Agrarian Crisis in India: An Analysis

Agrarian distress remains one of the biggest challenges confronting the policy
makers in view of the fact that nearly 49 per cent of the workforce in the country
is engaged in agriculture, yet the real farm incomes have almost stagnated or
declined over the past two decades.
The growth rate of agriculture output has been decreasing in recent years;
and the relative contribution of agriculture to the GDP declining steadily. The
deceleration began from the early 1990s, and has become sharp over time. The
agricultural downfall has been reflected in performance of agriculture by crop
categories, trends in area cultivated, input use, capital stock, in and other aspects.
The country is slowly degrading from being a self-reliant country with a food
surplus to being a net importer of food. The alarm bells, however, are still to
register a drastic response. It is stated that agriculture is not seen as a profitable
activity any more, as the incomes derived from it do not suffice the expenditure
of the farmers. The government has made the agri-sector its main focus now,
rolling out reforms like e-NAM and the price deficiency payments scheme to
address farmer’s problems over lowering prices. The World Trade Organisation
(WTO) has permitted income support, and so the government has been able to
introduce income support schemes without any major scrutiny over ‘producer
support subsidy’, issues of overproduction continue to be a challenge. The
government’s agri-marketing reforms need to be foregrounded going beyond e-
NAM.

Since 2014, the budget allocation has been increased by the NDA
government to the agri-sector annually by giving out higher farm loans.
However, there has been no visible improvement in the livelihood of the
cultivators.

As per estimates of the NITI Aayog, the growth in real farm incomes
remains at around zero over the past two years, and prior to that, between 2011–
12 and 2015–16, real farm incomes had risen by less than half a per cent every
year.

Earlier, in 2016, the Economic Survey report showed that the average
income of a farming family in 17 states of India was a meagre ` 2,000 a year, or
less than ` 1,700 per month. The average farming family in India requires an
income of ` 1.5 lakh per year to come out of poverty, but unfortunately this
remains a far-fetched target. Moreover, it was reported by an ICRIER-IECD
study that farmers suffered a cumulative loss of ` 45 lakh crore between 2000–01
and 2016–17. The reason behind it was the denial of a fair price to farmers for
their produce. Several recent studies have pointed towards farm incomes falling
to the lowest level in 15 years as well as massive job losses for the rural farm and
non-farm workers.

——sidelight——

The country’s agrarian crisis has been reflected in the full-year GDP
estimates for 2018–19: the farm growth rate adjusted for inflation is the same as
the farm growth not adjusted for inflation—at 3.8 per cent. In other words,
income growth in the agricultural sector has been flat, as inflation in agricultural
produce is virtually zero.

—————

Even after putting in a lot of hard work and producing bumper harvests, the
plight of a farming family has only worsened owing to a number of factors
ranging from macroeconomic policies to diminishing returns. There was a failure
to recognise when the Green Revolution started giving diminishing returns and
suggest alternatives to tackle the situation. There is also the economic impact of
subsidies leading to indiscriminate use of inputs and causing strain on financial
resources that can be diverted to more productive purposes. So, the current
agricultural crisis can be attributed to a plethora of reasons: unviable agriculture,
poor returns to farmers, including denial of a fair price to farmers for their
produce, periodic very high spikes in prices of key commodities, shortcomings in
the MSP system, periodic excess of production which are dumped by the
roadside severely affecting several farmers and causing a huge burden on the
government, adverse terms of trade, rural indebtedness, the problem of
diminishing soil fertility, the sinking water table, and increasing costs in general
(the last three are a consequence of the Green Revolution). The factors
responsible for the farm crisis include dependence on climate and rainfall, high
import of agricultural goods, reduction in agricultural subsidies, conversion of
farm land for other uses, agricultural budget increases without relating them to
benefits on ground, etc. Agricultural distress has had an impact on the economy
as a whole affecting most of the people in one way or another, as it had affected
food supply, cost of living, health and nutrition, employment, land loss, forex
earnings, and so on.

