Agri Business

Agrarian distress and the way forward

Siraj Chaudhry | Updated on January 14, 2020 Published on January 14, 2020

Agriculture has been a key contributor to India’s growth story, where 650 million people or 58 per cent of Indian households are directly or indirectly dependent on agriculture. In recent years, crop failures, indebtedness, non-remunerative prices, and low returns have resulted in agrarian distress in most parts of the country. Despite the government introducing several reforms in the sector, challenges continue to exist.

The Indian agriculture sector is confronted with high price volatility, climate risk, and indebtedness. It is currently suffering from a period of crisis that has not only affected the overall productivity but also led to a massive reduction in farmers’ income. Since the majority of farmers are small and marginal with declining and fragmenting landholding, these uncertainties make it even more risk-prone.

Some of the key initiatives rolled out by the government to mitigate agriculture distress and safeguard the interest of farmers in 2019 were:

Fasal Bima Yojana

It was a scheme introduced in 2016, keeping in mind that farmers are vulnerable to the vagaries of nature and need insurance support for crop loss. Under this scheme, farmers are provided financial support in the event of crop failure. They are required to pay a uniform premium of 2 per cent for kharif crops, 1.5 per cent for rabi crops, and 5 per cent for commercial and horticultural produce, with the balance being incurred by the government.

A close assessment of the scheme and its implementation shows that though the scheme provides much-needed relief as it protects the farmer from loss of income due to unavoidable risk, it does not guarantee any assured income for the produce. Being only a yield protection insurance, this scheme is not holistic and fails to provide revenue protection. Incorporation of technology through remote-sensing, drones, satellite imagery, and digitisation of land records should be promoted for effective implementation of the PMFBY.

Additionally, a regulatory framework that unifies the insurance system covering yield and price risk will ensure increased participation. The Government has taken steps to make the scheme effective, but hurdles remain in its effective implementation.

Krishi Sinchayee Yojana

Though the scheme focuses on assured irrigation through reduced water wastage and improving efficiency, it has so far failed to deliver on its promises. The target was to create irrigation potential for additional 4,293 thousand hectares by December19, but only 67 percent of the target has been completed.

Overall, PMKSY has set the target to achieve 99 irrigation projects by December19 to improve the irrigation coverage in the country. Land acquisition and delay in tendering process are the main reasons cited for the delay in the completion of the projects.

Kisan Samman Nidhi

The scheme promises direct payment of ₹6,000 per year in three equal instalments of ₹2,000 each to small and marginal landholding families. The scheme is geared towards inducing behaviour change through a nudge effect, as mentioned in the Economic Survey 2019 to make government schemes more effective.

E-NAM aims to facilitate better price discovery, a nationwide electronic trading portal that links all APMCs (Agricultural Produce Marketing Committees) was developed under the name of E-Nam. The farmers are given the freedom to sell their produce without the intervention of any middlemen and with more options to sell, thus helping them get a more competitive return for their produce.

A closer assessment of this initiative shows that e-NAM is facing significant challenges. Most of the e-NAM transactions are settled outside the system payment gateway; the farmers are not paid in full and on time. The account integration is the key to ensure the online platform succeeds.

Moreover, it should also ensure that the entire ecosystem, including assaying and grading of produce works in tandem to ensure all India participation works. There is a need to strengthen the platform through significant investment in infrastructure, the up-gradation of mandis, and driving awareness among farmers’ welfare.

India has multiple hurdles in the path of equitable growth of its primary sector. But there are avenues through which productivity can be increased, and the growth of farmers' income is attainable, even with the existing constraints. The development of the agriculture sector should be the focus area.

The government bodies, private players and agri start-ups working with the farmers can together transform the sector’s outlook. Along with this, we need a framework that is timely, consistent and improves the farmer’s income and hence quality of life.

The writer is MD & CEO, NCML. Views are personal

Published on January 14, 2020
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