Efficacy of Government’s Plans for Agriculture Sector
This blog should be read in conjunction with the previous blog on the subject in which the major problems of the agriculture sector have been highlighted:
The government has very rightly focused on the agriculture sector in the recently presented budget. Let us analyze the efficacy of the promises, plans and initiatives in the agriculture sector.
Promise: Farmers’ Income to Double by 2022?
The Indian government has promised doubling of income in 6 years and implies an annual growth of approximately 13%. Will the measures being instituted result in such a rapid growth? The sector grew at 1.1% in 2015-16. With 60% of crop production being monsoon dependent, and having suffered two droughts we expect a normal monsoon, which should help raise production, but not very greatly. The stated growth target is possible through increase in production or receipt of price. We are clear that such immense growth rate is unimaginable. A realistic figure may be 2-3%. It is also well known that there is an inverse relationship between production and price. Thus farmers’ earnings through the meagre increase in production cannot be augmented by receipt of above 10% in MSP. MSP will have to relate to global prices.
To a realist, like me, this is just a marketing statement selling dreams. It is desirable, but absolutely unrealistic!
Agriculture is State Subject
It should be realized that agriculture sector growth will depend far more on actions by CMs than Modi or Jaitley. The impact of actions by the centre cannot make drastic changes.
“Pradhan Mantri Krishi Sinchai Yojana”
Targets of the above scheme are: Promised to irrigate 80.6 lac hectares by 2022 by fast tracking 89 projects. Let us assume that these figures are correct and the fund allocation planned is made available. The monsoon dependent crop land is: 1573 x .60= 943.8 lac hectares. Subtracting the 80.6 lac hectares still leaves 863.2 lac hectares of monsoon rain dependent crop land, which is still above 50% of total cultivated area in India. Thus after six years Indian agriculture will still be dependent to a great extent on monsoon rains, even if all plans succeed totally.
Ground Water Management, Organic Manure Production, Soil Health Management & Organic Farming
The actions planned by the government in all of the above issues are laudable.
Incentives for Pulses Production
Let us assume that the Rs 500 crores allotted and the increased crop area should suffice to increase the shortfall in production. Since the production per hectare is not very beneficial, suitable MSP must be provided to incentivise production of pulses.
Unified Agriculture Marketing Scheme
Access to markets is critical to farmers’ income. Unified Agriculture Marketing Scheme envisages a common e-market platform that will be deployed in selected 585 regulated wholesale markets. With the support of states this scheme should grow and benefit the farmers greatly.
Increased Storage Capacity for Food grains
97 lac metric tons storage capacity was added in the previous year. The shortfall in capacity still remains 350-97= 253 lac metric tons. This capacity will have to be created to prevent losses of food grains. There is no plan for it as of now.
Pradhan Mantri Gram Sadak Yojana
The plan to connect 65,000 eligible habitations by constructing 2.23 lac km of roads is vital and laudable.
Credit to Farmers
Agriculture credit has been kept as Rs 9 lac crores in the current year. This is a good initiative. The problem is in credit disbursement to the genuinely needy poor farmers. Another associated problem is the risk exposure to banks, already under stress of NPAs.
Pradhan Mantri Fasal Bima Yojana
This is a great initiative. It is only hoped that implementation of the scheme is effective. Details are covered in a previous blog: http://nofrillsacademy.com/pradhan-mantri-fasal-bima-yojana-pmfby/.
Online Procurement System
The plan for online procurement through the FCI will bring in transparency and be a great help to the farmers.
Plans to help Dairying
The proposals to help dairying industry are very fine. Unfortunately the government will not help the beef and leather industry because of political reasons.
Losses of Vegetables and Fruits
The immense losses in vegetables and fruits of approximately Rs 78,000 lac crores have received no mention in the budget. Opening up of the agriculture sector to FDI can lead to the resolution of the problem in due course of time.
Plans for Rural Development
The plans for rural development are all good and helpful. It must be realised that the greatest help needed by the poor farmers is alternative employment in the manufacturing and services sectors, closer to their homes.
The budget has given considerable focus on the agriculture sector and rural economy, which was very much needed. It will help the country considerably. Compared to the Sonia regime the present government’s efforts are much better. However, the major problems of low farmers’ income and dependence on monsoon of the sector will exist even in 2022. Sadly the era of farmers’ suicides is not coming to an end quickly!