Dr Simi Mehta, Ritika Gupta, Anshula Mehta, Sunidhi Agarwal and Nikhil Jacob
There is a widespread sentiment that agriculture is an activity of low returns, shaped by the stories of several farmers of our country who have been long in distress. Despite this unpopularity, it is still the highest employer, with about 50% of the country’s population indulged in agriculture and allied activities, 87% of whom are small and marginal farmers. Much needs to be done to alleviate the distress of the Indian farmers and elevate the status of Indian agriculture.
The Indian government has emphasized its aim of doubling the farmer’s income by 2022, and several schemes have been launched to achieve this target in due time. Even while coming out of the nationwide lockdown, a slew of measures was announced to make Indian agriculture truly AtmaNirbhar.
In this light, the forthcoming budget 2021 is the first budgeting exercise post the landfall of the worldwide pandemic that has brought about a slowdown in the economy in general. All eyes are on the budget and how it will chart a course to create an AtmaNirbhar Krishi.
To deliberate about the needed measures, the Centre for Work and Welfare (CWW) at IMPRI Impact and Policy Research Institute, New Delhi organized a panel discussion on “Budget 2021 for #AtmaNirbharKrishi: Towards New India“.
To set the tone for a comprehensive deliberation and open the discussion, Dr Patel, underlined the most pressing issues that the agriculture sector is marred with. She highlighted the unsustainable processes and practices deployed with a focus on productivity and meeting food security needs. This she believes comes at the cost of sustainability and the health of the soil and groundwater. She highlighted the prevalence of poor farm infrastructure and consequent wastage, leading to huge losses.
Dr Patel also pointed out the challenges like increasing water scarcity all over the country, increased fragmentation of agricultural landholdings, an increased proportion of small and marginal farmers, and low income. Holistically addressing these challenges is pertinent to realize the aim of AtmaNirbhar Krishi, she added.
Key Observations by the Panelists
Prof C S C Sekhar
Prof Sekhar highlighted the conundrum faced by the agriculture sector where growth is percolating year after year; however, the farmers’ low income has remained a cause of concern for the policymakers. He talks of a large disparity between the per capita income of farm and non-farm jobs, which is still widening.
Prof Sekhar enlists a few promising schemes launched to double the farmer’s income by 2022 and talks about the 16-point program introduced in last year’s budget to augment the sector. He mentions some prominent programs announced last year including the cluster-based approach, which took into consideration regional specialization and cropping patterns; increased marketing avenues for the farmers through Krishi Udaan and Kisan Rail, and the utilization of uncultivated barren lands to set up solar panels and generate electricity. These programs act as an additional source of income and the forthcoming budget should consider these initiatives.
Prof Sekhar also appraised the measures put forth by the government in the post lockdown period in the form of a stimulus package for agriculture. According to him, of these, the Rs 1 lakh crore fund set up to create post-harvest infrastructure, the Rs 2 lakh crore credit facility, and the recent farm laws are all in the right earnest. The budget 2021 should capitalize on these existing measures.
Dr S P Sharma
Dr Sharma tried to focus on the importance of the agriculture sector. It is the primary source to generate demand as about 50% of the population depends on it. The health of the agriculture sector is detrimental to the growth of the manufacturing and services sector. It is a highly resilient sector of the Indian economy, corroborated by its performance during the COVID-19 induced slowdown. It is an export-oriented sector, and there is an excellent opportunity to explore this potential, he added.
Dr Avinash Kishore
Dr. Kishore dwelled upon the ignorance of the trade component of the agriculture sector. He states that, like the South-East Asian countries that are far more trade-oriented, there needs to be a renewed focus on India’s agriculture trade. He postulates that agri-exports must increase rapidly to meet the ambitious goals of doubling the farmer’s income.
He also highlights the critical aspect that ‘AtmaNirbhar’ doesn’t mean India needs to grow everything within its boundaries. Instead, India should focus on imports too as without adequate imports, the export sector would not grow. More open trade would lead to the availability of a wider variety of food at lower prices, farmers will earn more, and value chains will become more efficient.
“We need a globally competitive agriculture and a self-dependent farmer or Atmanirbhar Kisan, who can earn a decent living from this agriculture and allied activities”, summarised Dr Kishore.
Mr Ranveer Nagaich
Mr Nagaich remarked that to make the agriculture sector Atmanirbhar, the farmers need to be prepared to tackle the pertinent challenges of the Anthropocene, like climate change, water stress, diminishing soil health, shifting consumer demands, and the need for diversification. He vouched for solutions that will increase productivity while maintaining sustainability.