Government Measures and Shortcomings

The government is aiming at doubling farmers’ income by 2022–23 to
promote agrarian distress and parity between the incomes of those in farming
and those in non-agricultural sectors. PM-Kisan for farmers, PM Krishi Sinchai
Yojana (PMKSY), e-NAM, Soil Health Card, Neem-coated urea, and other
measures have been undertaken. States have introduced their own farm support
schemes like the Rythu Bandhu scheme in Telengana and the Krishak Assistance
for Livelihood and Income Augmentation (KALIA) in Odisha. Along with food
subsidy under PDS, fertiliser subsidy is provided. The MSP has been increased at
50 per cent above the production cost in the 2018 budget.

The effects of such measures are hampered in various ways. The

government procurement operations covering all major crops may not be feasible
in reality. Price-hedging mechanism through derivative instruments—for
instance, forward future trading in farm goods—is not popular among farmers.
There is a need to completely revamp the value chain so that farmers can be
integrated directly with the consumers but this has not been done. A mass
irrigation programme is needed involving inter-linking of rivers, agricultural
diversification, and use of technology for smart farming. The approach should be
tuned towards providing medium-term and long-term solutions to problems.
 There is no scheme providing exit route for farmers in distress. It is
necessary to make agriculture a profitable occupation and attract farmers to
continue farm production activities instead of thinking of ways to remove them
from the agricultural sector and shift them to other occupations. Investment in
agriculture and allied sectors need to be raised in a drastic manner. There should
be integrated development of rural areas so that agricultural development can
take place in a supportive framework of policies, infrastructural growth,
investment opportunities, and an improved marketing structure. Doling out a
few packages now and then is not the solution, but drastic changes in the
economic policies on agriculture are necessary.

Developments The government has so far set up 10 committees to suggest

agricultural reforms as part of a new 5-year agenda to improve the distressed
agricultural sector.

Interministerial Panel for Rural and Agriculture Sectors Focusing on the

agricultural marketing, including the mandi system that controls purchase and
sale of agricultural produce, the interministerial panel for rural and agriculture
sectors has identified persistent trade barriers in the mandi system that severely
affect traders of food commodities and, thus, farmers. The report, released in
September 2019, states that the crisis in agricultural markets is related to such
barriers and the lowering of profits for cultivators.

The committee observed that to provide farmers freer access to markets to

sell their crops, there should be a single mandi tax and removal of inter-state
mandi tax-levies charged upon traders and farmers when inter-state sale of
agriculture produce is conducted.

The panel has recommended setting up of a warehousing network where

farmers can store their goods for a longer time if expecting better prices at a later
time. To make the e-NAM effective, it has suggested a pan-India licence valid
across all such markets. Reforms have been attempted in agricultural markets to
allow trade at any place of choice: for instance, supposed to allow private
markets outside the mandi system and declare ‘warehouses’ or cold storages as
‘markets’ where farmers and traders can sell and purchase. But these have not
yielded much in actual terms.

Background The agricultural marketing system is a mix of organised and

unorganised markets. Farmers sell their produce mostly in the mandis—state-
run market yards, called agricultural produce marketing committees (APMCs).
There are 585 such regulated committees spread across 16 states and 2 UTs.
Under the APMC regulations that were established in the 1960s to protect
farmers from being forced into distress selling, farmers can only sell to licensed
middlemen in notified markets (generally in the same area as the farmers) and
not directly to buyers.

But a number of intermediaries have emerged and the presence of many

middlemen has resulted in a ‘price spread’ and led to fragmentation of profit
shares.

Panel for Linking Central Grants with States’ Reforms

A panel of chief ministers has suggested linking the adoption of agricultural
reforms by the states to boost farm growth, to the grants and allocations made by
the Finance Commission. The 9-member committee, led by the chief minister of
Maharashtra, Devendra Fadnavis, decided to draw out a comprehensive time-
bound roadmap for implementation of agricultural reforms by states.

