5 Key Messages from Economic Survey for India

5 Key Messages from Economic Survey for Indian Agriculture

By:

Vijay Sardana

While dynamic sectors such as services and manufacturing tend to grab public attention, India cannot afford to neglect its agriculture.

1. Agriculture will remain politically important but remain economically marginalized:

We must keep in keep in India about 42 per cent of Indian households derive the bulk of their income from farming. This is good enough for government and political parties to keep talking about agriculture.

Smaller farmers and landless laborers especially are highly vulnerable to productivity, weather, and market shocks changes that affect their incomes.

The newly introduced crop insurance schemes should begin to address these problems to a great extent. But unless income in the hands of farmers will not improve consumption of products from non-agriculture sector will remain depressed. Industrial revival will not be easy. This will prolong NPA problems in banks.

2. Agriculture investments should be recalibrated:

Climate change and emerging scarcities of essential food like pulses and edible oils will necessitate a focus on “more for less”, and hence redressing the current system of incentives and subsidies, which encourages using more inputs such as fertilizer, water, and power, to the detriment of soil quality, health and the environment. They also disproportionately benefit rich and large farmers.

3. Existing Agriculture Policies are damaging Indian Agriculture: 

Well-documented impacts of existing policies are decline in water tables, over-use of electricity and fertilizers (causing soil and public health harm)  & rising environmental pollution, owing to post-harvest burning of husks. This has to change.

Subsidies in the name of agriculture are actually heading to products made by corporates. In order to change this government should provide direct income support, crop insurance, infrastructural support and information support.

4. Success of agriculture will decide success in politics:

Optimism is reinforced by events of the last decade that have re-affirmed the dictum that good economics is good politics, even as frequent elections complicate the task of policy-making. Not always and not everywhere but increasingly, Central and State governments that have delivered rapid growth and better governance tend to get re-elected and vice versa. It is telling, for example, that the state governments that have been elected three times have been the ones that have delivered rapid agricultural growth.

5. Illogical Trade policies hurting the most:

On one hand government wants to improve domestic edible oil and pulses production on the other hand the trade policy is such that imported products are cheaper than domestic cost of production. On the other hand government increases the MSP but reduces the customs duty of agriculture commodities. Edible oil and pulses are such classic cases. Till date government is not bale to come put a policy which can address the long term need of pulses and edible oil and how to fill the gap. 

Urgent Need for Sensible Agriculture Policy:

I hope there will be National Agriculture Policy with proper resource allocation and time lines soon.

Let us see how government is planning to address these issues.