Mr Nagaich appraised the policy domains and the current programs under these domains that are at play to achieve the mission of Atmanirbhar Krishi. He spoke about the income support scheme, Pradhan Mantri Kisan Samman Nidhi (PM-KISAN); schemes to increase the irrigation coverage like Pradhan Mantri Krishi Sinchai Yojana (PMKSY); crops insurance schemes like Pradhan Mantri Fasal Bima Yojana (PMFBY); the e-NAM scheme to facilitate increased connectivity between the agricultural markets; efforts to promote Farmer Producer Organizations (FPO), subsidy schemes like Pradhan Mantri Annadata Aay SanraksHan Abhiyan (PM-AASHA), and other measures to bring about a regime of Direct Benefit Transfer (DBT).
He also spoke in detail about the Atmanirbhar Bharat announcements for the agriculture sector. He notes that the tranche of schemes covered three main verticals – agriculture marketing, infrastructure creation, and diversification of income sources of the farmer. Under the reforms to improve the farmer’s access to markets, he cites the recently pronounced farm laws and a production linked incentive scheme for the food processing sector.
An agriculture infrastructure fund of Rs 1 lakh crore has been created to improve the agri-infrastructure. Additionally, schemes like Pradhan Mantri Formalisation of Micro food processing Enterprises scheme (PM – FME), Matsya Sampada Yojana, and the animal husbandry infrastructure development fund were also introduced. Mr Nagaich also highlighted the need to diversify the farmer’s income sources to make him more resilient to uncertainties. He enlists the allocations for promoting herbal cultivation and beekeeping as steps in this direction.
Mr Nagaich emphasized rural infrastructure plays a significant role in enabling adequate market access. Keeping with this need, he highlights the role played by schemes such as Pradhan Mantri Gram Sadak Yojana (PMGSY), which is in its 3rd phase, PM-Wifi Access Network Interface (PM-WANI) scheme and the success of PM-AWAS Yojana, which is expected to achieve its target of building 2.95 crore houses by 2022. (The budgetary allocation for PM-AWAS Yojana increased from Rs 25,328 crore in 2019 RE to Rs 27,500 crore in Budget 2020, and that of PM-GSY increased from Rs 14,070 crore in 2019 RE to Rs 19,500 crore in Budget 2020).
Touching upon a few of the initiatives undertaken by the NITI Aayog, Mr Nagaich highlighted the efforts of the premier think-tank of India in promoting natural farming, which are showing promising results with states like Andhra Pradesh and Himachal Pradesh leading the way in its adoption. They are also spending much of its time and resources to develop Agri-Tech solutions for the farmers in collaboration with the private sector through ideas like KrishiNeev or AgriStack.
Suggestions and Inputs for Budget 2021
Prof C S C Sekhar
- Gramin Haats or rural agri-markets in a deplorable state should be developed, and adequate infrastructure needs to be created. This will reduce the distance the farmer needs to travel with his product to sell them. (Swaminathan committee recommended one gramin market for each gram panchayat; however, only about twenty-two thousand rural agri-markets exist amidst over 2.6 lakh gram panchayats.)
- The Minimum Support Price (MSP) system needs to continue for staple crops like rice, wheat, and pulses. But for other crops, some different strategy needs to be devised as it is not economically or logistically feasible to provide MSP. The government could consider a shift from the price support system to an income support system. PM – KISAN is a step in that direction, but the assistance under that is deficient. A more scientifically reasonable amount needs to be arrived based on either the cost of production or the cost of living in a particular region.
Dr S P Sharma
- Centre and states should focus on creating agri-infrastructure and reduce skyrocketing logistics costs. (The share of the GCF of the Agri sector in India’s total GCF has dropped from nearly 20% to less than 10 percent).
- Wastages should be reduced from the current 30-35% to 10-15%.
- The focus should be on direct transfer schemes and not on subsidies.
- There should be steps taken to improve awareness about the policy environment at the ground level to avoid confusion and misinterpretations. There should be deliberations between the farmers and the policymakers.
- Focus on global supply chains and boost Agri-exports and food processing sector (Next IT sector of Indian economy).
Dr Avinash Kishore
- Make trade policies more consistent and predictive so that the farmers and trade partners can be assured about the price/trade/export-import policy.
- Shift towards import of land and water-intensive products like rice/soybean and export of skill/labor-intensive and high-value products like fish, fruits, and vegetables.
- Invest in livestock, fruits, and vegetables. It generates two-thirds of the value of agriculture and gives a higher return rate.
- Increase R&D budget for the agriculture sector to usher in innovations, which in addition to investment is needed for constant growth.
- Invest more in improving food safety and food quality.
- Change the nature of subsidies provided from distortionary to non-distortionary subsidies without increasing overall allocation to subsidies.
Mr Ranveer Nagaich
- Investment in the agriculture value chain, especially in human resources, farmgate infrastructure, and an efficient end to end cold chain, should be promoted. There should be added focus on expanding Kisan Rail, and Krishi Udaan should be reoriented to focus on the North East region with poor rail connectivity.
