Agricultural Policy

Agrarian Crisis in India: Struggling with policy fallow

By: R S Deshpande and Shivkumar Nayka, former Director and Research Scholar at Centre for Research in Urban Affairs, Institute for Social and Economic Change (ISEC), Bangalore, respectively
The Indian agriculture sector is at a critical juncture, with productivity stagnating and technological inputs being negligible. Policy failures in most critical sectors of agriculture has caused severe distress to farmers.
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The recent agrarian crisis once again brought forth the fragility of the state policy towards agriculture. Agriculture is primarily construed as a massive private activity with farmers as the main decision makers. However, there are two important basic determinants of the development of agriculture. The first one relates to the concept of agriculture that is derived from culture. Therefore, the changing flow of culture (today commercialisation and market centralism) influences the method and process of agriculture. The second most important set of determinants of agriculture are the policies emanating from the State. Our experience of policy making in India for agriculture has been quite checkered. Till 1999, we did not have a cohesive policy document for the agriculture sector even though some fractional efforts were made earlier (Deshpande, 2015). Therefore, a recurring agrarian distress and the resultant suicides of farmers is not an unexpected outcome.

The issues confronting Indian agriculture today have five important facets. First, the making of the personality of the Indian state after independence has been more urbane in nature and hence there is a natural neglect of agricultural policies. Second, India has a large number of agro-climatic regions and a blanket policy does not suit every region. Third, even though agriculture contributes less than 20 per cent of the GDP, its poor performance significantly influences the aggregate growth of GDP. Fourth, India’s heavy dependency on rainfed agriculture was assiduously neglected till the beginning of the 11th plan. Hurriedly, during the 11th plan period, the Indian government propped up the National Rainfed Area Authority. Irrigation has been India’s Achilles heel due to its uneven coverage, high capital intensity, and extreme inefficiency in operation. Lastly, issues of agrarian distress pop up almost every alternate year due to market failures, climate vagaries, investment failures and finally the failure of the policy to meet the challenges well before they emerge (Deshpande and
Raju, 2009).

Agrarian Transition of Seven Decades

Transitioning over the years, the personality of the Indian State has turned from core rural to semi-urban and, in the recent past with intensified use of technology, is inching towards a techno-centric machinery (Deshpande, 2015). It is easily observed that when the agricultural sector shows depressed growth rates, the aggregate GDP also takes a dip (Fig. 1). That indicates the vulnerability of the aggregate GDP with respect to the agricultural sector.

It is known that the share of agriculture in total GDP has been going down over the years. During 1970-71, India had 40.5 per cent of its GDP originating from agriculture. This has slipped to 14.4 per cent by 2011. But interestingly the workforce engaged in the sector has not reduced at the same rate – dropping by 17.5 points as compared to the 26.1 reduction in the share of GDP. That results in the agricultural sector carrying a larger workforce per unit of GDP generated than any other sector.

The Situation Assessment Survey conducted by NSSO in 2002 warned that 40 per cent of India’s farmers have no interest in agriculture and would like to quit at the earliest. Not many people took it seriously, but in reality there is a strong trend of cultivators leaving the agriculture sector (Table 1). We have lost about 6 million cultivators during the two decades ending at 2011.

Over the decades as per census of India definition, the share of ‘cultivators’ among the workers is declining and the share of ‘agricultural labourers’ is increasing. This process indicates economic marginalisation of workers in rural areas and their degeneration in status from cultivators to agricultural labourers. The decline in the poverty ratio therefore should be credited to the availability of that proverbial minimum survival income (provided by MNREGA wages) allowing the poor to float marginally above the line. On the face of it and in the short run we seem to have achieved temporary inclusivity but one that may not remain sustained. In this context, the disappearing cultivator is a matter of concern. The increase in the number of agricultural workers is also substantial and there are enough reasons to believe that cultivators could have jumped category to agricultural labourers. This fact can also be corroborated with the agricultural census data,  which shows changes in number of operational holdings (Fig. 2).

There are reasons to believe that the rural poor may be hovering around the threshold level. Three possibilities can help them rise above the poverty threshold—first the agricultural income per hectare should increase. Second, as farming is not remunerative, as indicated by the NSSO 59th round, the way to help farmers/agricultural workers stay above poverty line is to increase agricultural wages or make other employment opportunities available. Real wages need to increase for that purpose. Third, there is a possibility of rural poor crossing the official poverty line with the help of many ongoing schemes (such as MNREGA), but still staying in its close neighbourhood. It is in this context that we need to trace the path of the development of Indian agriculture in the shadow of a non-existent long term policy.