The panel, in its meeting in July 2019, discussed review of agricultural

subsidies, ensuring fair prices and dismantling of market monopolies, removing
obstacles in implementation of the e-NAM system in all states and steps to
increase private investment and investment credit in the sector. It discussed
approaches to accelerate growth in the food-processing sector, emphasising on
the need for a faster pace of growth in this sector, compared to the overall
agricultural sector to raise farmers’ income. Better coordination between the
agriculture and commerce ministries has been stressed upon to put in place a
dynamic pricing policy based on international market trends for agricultural
goods. It discussed ways to target subsidies better. It dealt with ways to reduce
credit costs as well as improve linkages with financial institutions to boost
private investment.

Telangana: Farmers’ Deaths Continue despite Suicide

In Telangana, farmers’ suicides saw a drop in the months of the first half of
2019. But distress continued, with at least some 12,820 farmers who had taken the
state insurance scheme dying due to various reasons. According to a report in
July 2019, the reasons may include health problems, increased liquor
consumption (doubling of excise collections as liquid sales have shot up
significantly since the setting up of Telangana as a state), excessive use of
pesticides and weedicides. But problems related to agricultural distress continue
with poor market linkages which means farmers find it very costly to sell their
produce. The high cost of selling goods is resulting in poor returns, especially in
horticultural crops. There is also lack of access to institutional credit for tenant
farmers and those engaged in shift-cultivation.

————

Analysis

Slow Growth on Food Prices

Some agriculture specialists are of the view that agriculture has been a
victim of microeconomic policies with the intent of keeping food inflation low,
providing cheaper raw material for the industry, and meeting the obligations of
international trade. As a result of this, food prices have been growing at a much
slower rate than non-food prices in the Indian economy. The effect of this
difference in food and non-food inflation shows itself in a collapse in nominal
growth in agriculture. Unless there is a change in the current movement of food
and non-food prices, very high growth rates will be required to even maintain
the current purchasing power of farmers.

Agricultural Distress: Factors

 * Poor policy and planning focus on increasing agricultural output and food
security rather than raising farmer’s income

* Heavy dependence of agriculture on monsoon; climatic changes affecting

agriculture
* Reduced average land holding due to disguised employment in
agriculture, conversion of agricultural land for alternative use, etc.

* Lack of direct measures to promote welfare of farmers

* Easy credit not available to farmers, and their dependence on many

lenders

* Limited mechenisation of farming due to costs, low awareness, etc.

* Shortage in irrigation, seeds, and other agricultural inputs

* Travails of supply chains: deficiencies in storage and cold chains, restricted

connectivity and lack of a proper agricultural marketing infrastructure

* Middleman profiting by various means

Effects of Agricultural Distress

* Poverty among farmers

* Fluctuating farmer incomes affecting farm investments and migration of

farmers to towns/cities in search of jobs

* Increase in farmer distress and suicides

* Food security is threatened and health of the agricultural sector in general

What to do?
* Underaking development of farmer-oriented policies, infrastructure, and
institutional mechanisms and to increase farm growth and farmers’ income

* Technological interventions can improve productivity and reduce gaps in

yields and improve water-use efficiency (as through drip irrigation)

* Increased emphasis on agriculture-allied sectors like horticulture, poultry,

food processing for farmers to pursue agri-related activities
 * Stress on consolidation of land holdings to raise farm incomes—through
benefits in size of land cultivated input procurement and marketing of produce

* Need for a competitive and stable market so that farmers can get better
prices for their produce
* Shift from cereal-centric policies to include focus on other crops and
proactive policy management

* Reforms to ensure better price recovery along with trade policies

favourable to exports

* Develop value chain involving all aspects like cultivation, warehousing,

logistics, processing, retailing, etc.

* Direct benefit transfers most suited to support farmers

* Increasing MSP, price deficiency payments, and income support schemes

only to partially address the problem of ensuring better income for farmers

box closed

Role of Investment
While the terms of trade were adverse for agriculture, the problem was
further exacerbated by the decline in investment: public sector investment
between 2011–12 and 2016–17 declined to 0.4 per cent of the gross domestic
product (GDP), and private sector investment too dipped to 1.8 per cent in the
same period.

