Fuelled by technological change and supported by investment in irrigation and infrastructure, institutions, and incentives (input subsidies and minimum support prices), agricultural productivity in Punjab and Haryana — the harbinger of the Green Revolution — increased tremendously, turning India from a food-insecure to a food-surplus country.

Nonetheless, both States are facing challenges to maintain growth momentum achieved during the first three decades of the Green Revolution. Excessive emphasis on paddy and wheat, the staple food crops, has led to their monocropping.

Paddy, the water-guzzling crop, which was not an important crop in these States until the early 1970s, now occupies over 88 per cent and 52 per cent of the kharif cropped area in Punjab and Haryana, respectively. The low and erratic rainfall and limited canal water compelled farmers to rely on groundwater for irrigation. Groundwater irrigation now accounts for 74 per cent of the total irrigated area in Punjab and 63 per cent in Haryana.

And, paddy alone accounts for 80 per cent of the total groundwater use in agriculture in Punjab and 47 per cent in Haryana. Extensive cultivation of paddy has resulted in extraction of groundwater to an extent that 76 per cent of the administrative blocks in Punjab and 62 per cent in Haryana are in the dark zone.

Both States have been taking initiatives to manage the negative externalities of extensive paddy cultivation. In 2009, to check over-extraction of groundwater, both Punjab and Haryana at the same time brought out almost an identical regulation ‘The Preservation of Subsoil Water Act’ to align paddy sowing towards onset of the monsoon.

However, despite the Acts being in force, the groundwater extraction has continued as before. The delayed transplanting of paddy condensed sowing window for the next crop, mainly wheat, has compelled farmers to resort to mechanical harvesting of paddy and burning of its residues to clear fields for timely sowing of wheat. This aggravated air pollution, which does not recognise spatial boundaries and travels far and wide, affecting human and animal health.

What disincentivizes farmers to diversify away from paddy?

Subsidy factor

Among other factors, perverse outcome could be due to some behavioural and policy offshoots. One of the most important factors is the subsidy on electricity for pumping groundwater. Both States have been providing huge subsidies on electricity for agriculture.

For long, Punjab has been providing free electricity for irrigation, and Haryana charges a nominal flat tariff based on power of electric motor. Besides, the Centre provides subsidies on fertilisers. Together, these amount to around ₹30,000 per hectare of paddy sown area. Second, procurement of grains at minimum support price renders crop free from market and price risk.

In both States, over 85 per cent of the paddy output is procured by the Centre for public distribution system and buffer-stocking for unforeseen contingencies. Third, public spending on medium and large irrigation projects (in real terms) has not increased much for the past two decades. Most importantly, revenue terms of trade are highly favourable to paddy than its competing crops because of its significantly higher yield.

The options

The current incentive structure has now become unsupportive of sustainable pattern of agricultural development. The political economy of agricultural incentives is complex, and once provided for it is difficult to withdraw.

As a competitive populist measure of seeking electoral support, successive governments often continue with such incentives without taking cognizance of their potential negative externalities to natural resources, environment, and human and animal health.

The first-best solution is to resort to crop planning based on natural resource endowment and climatic conditions at regional level. Success of such a plan, however, is conditional upon relative profitability of different crops. Except horticultural crops, there is hardly any crop in both States which is as profitable as paddy.

Hence, resource endowment-based crop planning must be accompanied by a compensation package, equivalent to the revenue forgone from paddy due to substitution by less remunerative crops.

Towards this, governments may think bundling all types of subsidies into a compensation package, and if needed it may be topped. In the long run, social and environmental benefits of such a shift in policy stance will outweigh cost of the package.

Horticultural crops are highly perishable and prone to significant price fluctuation; hence to promote these there is need to invest in markets, refrigerated transport, cold storages and processing.

The second option is to re-purpose input subsidies to the adoption of sustainable agricultural practices that generate non-tradable ecosystem services, and to create an efficient market for their trading.

The recently developed protocol for voluntary carbon credit market by the Ministry of Agriculture and Farmers Welfare is an opportunity to re-purpose input subsidies. Third, rehabilitate canal irrigation system and promote conjunctive use to relieve pressure on groundwater resources.

Finally, long-term solution lies in research for breeding crops alternative to paddy for higher yield and stress tolerance.

Srivastava is a senior scientist, and Birthal is director at the ICAR-National Institute of Agricultural Economics and Policy Research, New Delhi. Views are personal