It is a common misconception that any sort of agricultural development programme in India only means increase in production level helping the poor and marginal farmers by several government initiatives. To supply the farmers cheap inputs, enhancement of irrigation facilities, cheap loans, development of infrastructure, etc. are some of the imporant initiatives. But the recent farmers’ stir in states like Haryana, Rajasthan, Punjab, Jammu and Kashmir, Madhya Pradesh, Maharashtra, Karnataka, and Kerala reveal that overproduction can also be a serious concern for Indian agriculture. They are protesting under the banner of Rashtriya Kishan Maha Sangh under which there are about 130 different organisations. What are their main demands from the government? The main demands are two. One is waiving off agricultural loans and second is their implementation of the M.S. Swaminathan Committee’s recommendations of fixing MSP (Minimum Support Price) amounting to cost + 50% of that of all agricultural produce. As a result of this agitation, daily supplies such as milk and vegetables have been hit in different parts of India, mainly in the northern region.
Problem of overproduction in agriculture
It is known that the reason behind the fall in the prices of a lot of agricultural goods is due to overproduction. Overproduction in the Indian situation does not mean any surplus over and above the desired requirement of agri-cultural products of the economy. Because one can clearly experience the average food intake of Indians is not as high as in many developed and developing countries of the world. In India, there are two sides in the economy at the current phase. On the one hand, there has been overproduction of many crops and at the same time there are hunger and lack of purchasing power to arrange square meals to crores of family members on a regular basis. In this situation proper policy of the government and its implementation is urgently needed.
Indian agriculture is highly dependent on the monsoons. It is not only that the total quantity of rain is not sufficient. The spread and distribution of rain are also to be taken into account. Otherwise one can experience both flood and drought can occur simultaneously even when the total quantity of rain is normal or more. There can also have other natural calamities. Weather forecasting, pricing, crop insurance, suitable import and export policy, infrastructure development, etc. are very important to mitigate the agricultural crisis. The most important of all is pricing.
A pan- India agriculture market for better pricing
It is not that the Government of India has not considered it seriously. In the past, several policies have been taken for suitable pricing of agricultural produce. A notable one is the Agricultural Produce Marketing (Regulation) Act 2003. This APMC Act was passed at the time of Atal Behari Bajpayee and as many as 22 states adopted it to some extent but this has not worked well and it did not alter the agricultural structure. The present government has taken another important step to change the situation.
The Modi government launched a scheme of unified National Agricultural Market (NAM) in April 2016. The government budgeted money for every mandi, willing to join the NAM platform. But in 2017, the government launched another scheme Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act. But what is its status quo? Ashoke Gulati, a famous agricultural economist, and Sweta Saini, a consultant at ICRIER, have pointed out the research outcome of this scheme from the Dalwai Committee Report 2017-18, in the national media recently.
Gulati and Saini point that out of about 29,547 marketing points in the country only 22%, that is, 6,651 are regulated under APMC. There are only 22, 932 regional periodical markets (RPM). As a result, on an average, a farmer gets a regulated market in the radius of 12 km and a RPM in a radius of about 7 km. Out of these 6,615 markets, the NAM scheme aimed to bring 585 markets, that is, only 9% on its e-market by the end of FY 2017-18. But there has been a noteworthy performance too. As on March 2018, all targeted mandis of 585 that are in 16 states and 2 union territories have been integrated with the NAM platform. At the same time these 585 mandis brought only 90.5 lakh farmers into the platform, which is less than 7% of the 14 crore Indian farmers. Gulati and Saini have also pointed out in the quantity and value terms also. A closed to 17 MMTs (million metric tonnes) of quantity worth Rs.42,265 crore is taken in the platform which is only 2% of India’s total value of agricultural output. It is clear that proper pricing of agricultural produce in India is at its infancy. That is why the actual farmers are yet to get prices of their produce at the satisfactory levels.
Long neglect of agricultural sector
The agricultural sector has been long neglected in the Indian economy. Prof. Himanshu, at the Centre for Economic Studies and Planning, shows that during the present government, the distress of farmers has been rising (EPW, March 3, 2018). Investment in agriculture increased at 10% in real times in 2004-05 and 2012-13 as against this it has come down to 2.3% per annum between 2013-14 and 2016. The trend is similar in the case of credit to agriculture. This had been rising at 21% per annum in nominal terms between 2004-05 and 2014-15, rising from Rs.1,25,309 crore in 2004-05 to Rs.8,45,328 crore by 2014-15. But it slowed down to 12.3% between 2014-15 to 2016-17, that is, rising only to Rs.10,65,756 in 2016-17. Himangshu pointed out that recent estimate shows that it has come down even to less than 5%.
Himangshu has pointed out two important factors that need immediate attention. These are increasing monetisation and mechanisation in agricultural operations and changing cropping pattern in cash crop and horti-culture. As a result there have been more need of credit to agriculture and storage facilities. But these are growingly inadequate in this sector. it is true that both the central and state governments are more proactive in matters relating to waiving of loans to agriculture. But this cannot be a sustainable solution.
The recent farmers’ protest for 10 days is spread across many states in India and was more organised. But there have been quite a number of big and small protests of farmers in the last few years. The farmers’ rally in Maharastra last April received international coverage. The present NDA government is quite aware of the intensity of farmers’ movement around the country. But how far they are able to solve the problem is a question.