According to the Food and Agriculture Organisation (FAO), insufficient

investment in the agriculture sector in most developing countries over the past
30 years has resulted in low productivity and stagnant production. Investment is
the key to unlock the potential of a developing economy. But the policy regime in
the past several decades has neglected this sector resulting in sluggish
investment growth in the farm sector. It is crucial that an enabling investment
package is provided to the sector. Unless adequate investment reforms are taken
in primary sectors, steps taken to foster growth in other sectors will not yield the
desired result.
 Terms of Trade Problem
When it comes to determining the cause of the problem relating to terms of
trade in agriculture, there is a debate regarding its actual reason. One view says
that the problem is there due to excess in agriculture, and a glut in food markets
has led to a reduction in food inflation.

So, a reduction in agricultural production is suggested as the only way to

deal with the farm distress. However, such an argument is not valid as it focuses
almost entirely on supply side factors ignoring the demand side. The production
glut is because there is no increase in effective demand for food in India (India’s
per capita supply of calories, protein, and fat have, since the 1970s, not increased
at a fast pace) owing to lack of mass income growth.

Adherence to this view would entail that agricultural policy be tailored

towards either reducing agricultural production, and hence growth, or going for
a stronger push towards export so as to ensure that domestic food inflation does
not fall as it has in recent times. Another view argues that a squeeze on mass
demand, rather than excess supply, is behind the worsening of terms of trade for
agriculture in the recent period. This debate must be resolved first in order to
embark on the required policy intervention.

The agriculture sector is in dire need for reforms. But due to inherent policy
fault, the emphasis is on moving people out of agriculture to the urban centres,
which require cheap labour. The policy of allowing agricultural prices to remain
low to satisfy consumers and industry is a wrong approach. Food prices have a
46 per cent weight in the Consumer Price Index basket, which is India’s
benchmark inflation measure. In this scenario, farmers bear the brunt of low food
prices, while the rest of the population enjoy the benefits of low food inflation.
So, any policy intervention aimed at improving the terms of trade for agriculture
risks a political backlash due to inflation becoming higher so the government
does not want such a policy reform. But this stance has to change for the benefit
of the economy as a whole. Agriculture must be treated as an economic activity,
and this alone is capable of reviving the economy.
 Income Support Considering the low level of income of an agricultural
household, it is a pertinent first step, though not sufficient, that some form of
income support is provided to farmers in addition to the other subsidies. Several
state governments are providing direct income support to farmers. Telangana
and Odisha have launched farm support schemes in 2018 the Rythu Bandhu
Scheme in (Telangana) and the Krushak Assistance for Livelihood and Income
Augmentation (KALIA) scheme in Odisha. Other states—West Bengal,
Jharkhand, Andhra Pradesh, Karnataka, and Haryana—pay directly to farmers,
some incorporating the allocation available under PM-Kisan.

Recognising the importance of provision of direct income support, the

essential reforms plan should include a national commission for farmers income
and welfare with the mandate to assure a sufficient monthly income per family
as a top-up approach. Along with this, an Ease of Doing Farming Programme to
remove the hurdles farmers face in production, marketing, and harvesting. The
network of Agricultural Produce Market Committee (APMC) regulated markets
may be expanded from the 7,6000 mandis to 40,000 or more. Farmer Producer
Organisations (FPOs) should be strengthened and start-ups in agriculture
encouraged to draw out entrepreneurs. However, the income-support schemes
do not provide enough for India’s youth to be retained in agriculture, which is
necessary to reverse the rural-to-urban migration pattern.

