India’s agrarian economy has been the subject of debate for decades. Initially, concerns revolved around food security; today, the livelihood of the Indian farmer is under question.
India ranks second worldwide in farm output and agriculture employs 49 percent of its total workforce. Despite the growth in the agricultural sector over the years, the share of agriculture in the country’s GDP has declined. Yet it engages half of India’s workforce. Although the graph for Indian agriculture shows an upward rising trend, the financial status of the Indian farmer is on a downward slope. In addition to this, the increase in farmer suicides across the country has further strained the situation.
The economic distress caused to farmers due to the lacunae in policies surrounding agriculture is momentous: improper bans on the export of crops, price manipulation, lack of proper credit-giving instruments, underdeveloped extensions, and poor infrastructure add to the frustration of the Indian farmer. It is time for the government to level with farmers and relax the stringent policies that deter them from living a profitable life.
India has come a long way since its days of drought and famine. Today India is not only a grain-surplus economy but also a net grain exporter. The country’s modern cultivation methods are intensive and technology-led. The production base is reasonably strong and growing. Despite this success, however, India’s agriculture needs better reforms to harness its full potential.
The country’s policies revolve around its bitter experiences from historical times like the Bengal Famine of 1875. The fears of an impending food crisis still influence many of the country’s policy designs and reforms. and the staggering levels of poverty and malnutrition deepen these fears along with the country’s policy drive to address it.
India is home to the world’s largest number of poor and malnourished children. Almost 21 percent of the country’s 1.2 billion-plus population still lives below Rs. 120 per capita per day. More than 68 percent of Indians reside in rural areas, and 58 percent of these households are largely agricultural. Today 85 percent of Indian farms are small and marginal (less than 2 hectares), and food supplies are still highly vulnerable to weather and climatic conditions.
Compelled by these factors, the Indian government has always played a pivotal role in the food and agricultural management of the country. Today the policymakers find themselves in a Gordian knot where they strive to find a balance between food security and self-sufficiency. If the Government chooses to interfere with the agricultural market price it must provide the farmers with broader and more varied markets. Ad-hoc implementation of the Essential Commodities Act (ECA) of 1955, and the existent inefficient models of the Agricultural Produce Market Committee Act (APMC) of 1966 have led to reduced private participation and investments in these markets, which forces the government to act as a ‘buyer-of-last-resort’.
The production trend in Indian agriculture is on an incline. With the introduction of High Yield Variety (HYV) seeds and technological innovation, the country’s farming sector has acquired an eminent position both in the domestic and global economy. From the Green Revolution to Operation Flood to the Gene Revolution, the growth of the Indian agricultural sector has been memorable. Modern technologies, innovation, and the institutional mechanism ushered India into an era of self-sufficiency. However, the Government’s ever increasing involvement and ad hoc regulations have deterred the dynamic growth of this sector, making it heavily vulnerable to market and climatic changes.
In 1995, globalisation finally reached India’s agriculture albeit among heavy scepticism. Despite liberalisation, trade policies heavily oscillated between free trade, outright bans, and restrictive duties. Restrictive tariffs and duties have so far managed to curb the inflation in food prices, but also further distanced domestic and global food prices. The bans on the export of rice and wheat debilitate the farmer’s effort to make any real profit.
Even after the governmental hiccups, Indian agriculture is consistently globalising and its share in the global market is steadily increasing. A different approach can be used to tackle the problem of food security without impairing the growth of farmers. Nearly 40 percent of India’s food production is wasted due to a lack of adequate storage facilities. By diverting adequate resources to developing state-of-the-art warehouses and introducing innovative storage facilities, these yearly losses can be capped.
Sanjay Sonawani, a farmer and activist from the Vidarbha region, advocates the use of dehydration techniques to curb the loss of productivity and produce. He also advocates the removal of regulations which curb the private sector from investing in agriculture. In a country that has a substantial portion of its population living below the poverty line, it is evident that even India’s agriculture trade policy takes a back seat in light of food security. The government must detach itself from the built-in consumer bias as it is highly detrimental to the farmer’s interests. Rather than subsidising food for the poor, they should try substituting it with an income-based policy through cash transfers to protect the interests of both the poor as well as the farmers.
Additionally, the government must make space for the private players in the markets to bring about better investments, innovation, and income. The APMC and ECA must undergo reforms which allow markets to operate freely. Farmers across India are keen on privatising certain key aspect of Indian agriculture. Bhim Singh Lamba, a farmer from Haryana, is hopeful that the Government will relax its policies around the inclusion of private parties, especially regarding contract farming.
The problem with India’s agricultural crisis is far more deep-rooted than it appears, interconnected with numerous socio-economic issues. The most important being the lack of education amongst farmers and the overwhelming population of the poor in the country. And although the government has heavily invested to alleviate both, the impact is not yet visible. Policymakers must take a step back and reorient their stance in Indian Agriculture, revisit and reform policies which are oversensitive to the consumer’s needs.
The first Green Revolution was launched to ensure food security but today our food supply is secure, and meeting the demand for the growing population is within our grasp. Therefore, the Second Green Revolution must aim at promoting sustainable livelihood, enabling the poor to come out of poverty by generating gainful self-employment and improving the credit delivery mechanisms on both micro and macro levels.
The author, Vidushi Kala, is a Senior Editor at Indus Dictum. Her work focuses on public policy and legal reform.
Tweet at Vidushi: @kala_masala