- Push for increased uptake of natural farming and rationalization of fertilizer prices for promoting sustainable agriculture.
- Pilot projects to partner with private sector players, research institutes, universities, and tech companies to leverage frontier technologies like blockchain for replication across India.
- Promote rural entrepreneurship in collaboration with the private sector to ensure last-mile delivery of tech-enabled solutions to the farmers.
- A more significant push for rural infrastructure by augmenting the existing schemes such as PM-GSY, PM-WANI, etc., is required.
Comments by Chair and Moderator
Chair, Dr Neelam Patel
Dr Patel agreed with the panelists’ views that the agriculture budget needs to increase and notes that it has been growing year on year for the past 5-6 years. The agriculture and allied sector allocation increased from Rs 1,20,835 crore in RE 2019 to Rs 1,54,775 crore in Budget 2020. She reiterated the views concerning the need for increased focus on R&D, new technologies, and agri-trade.
Moderator, Prof Surabhi Mittal
Prof Mittal opined that lack of collateral is a significant impediment towards availing institutional credit in the case of landless farmers or livestock owners. She suggested that the government explore new and advanced technologies like the blockchain-based models available whereby the farmer’s existing livestock can be used as collateral to avail credit and purchase more livestock.
Prof Mittal voiced out for a more realistic disbursal amount under PM-KISAN; however, she remarked that better targeting must be employed to ensure that the neediest farmers receive the assistance. She raised pertinent issues like the status of many FPO’s, which are now defunct, and the status of various DBT pilot schemes launched in collaboration with NITI Aayog, whether the schemes that showed poor results are scrapped or being redesigned. Mr Ranveer Nagaich responded to this query, adding that the NITI Aayog does note down the learnings and reorient the schemes according to the pilots’ results. Prof Mittal emphasizes the need to include the local inputs concerning agro-climatic zones, soil type, weather variability, and cropping pattern in designing price prediction models.
In her closing remarks, Prof Surabhi Mittal highlighted another popular sentiment that agriculture is a poor sector, and nothing can be done about this. However, she emphasized on how this is not the case and the conditions are improving, albeit, a lot more needs to be done. She drew a perfect conclusion by reiterating that there should be more of an entrepreneurship approach towards agriculture, rather than banking solely on government assistance. Agriculturists and farmers must become more open to innovations and modern marketing techniques. This will help tide over the belief that agriculture is a non-profitable business and establish that it is instead a lucrative and rewarding venture.
Moderator and Organizer, Dr Arjun Kumar
Drawing curtains on a very insightful deliberation, Dr Arjun Kumar, Director, IMPRI and organizer, noted the need for pushing an integrated Agri-CSC (Common Service Centre) at each gram panchayat. These centers should harness Digital India, SPM RURBAN Mission, Skill India, etc., along with agricultural and village related programs.
The success of PM-KISAN, e-NAM, Jan Dhan Yojana, Swachh Bharat Mission, PM-AWAS Yojana, Ujjwala Yojana, etc., led by gram panchayats should be leveraged, and models of Krishi Mitra, FPOs, rural haats, SHGs, Ayushmaan Bharat’s Health and Wellness Centers, Swamitva Yojana and alike, as well as MGNREGS, Kaushal vikas skill India, can be streamlined through these Agri-CSCs.
This initiative will enable and create access to information, market, and handholding regarding schemes and technologies related to the agriculture sector and rural development, aiming to double the farmer’s income in AtmaNirbhar New India. He voiced for a revolutionary digital push along with a re-invigorated thrust on AtmaNirbharKrishi amidst the pandemic to counter the problems of existing ground-level disconnect.
Dr Kumar highlighted out that perhaps this is the best opportunity to chase this aim considering that our country is the world leader in IT technologies and has the largest youth populace
Major Points from the Q&A
Fall in fertilizer subsidy – There has been a fall in the fertilizer subsidy allocation under budget 2020 (2019 RE: Rs 79,998 crore and 2020 BE: Rs 71,309 crore). Commenting on whether such a trend could be expected in the forthcoming budget, Dr Kishore states that neither the expenditure on fertilizer subsidy has fallen nor has the prices of fertilizers gone up, so a decrease in allocation should not be seen as a pertinent issue. He also added that the focus should be on utilizing funds allocated the previous year and not on the present allocation per se.
Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) – Dr Kishore believes that there has been a greater demand for jobs under MGNREGS after COVID-19, and hence it should see an increased allocation in the forthcoming budget. However, he cautions that, more often than not, MGNREGS does not perform well in the states where it is needed the most.
Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) – A question was raised regarding the reduced utilization of allotted funds under PM-Kisan. Revised estimates for the flagship PM-Kisan scheme stood at Rs 54,370 crore as against Rs 75,000 crore allocated for it in 2019. Even in the year 2020, when the pandemic necessitated the need to direct cash transfers to the farmers, reports suggest a poor disbursal of funds under PM-Kisan. Addressing this issue, Dr Kishore stated that some of the scheme’s under-utilization could be due to reasons such as the underperformance of states like Bihar.