Agriculture is in dire need for reforms. Though agriculture is a state subject,

it requires comprehensive reforms such as those carried out in 1991 which
should include the centre, the states, banks, and the RBI. Such a massive reforms
push is needed in view of the fact that though a lot has been done to deal with
the problems of the corporate sector in the last seven or eight years, agriculture
remains a neglected sector. In this context, the former RBI Governor Y.V. Reddy
stated that agriculture should be recognised as a nationwide problem. It
expresses itself differently in different parts of the country, requiring localised
suitable measures. Hence, a national consensus involving both the union and
states has to be built around a new approach.
 Reforms must aim at getting the centre and the states together on a common
platform. A federal agency, like an agricultural development council, should be
set up to harmonise centre-state relations related to policy-making,
administering, and implementing measures to encourage farming and farmers.
As mentioned earlier, it is to be noted that despite the rise in output of food
and horticulture since 2015–16, farmer’s income has not improved in the absence
of a demand and supply chain that can help enable viable farm gate prices while
delivering the produce in time to the consumer. In this situation, there is a need
to go behond the e-NAM initiative and the price deficiency payments scheme
(aimed to deal with farmer’s distress over falling prices).

E-NAM, a chain of electronic national agricultural markets, looks fine on

paper but it hasn’t yet taken off in states—there is no actual inter-state trading
taking place. Lack of required equipment and absence of qualified technicians or
essayists who can carry out quality checks on farm samples, are among the major
flaws in this system.

———

Reform in this direction should promote self-sufficiency in crucial crops like

pulses. Pulses are an important crop from the point of view of nutrition and
enhancing soil fertility, and their low water requirements.

Another thing to consider is that despite record-high food production, agri-

imports have been growing at 9.8 per cent Compound Annual Growth Rate
(CAGR) in the last five years while exports growth remains at a dismal 1.1 per
cent CAGR.

While the government cannot revive food demand or prices globally, it can
certainly come up with long-term policies on exports and imports that would
help producers deal with non-tariff barriers.

Better policy and management aimed at ensuring institutional reforms such

as creation of farmers producers organisation (FPOs) can help in removing
obstacles in accessing credit, logistics, and marketing services which are the need
of the hour.
 The rise in horticulture output should be maintained by ensuring better
marketing channels and crop insurance. In view of rising horticulture produce, it
is quite important that the sharp spurt in horticultural output is sustained by
improvements in marketing channels as well as financing schemes that can also
introduce product differentiation. There is need for infrastructural development
like setting up cold storages. The state of food processing parks should also be
reviewed. Apart from this, it should be ensured that all states implement the
Model Agricultural Produce and Livestocks Marketing Act, 2018 and promote
investments in argi-processing.

Very little targets can be achieved by just increasing the Minimum Support
Price (MSP). There is a need to go beyond it and target subsidy policy.

The subsidy policy has been blamed for the demand-supply equation in
agriculture that is skewed against the producers. The demand curve is steep
while the supply curve is relatively flat. The market price is closer to the supply
curve, which leaves a huge consumer surplus (demand being much more,
meaning the people may be willing to pay more but do not) and little of profit. If
the demand line is flattened, the price is closer to demand, which means smaller
consumer surplus and higher profits for farmers. The subsidy policy has been
seen as contributing to this.

Subsidy Policy
The ill-advised subsidy policy of the government should be rationalised.
The current subsidy policy makes no discrimination whatsoever on the various
input subsidies to agriculture. This has led to injudicious decisions, for example,
subsidies have been given for paddy and cane in rainfed regions, such as free
electricity, which resulted in inappropriate crop choices. Moreover, when
everything from electricity, water, seeds, fertiliser, interest are given free of cost
or subsidised without taking into consideration the landholding or size, the end
result is similar cost structures for most suppliers. To overcome the problems
that have sprung up due to an indiscriminate subsidy policy, subsidies should be
rationalised by restricting them to only those holding 2–3 acres or to the first 2–3
acres only for even larger farmers. Direct Benefit Transfer can be a good
beginning in this direction. In this way, the larger units which lose a part of their
subsidies will find cultivation of traditional crops uncompetitive. As a result,
there would be diversification of crops. The larger landholder will diversify into
other commercial crops or crops for which there are no subsidies now so that
they do not suffer, in comparative terms, in relation to subsidy-supported small
or marginal farmers. This diversification is an important requirement for
increasing income of farmers as foodgrains production is in surplus.
It will also have a positive effect on government finances. It can reduce the
crops procured under MSP since the market prices would have substantially
enhanced the incomes of farmers. Poorer marginal sections could be covered
through higher public distribution system (PDS) subsidies.

