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Agri Crisis: 24 x 7 Politicking and Torpor of 10 to 5 Policy

Published: 26th April 2015 06:00 AM  |   Last Updated: 25th April 2015 11:16 PM   |  A+A-

Agri Crisis

About an hour after the death of Gajendra Singh, telecast live on national news, 55-year-old Harshu Jatav jumped in front of a train near Alwar. Losses and debt drove Jatav to suicide. There were no politico delegations, no instant cheques.

His death will soon morph into a statistic in the next edition of the NCRB.  He will have company. Just between 2011 and 2013, 39,553 farmers committed suicide—or 36 persons every day! It is unlikely that governments can be charged under Section 306 of IPC (abetment to suicide). There is no doubt, though, that successive regimes stand convicted of apathy and neglect.

At the dawn of Independence, Jawaharlal Nehru declared “everything else can wait but not agriculture”. The logic: India was a net importer of food, and agricultural distress perpetuated poverty. India waffled between definitions of “collective” and “cooperative” farming for two decades before Lal Bahadur Shastri and C Subramaniam propelled the Green Revolution. Five decades after the Green Revolution, arguably, India is self-sufficient but farmers are trapped in penury. Agriculture has trailed overall GDP for decades by a factor of two. Between 1999 and 2014, while overall GDP grew at 6.99 per cent, agriculture grew at only 3.13 per cent—55 per cent of the workforce lives off less than 14 per cent of the gross domestic income.

Agriculture matters because without a robust Bharat, India will  be a shallow economy; because it is vital for 8-plus per cent GDP growth; because by 2050 India will need 450 million tonnes of food; because Make in India needs domestic demand; because without higher growth and savings, India will be haunted by poor infrastructure; because it can enable Swachh Bharat. Agriculture matters because social and political India cannot afford to leave half its populace in poverty.

The cause of the crisis is best illustrated by data. Six of 10 farmers lack access to formal credit. Banks prefer investing in NABARD bonds and money from NABARD is routed via state and district cooperative banks—adding interest costs at every level. Loans for a Mercedes are cheaper than those for tractors. Only 37 per cent of net sown area is irrigated—the rest live on hopes and prayers. Irrigation projects are only announced—571 projects are currently pending, some over 30 years. An analysis of 151 projects revealed cost overruns of over 1000 per cent. Fertiliser availability is marred by political whims, and seed quality trails global standards impacting yield.

The consequences are best visible in the assessment of agri-households by NSSO (70th Round). The average gross cropped area per household is .937 hectare. Average value of crop harvested: Rs 38,329. In Bihar, the average crop value would be Rs 16,704. Do the math for the income of a household of four-five toiling from July to December. NSSO also tells us that the average monthly income of an agri-household is Rs 6,426. The worst off: Bihar, where it is Rs 3,558 per month.

Why this is so is explained by the simple formula: Acre x Yield x Price = Value. Consider this: In 2013-14, the government calculated that it costs Rs 1,234 to produce a quintal of paddy and the MSP was Rs 1,310 per quintal. The margin for the farmer: Rs 76 per quintal or 76 paise per kg. The solution is not to hike MSP blindly but to help the farmer improve yield per hectare. Thanks to lack of investment, and the culture of sops=votes, yield/ha has suffered. The Indian average for paddy is 3,200 kg/ha, which is at least 1,200 kg below world average and worse in some states. Compare this with Indonesia, which harvests 5,140 kg/ha or Vietnam 5,630kg/ha or China which bags 6,740 kg/ha. Compare Rs 76 x 3,200 kg with Rs 76 x 6,740 kg to get the picture. And this is the story of just one crop.

Renaissance in the rural economy calls for the creation of an eco-system. Access to credit can be improved by deploying Jan Dhan and India Post. Well-regulated contract farming will spur innovation in credit and insurance. Climate change demands adoption of drip irrigation. Expansion of mortgage norms can enable farmers invest in drip systems and in green houses—opportunity for Make in India and Mudra. Partnerships with private entities will enable improved weather monitoring. Redesign of procurement regime will nudge water-stressed states like Punjab and Maharashtra away from water-intense crops. Direct Cash Transfer can incentivise shift from fertilisers to nutrients, from diesel to solar pumps. India needs a unified agri market—why not host a global contest for an e-kisan app and portal? Farmers need better market access—create an Amul II for perishables (http://bit.ly/1pfjuiz). Do keep the government out of marketing and distribution. Cooperatives and entrepreneurs can combine to create farm to fork linkage—a la e- commerce. Sure, agriculture is a state subject, but the BJP rules 11 states and can forge a bottom-up partnership.

The crisis presents an opportunity to the Modi Sarkar to bet on its slogan, Sabka Saath Sabka Vikas. For too long, India has been stalled by the tyranny of 24x7 politicking and the Torpor of 10 to 5 policy.

shankkar.aiyar@gmail.com

Shankkar Aiyar is the author of  Accidental India: A History of the Nation’s Passage through Crisis and Change



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