India’s recent major reforms in the agriculture and related sectors represent a decisive break from the past practices, mind-set, and sets a different dynamic for the sector.

This column discusses the changing role of NABARD (National Bank for Agriculture and Rural Development), established on 12 July 1982 by an Act of Parliament, under the new environment.

NABARD is the agency with the responsibility for developing India’s agriculture sector, not in just undertaking banking functions of providing credit, but also developing the agriculture sector through various initiatives.

As of March 2020, NABARD’s balance sheet amounted to INR 5.3 trillion (2.6 % of GDP), out of which advances were INR 4.8 trillion (2.4 % of GDP.) During 2019-20 NABARD set up a new subsidiary, NABFOUNDATION, to pursue development partnerships.

In India’s new development stratagem, agriculture has been given critical role.  Ashok Gulati has argued, “…NABARD has a lot of heavy lifting to do, else they will fail the country by not realising the full potential of these legal changes. NABARD must get its act together, take professional advice and work with implementing agencies in the private sector, including various foundations already working with farmers. The payoff will be very high. It will make Indian agriculture globally competitive, and benefit farmers and consumers alike” ¹.

Key Developments Portending a Decisive Break in the Agriculture Sector

These may be briefly summarized as follows:

• passage of three laws relating to agriculture which came into effect in September 2020. The laws are the Farmers Produce Trade and Commerce (Promotion and Facilitation) Law 2020 (FPTC); The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Law, 2020 (FAPAFS); and The Essential Commodities (Amendment) Law, 2020 (ECA).
• These should be viewed as a package. The FPTC law allows farmers to sell their produce anywhere in the country as part of “one country one market”, thus breaking the monopoly of the APMCs (Agriculture Produce Marketing Committees).

The FAPAFS law allows contract farming. It removes the ceiling on storage of commodities. The removal of the ceiling will help processors and industrial users to buy and store farm commodities without any fear during the peak arrival season.

The ECA is a relic of the 1950s decade of socialist shortages. As a result, the market for most foodstuff is now deregulated. This law would restrict any government intervention in the agricultural market to exceptional circumstances. Recent ban on onion exports however is not consistent with the spirit of this law. It is hoped that this is an aberration.

• launching a scheme for developing the fisheries sector, a sector holding considerable potential to improve India’s nutrition standards, and help expend India’s exports. It is called Pradhan Mantri Matsya Sampada Yojana (PMMSY) It aims to increase India’s fisheries sector fish exports to INR 1 trillion by 2024-25 ².
• launching of the Bharatiya Poshan Krishi Kosh (BPKK) initiative in November 2019. This project has two components – Development of a Food Atlas and Documentation of promising practices for Jan-Andolan for POSHAN Abhiyaan ³. 

The Agro-Food Atlas is to act as a repository of diverse crops across 127 agro-climatic zones of the country having three parts- crops currently being grown, agro-ecological conditions (soil, organic carbon content, ground water availability etc) and guidance on how a greater diversity of crops could be encouraged in a particular district or block to promote dietary diversity and nutrition.

 The project also documents social, behavioural and cultural practices that promote and reinforce healthy dietary behaviour.

In essence, these pathbreaking developments expand economic freedom of the farmers and others involved in the agriculture sector; introduce new technologies in all aspects of agriculture activities, including technology of the Third Industrial Revolution, based on Internet of Things ⁴. To harness traditional knowledge of India about crop diversity and nutrition; and accelerate hitherto neglected public investments in necessary infrastructure to make India a major agriculture power globally ⁵.

These development in the agricultural sector are a part of India’s application of strategic ideas the Atmanirbhar Bharat Abhiyan (ABA), and Be-Vocal for -Local (BVFL), and for the world, to be applied to five pillars- economy, infrastructure, technology driven systems and structures, favourable demographic features, and demand.

The literal meaning of the term Atmanirbhar Bharat Abhiyaan is Self-Reliant India Movement. But this self-reliance is in the context of India being highly globally integrated, and India pursuing further integration based on enhanced global competitiveness and competence. As Amitabh Kant, Chief Executive Officer of NITI Aayog has argued, “ABA is not anti-globalisation. It is about making India self-confident and self-reliant to take on global competition. It is about driving India’s socioeconomic transformation”⁶.

The vision for BVFL is to encourage local producers to innovate, create better products, not just for the domestic markets but also for global markets. Leading to emergence of regional, national, and global brands.

Suggested Responses from NABARD

The new dynamics needs newer responses departing from ‘business-as-usual’ from all the stakeholders, including from NABARD. Let me make the following suggestions for consideration by NABARD management.