This could be because the number of farmers is lower than the number of holdings counted by the Agri-Census. It could also be because many landowners are tax-payers since they have other sources of income. Also, there are still the last-mile problems in the disbursal of cash. For instance, some states require farmers to have paid their land revenue to qualify for the subsidy and they have not paid their land revenues. Finally, farmers in West Bengal were excluded from the state government’s scheme, adds Dr Kishore.
Rainfed area development and climate change – Addressing the decreased allocation towards rainfed area development and climate change (2019 BE Rs 250 crore and 2020 BE: Rs 2,020 crore), Dr Kishore highlights that even the existing allocations under Atal Bhujal Yojana or Pradhan Mantri Kisan Urja Suraksha Utthan Mahabhiyan (PM KUSUM) have barely been deployed. He suggests that the central government work closely with the state governments and CSOs to ensure that the allocated budget under different schemes is implemented. He also emphasizes the need to increase the utilization of existing schemes for the Central India Tribal Belt, which is the least irrigated area in India but receives adequate rainfall.
Diversification of Indian Agri-Trade – Regarding India’s trade in agriculture products, Dr Kishore remarked that there should be diversification of markets that are captured and diversification of product portfolio to become more resilient to risks.
Agri-R&D – Dr Kishore addressed the need for increased investment in agriculture R&D. He added that research should be carried out by states too, along with central Indian Council for Agricultural Research (ICAR) owning to the microclimate diversity and peculiarities of each state in India.
Zero Budget Natural Farming (ZBNF) – Regarding the lack of allocation for ZBNF despite finding mention in Budget 2019 and Budget 2020, Dr Kishore maintains that the governmentshould stop assigning money to ZBNF if any since scientists do not agree with the ZBNF idea.
Farm Mechanization – Addressing the query on programs that focuses on improving the mechanization of the Indian farms, which according to the 2019 Economic Survey, stands at an abysmal low of 40%, Dr Kishore highlights the Sub-mission on Agriculture Mechanization (SMAM). He noted, states benefit from the Rashtriya Krishi Vikas Yojana (RKVY), which supports mechanization. There is also another dedicated scheme for mechanization to reduce crop residue burning, he added.
Taxing Agriculture Income – Prosperous farmers who probably earn a large sum from farming are not taxed for that income. Responding to a query on whether bringing such farmers into the tax net will be beneficial, Dr Kishore maintained that such farmers are small in number. Chasing them will cost more than the tax revenue it will accrue. He also added that even if they are brought in the tax net, the country lacks the capacity to audit their accounts, etc.
Doubling Farmers’ Income by 2022 – Asked whether the new farm laws will help in doubling the farmer’s income by 2022, Dr Kishore responded very practically, adding that it is impossible to double it by 2022, considering that agriculture has never grown @ 4% in India at the national level. In that context, to expect it to grow at 10% per annum is unrealistic. On the brighter side, it has led to a much-needed shift of focus from increasing production to increasing farmers’ income, he adds.
Giving Agricultural Subsidies in the Lines of Major Economies like USA – Whether providing subsidies on the line of how the USA offers will help the Indian agriculture sector grow globally, Dr Kishore states that subsidies alone cannot ensure our agriculture’s progress. Instead, there should be more focus on increasing public investments in agriculture, rural infrastructure, R&D, etc.
Export of Water-Intensive Crops like Rice – Rice exports mean more water needs, leading to domestic water table decline and adding to India’s climate change woes. Addressing this concern, Dr Kishore remarked that exports of Basmati rice could continue, but the export of other rice varieties may be hurting us more than helping us, especially if it is produced in water-scarce areas like Punjab and Haryana.
Minimum Support Price (MSP) – Whether India will ever move away from distortionary price support schemes like MSP, which incidentally is the eye of the storm during the protests against the new farm laws, Dr Kishore lamented that it would be difficult. He explained that MSP supports Public Distribution System (PDS) and PDS supports MSP. So, two not great programs have become justifications for each other’s existence.
Public-Private Partnership (PPP) in Agriculture – Regarding the utility of the PPP model in the agriculture sector and creating benefits for the farmers, Dr Kishore noted that PPP could be beneficial. However, he cautioned that the devil lies in the details. He cited India’s experience with PPPs in other sectors of the economy like roads, power, SEZs, etc. to drive home his point.
Shift to Cash Crops – On being asked what can be done to shift focus away from the crops like rice and wheat, which are overproduced due to MSP to the cash crops, Dr Kishore added that we need to move away from crop-specific subsidies to crop-neutral subsidies. However, this is easier said than done given the popularity of public procurement at MSP and the Public Distribution System (PDS) it supports, he remarked.