New policy options mooted for fertiliser, power for farms

Subsidies for fertilisers and free power for groundwater-dependent irrigation have been contentious issues for decades in India. Despite a strong case for rationalising the use of these two crucial inputs for agriculture, no significant headway has been made. The subsidy benefits have never been equitably distributed or enjoyed, having favoured medium and large farms at the cost of small and marginal growers. Clearly there are political challenges in using subsidies as policy instruments.

Past reform approaches have hardly delivered. So, what are the options for new strategies? A monograph; “The Political Economy of Agricultural Policy in India – Fertilisers and Electricity for Irrigation,” brought out by the Washington DC-headquartered International Food Policy Research Institute, makes recommendations worth exploring.

These include reframing the reform debate with greater focus on problems of small and marginal farmers and landless labourers, rather than farmers as a group. Rationalising subsidies with greater emphasis on poverty and equity, in addition to macroeconomic and fiscal goals, may help overcome political resistance, the authors have argued.

Another suggestion is to build new coalitions that include environmental groups to support policy reforms. Additionally, the authors recommend strategic bargaining — an approach that assumes people have fixed preferences and act exclusively out of self-interest in a bargaining situation — as well as deliberation among stakeholders, which assumes people may learn and change their preferences through the deliberative processes.

The mid-way solution

The study has identified a wide range of policy options to help overcome the economic, distributional and environmental problems associated with electricity supply to agriculture. Community-based solutions such as decentralisation and devolution are promising options that offer a third way between State and market, the study argues. For fertiliser, the study provides fewer solutions immune to major political resistance. However, it does recommend strategies such as deliberative democracy and improved use of research-based knowledge to promote policy-oriented learning.

Interestingly, while fertiliser-sector subsidies are the Union Government's concern, electricity for irrigation falls within the ambit of State Governments, which differ in the levels of importance given to agriculture. We need a national policy with regionally-differentiated strategies.

While the research concludes with a series of recommendations, it must be stated that politicians have a way of frustrating genuine efforts at reform. For instance, how does one prevent interference from local politicians even if there is a community-based equitable solution? How does one keep rent-seeking interests away? What India lacks is genuine political will to implement progressive reforms that ensure growth with equity.

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