Relevance: GS Paper III (Indian Economy)
Introduction
The prime minister’s promise to double farmers’ real incomes by 2022-23 cannot be realised with loan waivers and higher MSPs.
Can freebies put Indian agriculture on sustainable high-growth path and augment farmers’ incomes?
- The answer is “no”. In fact, they may worsen the condition of agriculturists over the medium to long run.
- These band-aid solutions will eat into the scarce resources of the sector, shrink public investments in agriculture and lower growth in this sector.
- Such promises of freebies take away the focus from structural reforms that are urgently required in the agriculture sector.
- Even the current MSPs of kharif crops that were announced on the formula of 50 per cent margin over cost A2+FL does not give much comfort to farmers as the market prices of most kharif crops are way below (10 to 40 per cent) these MSPs.
Way Forward
- What Indian agriculture and farmers need from political parties is the promise to usher in structural reforms.
- These include getting the agri-markets right so that farmers get fair prices for their produce, ensuring that farmers have access to best technologies from the Indian Council of Agriculture research, CGIAR or the best private sector companies, local or global.
- This would require augmenting investments in agri-R&D, and fixing the weak Intellectual Property Rights (IPR) regime.
- This would also require massive investments in better water management technologies, fertiliser use management, improved organic culture and bio-technologies, including GM technologies.
- These have to be coupled with institutional reforms in land management by freeing up land-lease markets and reforms in agri-credit markets by increasing the reach of institutional credit to small and marginal farmers — rather than giving heavy interest subvention.
- Streamlining crop-insurance — the Pradhan Mantri Fasal Bima Yojana — and e-NAM would take time, and require a lot of perseverance.
- The Essential Commodities Act needs to be drastically pruned and reformed.
- Export and domestic marketing policies need to be liberalised.
- Doubling farmers’ real incomes by 2022-23 over a base of 2015-16 requires a growth rate of more than 10 per cent per annum.
