Agrarian Crisis: Addressing the problems of the Indian Farmer
- In Economics
- 03:24 PM, Apr 27, 2015
- Ajay Kuligod
The year was 1916.Most parts of North India faced severe famine due to drought. The situation was worsened by the policy of the British rulers that the Indian farmers only grow cash crops like Indigo which the government could export to foreign countries. The farmers were paid much below their fair share. The British without taking into the consideration the severe famine further increased the tax on farmers. With no money, no food, the farmers of Champaran in Bihar rose in revolt against the British Raj. This farmer movement was very significant in the contest of the Indian freedom struggle. It gave us our tallest leader during freedom struggle, the Father of Nation, Mahatma Gandhi. It was during the Champaran movement where the term 'Satyagrah' was first publicly used by Gandhi in support of the struggle of the farmers of Champaran. Later the movement inspired him to take a rail tour of the entire country and better understand the problems of rural India. A similar situation of distress is seen in rural India even today. With three back to back failed cropping seasons, minimum government support and depreciating farm income the farmers in rural India are in acute crisis.
Indian farmers are heavily dependent on rainfall. Most of our acreage is via rain-fed farming. About 60% of our farmland is non-irrigated. The rest of which is irrigated does not get adequate water for intensive crops that are grown around the year. The Indian farmer is at the mercy of Rain Gods. Of late India saw unseasonable rains in the months of February and March destroying more than approx. 105 lakh hectares of standing Rabi crops in 14 states putting farmers in huge distress. The rains added to the already indebtedness of the Indian farmers. The crop damage has particularly affected the small and marginal farmers who are most vulnerable to droughts and floods.
The insurance cover for the farmers in India is dismal. With an average of 12% insurance cover, this is as low as 2% in under developed states like Jharkhand, Bihar and West Bengal. Even the best states in terms of crop insurance like Karnataka and Andhra have not been able to rescue the farmer in times of severe distress. Immediate attention needs to be given to the problems of agriculture sector. With a growing population and a changing climate the farmers of India need urgent attention and technical inputs. Recently a report pointed out that farm credit does not reach the farmer. According to the recently published ASSOCHAM report about 90% of Indian farmers are caught in some form of debt, the institutional farm credit is not reaching the small farmers. A MUDRA kind of institution needs to be envisaged with special focus on extending farm credit particularly to small farmers.
Many states have also seen distress selling of horticulture produce. The potato yield in West Bengal was badly hit. The absence of storage facilities at village level is the serious detriment on farm infrastructure and income. Crops like potato, onion and garlic can be easily preserved for 2-3 months but the lack of storage structures has only worsened the crisis situation. The Planning Commission report on building Cold storage facilities in India, submitted to last government, is biting dust with no significant steps taken in that regard. If we can build an 'AMUL' for milk, we can definitely build such a state-of-art supply chain for fruits and vegetables.
As promised by Prime Minister Narendra Modi during his campaign last year, the government should take immediate cognizance of the crisis and increase the minimum support price (MSP) of the crops like Wheat and Cotton. The MSP has been only raised to 3-5% this year against the promised 50% over production cost. As there is no insurance cover, higher MSP is the only immediate relief for farmer in the current crisis situation. The long term mitigation strategy would be to use the funds of NREGA to build micro irrigation canals, agriculture warehouses and other infrastructure to promote that strengthen rural economy.
The current agriculture systems is based on prices therefore we need an income based support system for the farmer taking into account his individual input costs. District level regional data can be used to calculate and distribute subsidy. AADHAR linked Direct benefit can be leveraged to transfer insurance to the bank accounts of farmers without any interference from the middlemen. The current crop insurance schemes have serious flaws and have a long process that the less-literate farmers find difficult to comply to. Some of the farmers are unaware of the existence of such crop insurance schemes. The existing systems need to be scaled up. They can be improved by the use of technology. Some African countries have shown the way. Mobile based crop insurance in Kenya calculates the crop damage on the data obtained from weather tracking systems and automatically computes the insurance amount per sq. mile which is then transferred to the farmer’s banks accounts using mobile banking. There is no point of contact anywhere in the system and corruption is checked to a very large extent. The system also cuts down the operating costs helping the private sector to optimize their insurance schemes.
Micro-credit extension, crop insurance to farmers and minimum support price (MSP) are only medium term measures. The long term impact of climate change is very significant on small farmers of India. Reports from Asian Development Bank (ADB), Food and Agriculture Organization of United Nations (FAO) and others point out that the Climate Change effects can reduce the farm income by 50% by 2020. The risk from monsoon that the rain dependent farmers in India face is very high. Climate resilient agriculture practices and processes need to be put in place at the state level. Higher impetus needs to be given on use of technology like weather forecasting, price information and knowledge transfer.
The total budget outlay for agriculture needs to increase manifold. The best case scenario would be to have a separate Agriculture budget each year. The next 4 years of the Modi government needs a special focus and policy thrust on agriculture. Sustained efforts shall deliver results and ensure the food security for our nation. Despite of all our shortcomings there is hope. If a robust agriculture policy is put in place and immediate correction steps are taken, we can grow our agriculture 6-8% in the coming years. The Indian agriculture has huge potential and we are home to more than 50% of the world's farms. We are one of the largest producers of milk and vegetables. We can be self-sufficient in our needs and can meet export demand from deficient regions like neighboring China and the nearby Middle East.
Our civilization was built on the foundation of a strong agrarian economy which is also the reason that it has sustained for over 10000 years. The sooner we realize this better off we shall be as a country and as a civilization.
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