First, NABARD has appropriately been so far largely domestic oriented. But now it needs to reorganize and reskill to also help expand India’s global agriculture footprint, and make India relevant for the global market. Greater global dependence on India would provide India an important leverage, which as in the pharma sector, can be used constructively to expand India’s economic and strategic space.

India’s share in global agriculture trade is only 2.4%, and this needs to increase markedly.

Official estimates suggest that in 2020-21, India is likely to produce around 305 million tons of food grains, and about 400 million tons of fruits and vegetables, medicinal herbs, flowers, while substantially raising the output of fish products in the next few years.

 Dairy production, which already processes around one-third of the production, and has been outside of restrictive agriculture laws and practices, is also set to increase substantially.

 Besides milk, only a small fraction of output of grains, horticulture, and fishing products are currently processed, Therefore, value addition through food processing, while being competitive in global markets through meeting global hygienic standards, and others would be an important part of NABARD’s responsibility.

Chairman of NABARD, and others have suggested an Export-Import Bank of India (EXIM) type of structure to help expand India’s agriculture exports through export credits and others tied to procuring from India.  This proposal merits serious consideration.

Second, NABARD’s operations also need to be linked to India’s Blue economy. Port-led development, and to coastal development to transform the agricultural sector. The key component of the blue economy is the Sagarmala project, the prime objective of which is to promote port-led direct and indirect development and to provide infrastructure to transport goods to and from ports quickly, efficiently and cost-effectively⁷.

The 2019-20 Report of NABARD, Chapter 2 titled « Blue Revolution » analyses the fisheries sector, and does recognize investements needed in this sector⁸.

But the chapter does not link it with the Sagarmala project and with the Blue Economy. NABARD will need to device explicit goals and outcomes for the fisheries sector, and for encouraging seaweed production.

Third, given the emphasis on technology. Financial Technology, FIN-TECH and other start-ups relating to agriculture need to be encouraged by NABARD. In Gandhinagar, there is Gujarat International Financial Tech City (GIFT), with whom NABARD could consider collaborating to set up innovation hub, focusing on agriculture.

Fourth, given a new environment facing NABARD, it may consider whether Mission Karmayogi type initiative of the Centre should be adopted by it as an organization, even as NABARD help in enhancing skills of other stakeholders in the agriculture sector.

 Mission Karmayogi"- National Programme for Civil Services Capacity Building (NPCSCB) aims at comprehensive reform of the capacity building apparatus at individual, institutional and process levels for efficient public service delivery⁹.

Fifth and final suggestion concerns facilitating data gathering and data analytics. This is an ideal point when new data base can be created on behaviour of farmers about credit obtained, crops, technology, supply-chain, including through FPOs (Farmer Produce Organizations which are given a major thrust), post-harvest practices, contract farming and others.

NABARD, perhaps with SBI (State Bank of India’s YONO (mobile banking and life-style app) could create a separate entity for data collection. This will help in providing high quality data to them to fine tune their operations, to policymakers, and after addressing privacy concerns, to researchers. At some point, it may be feasible to monetize this data base.

Concluding Remarks

The pathbreaking agriculture reforms have given NABARD an unprecedented opportunity to help shape the future dynamics of the agriculture sector in India.

By considering these five suggestions, and by refining them, and adding more initiatives from its own analysis, it can be true to the spirit of Atmanirbhar Bharat Abhiyan, and Be -Vocal-for-Local (and for the world) as these apply to agriculture.

References:

1. https://indianexpress.com/article/opinion/columns/farm-bills-farmer-protests-parliament-rajya-lok-sabha-6618353/ Accessed on 29 September 2020.
2. https://www.myind.net/Home/viewArticle/pradhan-mantri-matsya-sampada-yojana-pmmsy-initiative-designed-to-modernise-and-enhance-indias-global-presence-in-the-fisheries-sector-Accessed on 15 September 2020
3. https://pib.gov.in/Pressreleaseshare.aspx?PRID=1595250- Accessed on September 1, 2020
4. https://www.youtube.com/watch?v=QX3M8Ka9vUA&feature=youtu.be- Accessed on 2 September 2020
5. https://www.nabard.org/auth/writereaddata/tender/1008203730Nabard%20English%20Annual%20Report%20for%20Website.pdf accessed on 10 September 2020
6. https://www.hindustantimes.com/analysis/a-blueprint-to-make-local-indian-brands-truly-global/story Accessed on 20 September 2020.
7. http://pib.nic.in/newsite/PrintRelease.aspx?relid=117691 Accessed on 4 September 2020
8. https://www.nabard.org/auth/writereaddata/tender/1008203730Nabard%20English%20Annual%20Report%20for%20Website.pdf Accessed on 20 September 2020
9. https://pib.gov.in/PressReleseDetailm.aspx?PRID=1650633 Accessed on 23 September 2020

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