Context:

• India is mainly an agricultural country. Agriculture is the most important occupation for 60% of the population either directly or indirectly. It is the basic foundation of economic development.
• It is not merely a source of livelihood but a way of life. It is the main source of food, fodder and fuel.
• This year’s budget has increased outlays to the agricultural sector and initiation of various programmes. However, there are some real challenges that need to be solved to address agrarian distress in India.

What are the main challenges that need to be addressed?

1. Regarding MSP price:

• Raise the minimum support price (MSP) by at least 50% above the cost of production. It should be extended to all crops.
• The production cost of any crop should include all actual expenses in cash and kind incurred in production and rent paid for leased land, imputed value of family labour plus interest paid.
• However, as per the current calculations, only actual paid cost and unpaid family labour is covered and the government has been giving MSP above 50% of that production cost figure.
• Sadly, the same practice will also be continued in the current budget year.
• While a workable formula for fixing MSP in consonance with the States will take time, the government must extend immediate help to farmers from rampant price volatility.
• In addition to it, States can continue with implementing various ‘price deficiency payment schemes’.

2. Develop and upgrade the existing rural haats into Gramin Agricultural Markets

• A corpus of ?2,000 crore has been allocated in the name of the Agri-Market Infrastructure Fund for developing and upgrading marketing infrastructure.
• The real challenges are to ascertain the priority of the respective States towards it and ways to accelerate its pace.
• Under market reforms, it will also be important to link production centres with marketing through agri-value chains, which would require farmers to aggregate, form self-help groups, or farmer producer organisations to avoid exploitation of farmers.
• A hike in MSP should be supplemented with irrigation, and reduction in fertilizer cost.
• Another interrelated initiative is the launching of ‘Operation Green’ with an outlay of ?500 crore to address the challenge of price volatility of perishable commodities.
• State governments need to bring various programmes under one roof, perhaps within the Agricultural Produce and Livestock Market Committee 2017, to help farmers.

3. increase institutional credit

• The share of agricultural credit in gross domestic product in agriculture and allied activities has increased from 10% in 1999-2000 to 41% in 2015-16.
• Targeting of the announced allocation to the poorer farmers and tenants in each State is the need of the hour.
• What are different price deficiency payment schemes implemented in different states?

While some have announced loan waivers, others are trying to fix farmers’ problems originating from tumbling farm prices.

1. Bhavantar Bhugtan Yojana (BBY) , Madhya Pradesh:

• It is essentially a price deficiency payment (PDP) scheme, being undertaken by the government of Madhya Pradesh.
• BBY applies to eight kharif crops — soybean, maize, urad, tur, moong, groundnut, til, ramtil.
• Under the BBY, farmers have to first register on a portal. Their sown area is verified by government officials.
• Farmers are then asked to bring their produce to mandis at a time fixed by the state government.
• Based on average productivity of a crop in the district and area cultivated by the farmer, the quantity of each produce that is eligible for deficiency payment is also determined by the government.
• Farmers receive the difference between average sale price (ASP) and MSP directly into their bank accounts.
• The ASP is calculated as the simple average of the weighted modal prices of the relevant crops in the regulated mandis of Madhya Pradesh and two adjoining states.
• For kharif 2017-18, so far, data related to five crops (soybean, maize, groundnut, urad and moong) has been finalised for price deficiency payment.
• The scheme seems interesting as it provides an alternative to physical procurement of commodities at minimum support prices (MSPs).
• However, this scheme is not without limitations. !00% production of crops is yet to be covered under the scheme. Still a larger proportion of farmers are not registered on the portal.

2. The Haryana government has announced a somewhat similar scheme for four vegetables — potatoes, onions, tomatoes and cauliflower. In contrast to these programmes is the government of Telangana’s input support scheme.

3. Telangana’s Farm Input Support Scheme:

• The scheme’s objective is to relieve farmers from taking loans from moneylenders by giving them Rs 4,000 per acre for the kharif and rabi seasons.
• It is envisaged that the farmer will use this money for purchase of inputs ranging from seeds to fertilisers to machinery and hired labour.
• The farmer is free to grow a crop of his choice and sell it anytime in a mandi of his choice.
• This model is crop-neutral, more equitable, more transparent, and gives farmers the freedom to choose.
• Incidentally, China has a similar scheme: It gives aggregate input subsidy support on a per acre basis.

What’s missing?

• There are certain pressing issues not considered in this Budget that must be given closer attention.
• Close to 52% of net sown area is still unirrigated and rainfed, in addition to the recurrence of floods and droughts due to climate change. The subject has not received due attention in this Budget.
• Centre’s plan to take up 96 districts deprived of irrigation with an allocation of ?2,600 crore under the Prime Minister Krishi Sinchayee Yojana — Har Khet ko Pani need to be implemented effectively.
• At the same time, the Minor Irrigation Census 2013-14, published in 2017, warns of a tremendous increase in deep tube wells to more than 2.6 million in 2013-14, from 1.45 million in 2006-07, and the resultant decline in the ground water table.
• The Government need to keep in consider the condition of ground water table while implementing a programme with the State governments to enable farmers to install solar water pumps to irrigate fields.

Way Forward

• A location-specific policy for irrigation with the identification of suitability of medium-major irrigation projects and/or minor or micro irrigation facilities is required to protect farmers from the adverse impacts of climate change.
• It must be supplemented with timely completion of pending canal irrigation projects, and strengthening of the National Agricultural Insurance Scheme by an increase in compensation and timely advice on weather.
• Technological interventions that update farmers about sowing and harvesting time and extension services can help prevent misfortunes.
• Investment in agricultural research and development (Ag R&D) should be increased.
• More drought and pest-resistant crops are needed, along with better irrigation technology.
• Farmers also require interventions in the seed sector to raise production and diversify to alternate crops to induce higher growth.
• The government should assure doable action plans that quickly rescue famers from price or crop failure.