However, this process of rationisation need not be done for all products. It
can begin with those where there are surplus buffer stocks. When prices of those
products rise, consumers will move on to other products diversifying their
consumption basket, and the prices of un-subsidised products will also start
rising.

MSP Procurement The agrarian crisis is also linked to changes in MSP

procurement. Already as it is, this limited relief is heavily tilted in favour of
traditional Green Revolution states, Haryana and Punjab, that account for half of
the total procurement. The government has been pushing towards direct cash
transfers in the PDS, calling it one of its biggest achievements, on the grounds of
combating corruption. But it means that the government’s procurement
requirements will fall, as it would result in a change in not just the quantum of
MSP hikes but also the amount of grain procured. A significant dilution of the
MSP would result in tensions in areas that have enjoyed its benefits. Other
changes may follow as in cropping patterns as farmers would grow uncertain
about returns without an MSP-based procurement assurance.

The Problem of Unproductive Cattle

What has been adding to agrarian unrest, slowly but surely, is the problem
of disposing of unproductive cattle—cows that do not yield milk and male cattle
that are no longer seen as necessary for working in farms. They have become a
huge economic burden on farmers who don’t know how to get rid of them.
Hindus are against beef-eating but this religious outlook is not reflected in the
farmers’ cattle-rearing practices—the unproductive cattle is not ‘put up with’ on
religious grounds but considered an enormous burden financially. This
contradiction was addressed earlier by the country’s unorganised cattle market
where the farmers sold them to traders for slaughter. This way they got money in
exchange even while not having to conduct the slaughter themselves.

But with BJP making cow slaughter a major poll plank to consolidate Hindu
votes, legal and extra-legal factors have disrupted this unorganised market.
Slaughter houses have been shut down in many places. Cattle traders have
become quite wary as they have been targeted with physical violence by people
even when they have not been involved in cattle trade for slaughter purposes.
With nobody ready to buy the unproductive cattle, they have been simply let
loose resulting in a large-scale increase in stray cattle menace causing crop-
destruction for farmers around the country. Farmers are forced to increase
vigilance in the fields to prevent the stray cattle from destroying their crops. This
entails either hiring extra labour or putting in extra labour oneself. Both ways,
this adds to the labour costs that have a significantly higher share in the A2+FL
measure of costs that has been used by the government to justify MSP mark-ups.
(The A2+FL formula takes into account actual cost plus imputed value of family
labour in the production of a crop.) Importantly, labour costs have a significantly
higher share than animal costs in the cost of cultivation and now, they have
increased at an even faster pace. There is no policy in place to deal with this—a
problem that will require significant resources to take care of the unwanted
cattle. But this issue has been ignored not just by the government but also others.

Role of Middlemen
The calls for breaking up of cartelisation of middlemen (to tackle the
agrarian crisis is naïve.) Removal of middlemen and reforming and Agricultural
Produce Market Committees (APMCs) may not address the issue of poor farm-
gate prices. The middlemen have an important role in terms of taking immediate
delivery of perishable produce, lending finance to farmers, storage, interacting
both ways with customers and markets and linking them, and inventory-
holding. Government agencies cannot perform these tasks as the middlemen do
for various reasons. Small farmers whose reach doesn’t extend beyond the
village boundaries cannot do the functions middlemen do for them.

Another important aspect of this reform architecture is the provision of

credit. The RBI has an important role to play in this regard. The RBI has not come
up with any new policy initiative for agricultural sector. Surprisingly, the limit
for collateral-free loans in the agricultural sector is ` 1.6 lakh, while MSME
borrowers get collateral-free loans of up to ` 10 lakh; and for educational loans,
the limit is ` 7.5 lakh. There is a strong case to hike this limit by coming up with
realistic norms with immediate effect for small and marginal farmers.

Commercial banks must also pay more attention and invest more
manpower resources for dealing in rural and inclusive business.