Travelogue of Indian Agriculture

The travelogue of Indian agriculture is marked with cyclical phases after independence (Sawant, 1983). India did not have the kind of policy arsenal to substantially enhance agricultural production. At the same time, in an infant nation, Indian policy wizards were in search of a suitable development model. Two international ideological pulls were strong—on one side, the capitalist development model, well celebrated in the world, and on the other the ‘socialist blocks’ centralised planning model demonstrating good results. Foodgrain availability had touched a lowest minimum. Those were the days when internationally, the ‘politics of food aid’ ran strong. India, with certain conditionality, imported huge quantities of foodgrains to tide over the crisis and at the same time initiated a technological revolution in agriculture through new varieties of wheat and paddy. Dr B P Pal, the then Director General of Indian Council of Agricultural Research (ICAR) led from the front in wheat research and Dr Challam, a seed breeder at Indian Agricultural Research Institute (IARI),  produced the first few kilos of new paddy seeds. Quite a few fallouts were noted after the initial ecstasy of the green revolution subsided, noted among which are, i. skewed income distribution effect in the farm sector; ii. increased regional disparities; iii. higher crop specialisations; iv. reduced emphasis on the traditional crops like millets; v. slow-growth experienced by a few crop groups like oil seeds and pulses; vi. increased cost of cultivation due to higher usage of purchased inputs and vii. finally, shrinkage of net income out of agriculture (Deshpande et al, 2004).

Now we are attempting to usher in a new agricultural policy with possibly a very fragile assurance of doubling the farmers’ income. India’s dreams of reaching a two digit growth rate and this ambition needs agriculture to be pulled out of its ongoing stagnation.

The ground situation however, betrays these ambitions by a fair margin. The growth rates presented in Table 2 are based on the traditional methodology across the phases. The fallacy of using the traditional growth rates as a policy tool has been well exposed. A closer look at the data and ‘year-to-year’ changes made it amply clear that in the agricultural sector, we needed to define a new measurement of growth. I termed it the “Rolling Growth Rate”, computed on a moving five year series (Government of Karnataka, 2009, Chair R S Deshpande). The justification for rolling over five years is that the ‘probability of a bad or bumper year’ arriving from a long time series is about 20 per cent; that would mean once every five years. Therefore, a rolling five year growth rate irons out the fluctuations (Fig. 3). The figure shows a lot of fluctuations but no specific trend. It is clear that the GDP originating from agriculture has always been under the 3.15 per cent barrier. Over a long time series, the agricultural sector showed sticky behaviour with this threshold. Albeit there are a few peaks which can be observed but equal number of troughs are visible. Especially the performance has been quite discouraging between 1996-97 and 2007-08.

Among the major reasons for the constrained growth at 3.15 per cent is the large share of rainfed agriculture, technological fatigue and highly variable weather conditions. More than 50 per cent of the gross cropped area is at the mercy of monsoon. Interestingly, even the area under irrigation fluctuates according to the moods of the monsoon.

Liberalisation and Crop Commercialisation

Market centrality is the philosophy of new economic policy and the agriculture sector was made to participate without proper preparation. Transitioning from subsistence to a market friendly agricultural sector, the role of the market started increasing way back in the 1950s and strengthened during 1960s. The Agricultural Produce Market Committee Act was passed in late 60s and the pace of commercialisation also increased after India achieved the arithmetic food self-sufficiency by 1970. Farmers then started moving towards commercial crops away from food harvests. Commercialisation has been stalking agricultural sector ever since. With the increased cash requirement in cultivation as also incremental lifestyle based on the urban consumption patterns, it was natural that farmers would move to commercial crops.

We can distil six indicators to understand the pace of commercialisation that include i. share of core commercial crops in the total crop output; ii. share of horticultural crops output in the gross value of output; iii. share of foodgrains in the gross value of output; iv. area share of core commercial crops in gross cropped area; v. area share of horticultural crops; and vi. area share of total food grains in the gross cropped area (Fig. 4). All these indicators depict six different facets of commercialisation, clearly showing that the process was slow till triennium ending (TE) 1992-93, but increased rapidly thereafter. Farmers take risks to increase their incomes, in the absence of cold storage and regionally focused horticulture processing. The process of commercialisation was difficult for farmers to negotiate when the market was not necessarily in their favour. In fact, market functionaries made best out of the situation to exploit farmers that had ensued out of a systemic policy failure. Distress in the farm sector culminating into farmer suicides has become an important area of discussion in Indian agriculture for the last decade. This genesis of distress has been traced back to the technological change of mid-’60s, which has necessitated a steep demand for cash inputs and brought new seeds in its wake. During the last three decades the situation has aggravated both due to policy fatigue (Narayanamoorthy, 2007) and successive droughts. The prices did not pick up even in the event of low production and the net income of farmers continued to shrink. The recent farmer agitations and demonstrations in many parts of the country stand testimony of the increasing distress. The situation is quite alarming in Karnataka, Andhra Pradesh and Maharashtra. The spate of farmer suicides that surfaced in these states was naturally associated with the performance of the sector, along with the other factors that were prominent including the advent of WTO, GM variety seeds, price collapses and spurious inputs.

Irrigation: Seven Decades of Development

Traditionally, irrigation has been understood to be as a saviour—however, the irrigation policy has failed due to the inefficiency in system operations. During the last seven decades significant changes have taken place, despite which irrigation efficiency has always remained under question. A look-back at the development of irrigation indicates a lopsidedness. The total live storage in 91 important reservoirs in different parts of the country, monitored by CWC for week ending August 10, 2017, was 73.492 billion cubic metres (BCM) (that is only 47 per cent of the storage capacity at full reservoir level (FRL) against 84.624 (BCM) (54 per cent of the storage capacity at FRL). That speaks volumes about the sector’s efficiency as only 47 percent of the storage capacity is used while the full capacity is far higher.

