National Council of Applied Economic Research
As Coronavirus attacks the manufacturing sector the Govt’s farm policy will have to be more consistent to help kickstart the economy
Opinion: Sanjib Pohit
In spite of the best efforts of the Government since 2014 manufacturing growth has not picked up in the country. It is not likely to do so in the near future too due to the global economic meltdown brought on by the COVID-19 pandemic. In this scenario agriculture is expected to remain the main source of livelihood for over 50 per cent of the Indian population in the foreseeable future. Therefore a vibrant agricultural sector is vital for India’s employment and growth story. However the Narendra Modi Government has not witnessed any significant recovery in the farm sector despite the fact that the Centre came out with numerous schemes aimed at it since 2014. Given the multiplicity of schemes and fund constraints priorities shift from year to year and new schemes invariably garner more funds while old schemes flounder. Also there is a very obvious lack of research on the ground before suggesting and approving a scheme for implementation. Take for instance the river interlinking scheme which cost $87 billion at the time of the launch. Once interlinking of 60 of India’s largest rivers is completed it is expected to help end farmers’ dependence on rainfall bring millions of hectares of cultivable land under irrigation and help generate thousands of megawatts of electricity. Even though water is listed as entry 17 in List II of the Seventh Schedule of the Constitution the NDA initiated work for linking the Betwa and Ken rivers which pass through Uttar Pradesh and Madhya Pradesh quickly. The work is nearly complete but there is no word on when it would be operational. In fact no substantial fund is being allocated to start work on linking other rivers. Of course linking of the Godavari and Cauvery figures in the report of the Task Force of the Department of Economic Affairs under National Infrastructure Pipeline (NIP) projects but there is no mention of linking of other rivers like the mighty Brahmaputra in the NIP’s vision document.
Doubling the Farmers’ Income (DFI) is another scheme that was launched by the Centre and in the Union Budget the Finance Minister announced a 16-point action plan for this. It included measures to provide growers access to distant markets through trains (Kisan Rail) and flights (Krishi Udaan). Here too the plan did not take into account the abundance of farmers with small and medium-sized holdings whose only worry is to get a remunerative price for the produce in the nearby market and not be exploited by traders. The DFI committee has made multiple recommendations for achieving its goal by 2022 but most of these instructions are the outcome of a top-down approach at the Union Government level even though much of these policy decisions need to be implemented by State Governments. Moreover only some of these recommendations pertain to particular States and these are to be identified after examination at the ground level which was not undertaken in the committee’s deliberations. Finally even though committee reports provide estimates of the investment required for DFI no attempt has been made to sequence the fund needs. After all given the monetary constraints for investment and time limitation the top priority should have been to identify the most binding constraints for DFI State-wise and allocate funds accordingly. Given the fund limitation even the Union Government has only been able to undertake a few of these recommendations. In fact the largest chunk Rs 75000 crore of the farm budget for 2020-21 went to the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) another newly-launched scheme for providing cash support to farmers.
Last year the Union Government launched Jal Jeevan Mission under which all rural households are expected to have piped water supply by 2024. No doubt it is an excellent scheme given that the rural population suffers significantly from water/vector-borne diseases. However given the water stress in India it is not clear where the supply would come from. As one recalls the NITI Aayog’s recently-released report argues that India is not only facing the worst water crisis in history this will aggravate over time. By 2030 the country’s water demand is projected to be twice the available supply implying severe water scarcity for hundreds of millions of people and an eventual over six per cent loss in the country’s Gross Domestic Product (GDP). Moreover the States which would be hit the hardest by the water crisis contribute to nearly 20-30 per cent of our agricultural output. Ideally in view of the impending water crisis the Government should have provided more incentives to those who cultivate less water-incentive crops in water-deficient States. However no such steps have been taken though the DFI committee has advocated them. Since growers overuse water due to the absence of water meters and free power to the farm sector there are only two ways to tackle this water crisis. In the short-run provide more incentives for cultivating less water-incentive crops and in the long-run large investment should be undertaken to expand “per drop more crop” schemes with increased use of technology. The Government must realise that it is best to stick to a few schemes over a period to reap their benefits. In the aftermath of the COVID-19 pandemic it is likely that the economy will pass through a recession. Since agriculture is a vital source of livelihood it is the responsibility of the Government to increase farm incomes as this would raise demand and help kickstart the economy.
The writer Sanjib Pohit is Professor at the National Council of Applied Economic Research. The views expressed are personal.