Investment and Infrastructure

Infrastructure in agriculture is an agri-segment that has been getting little
attention over the last few years. There is a need for measures to encourage
private investment in agri-infrastructure, such as in agri-startups, agri-tourism,
and agro-processing where tax holidays and simplified licensing procedures
would help. In agri-tourism, for instance, the existing tourism circuit can be
integrated with it to provide tourists glimpses of farm staff and operations. It
would boost investment and generate in-situ employment as well. More of
allocation to micro-irrigation schemes and drought-proof farming is the need of
the hour. Investment needs to build up public and private extension advisory
system and the quality of agri-education and research-for resource conservation
and sustainable use through organic, natural, and green methods. Where
livestock is concerned, India having the highest livestock population in the
world, investment can be focused on employing next-generation livestock
technology emphasising on productivity enhancement as well as disease
surveillance and treatment, livestock quality, waste utilisation, and value
addition. Investment in renewable energy generation involving use of wind mills
and solar pumps on fallow farmland and hilly areas would reduce the burden on
electricity distribution companies and build up energy security in villages and
towns. Private investment in agriculture can be routed through farm business
organisations which can be linked to commodity exchanges, providing
agricultural commodities more space on international trading platforms and
reduce the pressure on markets when there is a glut season.
Agri-data Agri-data is important to power artificial intelligence-led
agriculture in soil mapping, to trace climate-related changes, for e-markets, and
so on. There is need to maintain agri-data on various fronts in a systematic
manner that would ensure accessibility. A centralised institutional mechanism
can go a long way in maintaining farm level-data available for real-time (virtual)
assessment. Various food schemes can be monitored even while dealing with
loopholes in subsidy distribution, funding, and production estimates. The
structural weaknesses in the agri-sector can be addressed by converging public,
private, and foreign investments, as enunciated in the Economic Survey 2016–17.

Other Measures
To deal with the agrarian distress and resolve the plight of farmers by
stabilising farmers’ income and reducing climate-related vulnerability, there are
some focus areas identified by the National Innovations on Climate Resilient
Agriculture (NICRA) and Indian Council of Agricultural Research (ICAR)
studies:
These include—

* better land use planning methods;

* renewable energy generation through agro-voltaic system and rainwater

harvesting from fallow land;

* incentivising the agro-forestry system;

* utilising farm waste in an efficient manner;

* enhancing carbon sequestration;
 * enhance soil fertility;
* facilitation of crop diversification in ‘Green Revolution’ areas—Western
UP, Punjab, and Haryana;

* promotion of animal health;

* integration of centre and state subsidies.

The government should promote R&D with enhanced funding to the level
of 1 per cent of GDP. Methods of traditional farming like zero-budget natural
farming (ZBNF). The method promises to reduce input costs and restore soil
fertility. Zero-interest credit cards to small and marginal farmers with a
maximum ceiling can be an ideal solution to further expand credit growth.
Promotion of ancillary agricultural activities like agri-farming and bee-keeping
may diversify farm income. Interventions to make farmers more resilient to
climatic and price risks are needed. To leverage digital markets and the
monopoly of the APMC, agriware house grids may be set up as well as incentive-
based village storage systems along highways. Some kind of an organisation for
ushering in synergy in the context of drought-related management would bring
relief to farmers. For instance, there can be exclusive agency for reporting,
assessing, and streamlining the process of disaster-related claims—a matter that
has affected the financial condition of farmers.

Investment in agricultural R&D is necessary as even a small growth in

agriculture can be 2 to 3 times more effective in reducing poverty than a
comparable growth in other sectors. As of now, public investment in agricultural
R&D, in terms of percentage share in agri GVA, is at 0.37 per cent, as compared
to 3 to 5 per cent in developed nations. Public investment rise should be
accompanied by education, research, and extension services even while public
expenditure is reduced on subsidies, kind transfers, populist measures, etc.

A right combination of various policy initiatives for infra push along with
an innovative outlook can be the key to unlock the potential of agriculture, and
thereby resolve the crisis afflicting the sector for decades. The strategy being
adopted to tackle the situation may be on the right track, but its policy mix needs
to be fine-tuned.