The development of irrigated area during last seventy years has reached to 66.4 million hectares of Net Irrigated Area and 93.0 million hectares of Gross Area Irrigated. From independence to 2016-17, irrigation amounted to INR 500 crores (CWC data, concerned years) investment at current prices. The analysis indicates three important issues. First, although irrigation investment at current prices increased substantially during the successive plan periods, the physical coverage of irrigation is not commensurate with this growth. Growth in irrigation initially came mainly out of canal irrigation, but later on groundwater irrigation increased at a very high pace of growth. Largely, the growth in tubewell irrigation has been exemplary along with severe negative externality of depleting groundwater table.

The gross irrigated area increased from about 23 mha in TE 1952-53 to about 96 mha in the 2013-14 period, registering an average increase of 1.20 mha per annum.  During the same period, the net irrigated area is seen to have increased from about 21 mha to nearly 66 mha, with an increase of 0.92 mha per annum.  In absolute terms, the net canal irrigated area increased from about 8.61 mha in TE 1952-53 to about 16.18 mha in 2014-15. During the period 1965-66 to 1980-81, described as the first phase of green revolution, the net irrigated area under canals increased at a rate of 2.17 per cent per annum; this was marginally higher than the growth rate achieved during the pre-green revolution period (1950-51 to 1965-66). There are two notable reasons for the slow growth of canal irrigation from the Fifth Plan Period onwards.  First, the irrigation projects that were taken up after Fifth Plan required relatively higher amount of investment due to the nature of terrain and topography, the easier sites having been tapped already.  Second, due to the substantial allocation made on a large number of (Medium and Minor Irrigation (MMI) projects from the Fifth Plan onwards, the required amount of investment could neither be found for new projects nor for completing the ongoing schemes.  Observations on irrigation development show (Fig. 5) that the area under tanks has been going down significantly, whereas that under canals and wells increased initially but more or less stabilised after mid-’90s. Tubewell irrigation increased substantially during the ’80s and ’90s creating alarming groundwater concerns.

However, even today the efficiency of the irrigation is questionable as is the economic evaluation of the investment in irrigation (Inocencio and McCornick, 2007, Narayanamoorthy, 2018). Despite a large investment the rejuvenation of tank irrigation could not be achieved. Presently there has been a huge gap between the demand for irrigation and the possibility of supplying water to new systems. The irrigation potential of the country is almost reaching its limits and the negative externalities are evident in some of the regions of the country. Groundwater exploitation is quite high and almost every year a few new blocks are being added in the grey or dark zone of groundwater exploitation (Narayanamoorthy, 2015).

Endnote

Indian agriculture is poised at a very critical juncture today. Productivity has stagnated and the technological inputs expected are not visible. Policy failures are noticeable in the most critical areas of agriculture such as the technological front, agricultural extension, rainfed agriculture, prices and market conditions, state intervention, public investment in agriculture, failure of the safety nets and above all inefficiency of managing the critical resource sector like irrigation. All these together culminate into a crescendo of distress, agitation and suicide. Policy corridors need to take note of this upsurge before the agitations turn ugly. It is necessary to look for a medium term sustainable policy solution for alleviating the situation that covers all the facets.

References

Deshpande R S and K V Raju, 2009. Making of Agricultural Policy, in Surjit Singh et al (Eds), Changing Contours of Asian Agriculture, Academic Foundation, New Delhi.

Deshpande RS, M J Bhende, P Thippaiah and M Vivekananda, 2004. Crops and Cultivaion, Vol 9, Famer at the Millennium, New Delhi: Academic Foundation.

Deshpande, R S, 2015. Agriculture, Culture and Society, ICSSR National Fellowship Report, ICSSR, New Delhi.

Deshpande, R S, 2017. Farmer – State and Agriculture, Arthaniti, 16: (1&2), New Delhi: Sage Publications.

Inocencio and P G McCornick, 2007. Irrigation Investment in India in the Last three Decades: An Analysis of Economic Performance, International Water Management Institute, Colombo.

Narayanamoorthy, A, 2007. Deceleration in Agricultural Growth – Technology Fatigue or Policy Fatigue?, Economic and Political Weekly, 42, No 25.

Narayanamoorthy, A., 2015, Groundwater Depletion and Water Extraction Cost: Some Evidence from South India, International Journal of Water Resources Development, 31( 4): 604-617.

Narayanamoorthy, A., 2018, Financial Performance of India’s Irrigation Sector: A Historical Analysis, International Journal of Water Resources Development, 34(1): 116-131.

Sawant, S.D., 1983. Investigation of the Hypothesis of Deceleration in Indian Agriculture, Indian Journal of Agricultural Economics, 38(4) Oct-Dec.

Vaidyanathan, A., Asha Krishnakumar, A. Rajagopal, and D. Varatharajan., 1994. Impact of irrigation on productivity of land. Journal of Indian School of Political Economy 6(4): 601-645.

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