streamlining credit requires a differentiated needs-based approach, thrust on FPOs to enhance credit and direct credit to desired channels, horticulture and value chain financing. Sweeping changes in cooperatives are reflected in the computerisation of about 63,000 functional Primary Agricultural Credit Societies (PACS) with a budget of Rs 2,516 crore (GoI Rs 1,528 crore) to raise the number of PACS to 3 lakh by 2025 and benefit 13 crore farmers.
Agricultural exports rose 20% to $50 billion in FY22 because of production, familiarising State governments and farmers in exports, removing infrastructural, logistics, post-harvest bottlenecks, new markets, greater share in existing markets, reduced transport costs and quality losses, use of refrigerated rail containers and modified tariff structure.
The Centre’s 2018 Agri Export Policy visualised robust agriculture, eg, doubling of exports from $30 billion to $60 billion by 2022, diversified exports, and boosting high value and value-added agricultural exports, non-traditional agri products promotion, greater market access and global integration.
Roadmap
Despite significant State-wide differences because of historical factors, agro-climatic conditions and opportunities for alternative productive employment, stress on KCC/Rupay KCC, crop insurance, land records digitisation and creation of charge, close coordination between the Revenue Department and State Level Banker’s Committee for registration of property rights, stress on balanced/integrated farming and complete knowledge about crops, agro-climatic conditions and market conditions to optimise production and remunerative prices to farmers will help.
Most parts of India have ample sunlight; hence focus on solar power/farms is imperative. There are also aspects such as drip/sprinkler irrigation, hi-tech nursery to promote fruits, vegetables and flowers. Another innovative strategy could be agri-tourism, which is a kind of multi-functionality involving various agricultural activities, animal rides and stay at rural areas with natural and fresh cuisines. Important location-specific criteria include proximate water source, away from polluted environment, better connectivity, natural site, historical importance.
Lack of credit facilities, water resources, specific policy and unclear tax exemption hamper agri-tourism. Given the huge latent potential, focus on site, infrastructure, marketing and displaying agri-tourism products and services is needed. Vocational training and focus on meeting the challenges of first generation women at micro-level business startups will promote women empowerment. Simultaneously, concerted attempts are necessary for greater investment and private participation.
Given the success in semi-arid regions, eg, north Rajasthan, community-based groundwater and ecosystem restoration could check ecological and socioeconomic decline. Locally appropriate, integrated social and technical solutions promote a virtuous cycle enhancing the quality of ecosystems and well-being of the people with effective use of STEEP (social, technological, economic, environmental, political) framework.
The roadmap must bring about a paradigm shift with an emphasis on competitiveness, pricing, quality, diversification, food parks and cold chain infrastructure, value-addition and moving up the value chain. This requires coordinated strategic and operational measures. Strategic action includes policy measures, infrastructure and logistics support, holistic export-oriented approach and greater engagement of State governments. Operationally, undivided attention on cluster-based approach, value-added exports, marketing and promotion of ‘Brand India’, strong quality control and evaluation mechanisms, research and development is needed.
In this vision of ‘a new India’— an India, which is fully developed, inclusive and equitable, agriculture and food exports require synchronised measures by the Centre, State governments, Agricultural and Processed Food Products Export Development Authority, National Dairy Development Board, Gujarat Cooperative Milk Marketing Federation, exporters, food and agro-processing industry, RBI, Nabard, Exim Bank, banks, agri startups, FPOs/FPCs, apart from farmers themselves.