Wednesday

02


May , 2018
Editorial
13:12 pm

Dr. H. P. Kanoria


Dear Readers,

The Holy Veda describes agriculture as the best profession/work among businesses and services. Though 65% of India’s population is directly or indirectly dependent on agriculture, their well being is dependent on the vagaries of nature like floods, droughts, heavy rains, pest attacks and so on. Land holdings are getting fragmented. Among the agriculture class, 69.44% are marginal farmers and 17.40% are small farmers. The average size of marginal holdings is less than one acre; small farmers have very their own consumption. Rich farmers predominantly earn profit from the procurement operation. As per Shanta Kumar Committee, MSP benefits only 6% of the farmers.

The MSP for many crops is already 1.5 times the cost. Wheat’s MSP is Rs. 1735/quintal against a cost of Rs. 817/quintal. MSP of other Rabi crops like barley, gram, lentil and Kharif crops such as bajra, arhar, urad are more than 1.5 times of cost of production. MSP of some crops such as jowar, paddy, soya beans, maize, moong, cotton, jowar-hybrid, ragi, niger seed, etc. will benefit farmers. India exports about 10-12 million tonne a year. A higher MSP may affect the competitiveness in the international market.

Increase in the MSP every year serves the interests of a few groups, having influence on political parties. Government has to come up with long-term solutions, carry out fundamental reforms, improve irrigation facilities and productivity of land, and build silos at intervals of 50 km. Also, public investment must be channelized towards building agricultural infrastructure, expanding the coverage of crop insurance, skill development of farmers, promotion of better usage of land by multi-cropping, growing cash crops, supply of fertilisers at subsidised cost to small and marginal farmers, setting up labour intensive agro industries, improving logistic facilities to markets and procurement centres. The country needs to give base to farmers to grow. The country must bring them out of the pangs of poverty. They need enabling infrastructure to grow and survive. The country is sensitive to the suicide of farmers. It must tackle deep-rooted problems on war footing.

Prime Minister Narendra Modi said that there is a programme to upgrade the infrastructure of 22,000 rural markets and integrate with the pan-India electronic trading platform or eNAM (electronic National Agriculture Market). Soft loan and agricultural subsidies are available to land owners, not Barga operators except in West Bengal. In France, Australia, the USA, farmers’ suicides are mainly due to the volatility of prices erupting from demand and supply imbalances.

For various reasons, agri-contribution to GDP has fallen to 14.8% in 2017-18 from 15.3% in 2016-17. During 2017-18 crop year, food grains production is expected to be 277.49 million tonne against 275.68 million tonne in 2016-17. Agriculture exports constitute 10% of the country’s exports. Government has removed export levy on export of sugar as there is large accumulated stock in the country. It will give relief to farmers.

Yet in Bharat, 194 million out of 1.3 billion population go hungry every day. Agricultural productivity and water availability need to be increased. Also, we need to stop the colossal wastage of foodgrains that happens in India due to lack of granaries, warehouses, cold storages and the shortfalls in the logistical supply chain that prevent the produce to reach the markets in time. China has almost 40% less water availability and a smaller average land holding than India, but China’s productivity is higher due to better infrastructure, technology, crop selection, and control of flood, drought, and pest attack. The Chinese have embraced mechanization in agriculture in a big way and modern farming techniques have resulted in remarkable jump in their agro-yield. Management graduates and other graduates are being attracted to agriculture. In India too, if the right reforms are carried out, agriculture and allied services can open up huge scope for entrepreneurship. We need to create the right
incentives to make agriculture attractive for today’s youth. That will create gainful employment and also arrest the rural-to-urban migration problem. In India, one of the major deterrents to mechanization in agriculture is the small size of land holdings. Promoting the concept of co-operative farming by pooling together land parcels can encourage mechanization in agriculture.

Oil prices are now hovering around $ 75 per barrel and this is impacting market sentiment in a big way. Foreign investors are sellers. Foreign inflows have also slowed down. Strengthening US Dollar and rising US bond yields on higher expectations may lead to volatility in the emerging market equities. IMF has cautioned about the risk of low inflow in emerging markets. Volatility and uncertainty may rule the market. US’s tariffs will affect the steel stocks.

According to the IMF, India’s gross debt both of central and state governments is said to decline by almost by 9% points to 61.4% of GDP by 2023-24. This will impact the economy favourably. Interest rate will be lower as the government borrows less. As per the IMF, combined gross revenue for the Centre and state is likely to hover around 21.3% of GDP for three years starting 2018-19. The N.K. Singh Committee on fiscal discipline has favoured a combined debt-to-GDP ratio of 60% by 2022-23, 40% of the central government and 20% of the state government. The government is committed to bring down the fiscal deficit to 3.3% in 2018-19 from 3.5% last year. The government is likely to cut the expenditure – especially the populist expenditure. RBI Governor Urjit Patel is of the opinion that investment in reviving and GDP growth would be 7.4% in 2018-19. According to the IMF, India’s GDP growth will be 7.4% in 2018-19 and touch 8.2% by 2023-24. Public investment is not being compromised. Banks are likely to take more haircuts in the process of bankruptcy law than that of normal process of banking and business revival on recovery of the market.

Trade war between the US and China is affecting investment in USA, fall in equity markets, rising protectionism and nationalism in the world.

May God bless our policy makers with the wisdom so that they frame the right schemes and programmes for the farmers which will help the country to pursue bigger glory in the coming days.

Dr. H. P. Kanoria

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