By Amit Kapoor,
Farmers across the nation are on strike, cutting off vegetables and milk supplies to cities, demanding better prices, loan waivers, power supply and ethanol as fuel — all this hailing from the Swaminathan Commission’s recommendations. It makes one wonder if the agricultural sector is indeed competitive, given its vulnerability to temperature changes and dependence on monsoon. Are we forgetting the agriculture sector and allied activities in the name of progress?
Agriculture contributes 17.4 per cent to the GDP and employs 54.6 per cent of the population. However, the contribution of agriculture to gross value added has been declining since 2014. Recent estimates show that agriculture is expected to grow by 2.1 per cent in fiscal 2018-19, which shows that the wheels are in motion and the hope is that the competitiveness of the agriculture sector itself will reach sky-high. However, the cause of concern remains that the benefits have not yet reached the farmers. Therefore, the question remains as to how long will the policies take to reach the farmers.
Of course, in traditional economic theory, a nation must undergo a structural transformation, moving away from agriculture and towards industry and services. However, since more than half of the population is still involved in the sector, there is a need to focus on tackling its competitiveness.
So, what will turn agriculture and allied activities into a competitiveness miracle? The answer lies in productivity. Agricultural productivity showed a substantial rise from 2004-05 to 2014-15, where the output per hectare rose from 9.1. to 12. But the advanced estimates for 2015-16 have shown a decline to 11.9 output per hectare, indicative of a creeping sluggishness in the agriculture sector. Caution must be taken to understand that a push towards productivity will push up the quantum of produce for farmers, so even a reduction in prices would be more than compensated.
How productive can India’s agriculture sector be? In this regard, there is a lot to be learnt from the Netherlands, the second-largest global exporter of food, where farm productivity has risen by leaps and bounds. The country’s farm productivity in 2015 was five times that in the 1950s.
But, how? For one, the sector would need the right kind of physical infrastructure, financial infrastructure, improved communication, innovation within the sector, focusing on administration, and most importantly, ensuring development of human capital.
On that note, we see that agriculture in India has not been totally forgotten, in terms of the infrastructure, especially power supply. Power availability in agriculture increased from about 0.043KW/ ha in 1960-61 to about 0.077 KW/ ha in 2014-15, and the mechanical and electrical sources of power have increased from seven per cent to about 90 per cent from 1960-61 to 2014-15. To sustain innovation, the R&D expenditure in the agriculture sector has been increasing at a compounded rate of 4.2 per cent.
To ensure the doubling of income of farmers by 2022, the Indian government has made efforts at investing in science and technology for farming activities, where the term ‘Digital Agriculture’ has been coined to emphasise the importance of digitisation, followed by throwing light on the use of electronic devices, tools and a fusion of digitised systems, to enhance its productivity and thus pushing the farmer’s income. A step to ensure equitable regional penetration has been taken via a scheme of bringing the Green Revolution to Eastern India to address the concerns of low rice-productivity, complemented by initiatives such as soil health card, per drop more crop in Pradhan Mantri Krishi Sinchai Yojana (PMKSY), to ensure this.
But, let’s not forget the issues still exist across farmers in the nation. Therefore, it is necessary to ensure the competitiveness of the farmers. The sector needs a smoothness in the functioning and an “ease of doing farming activities”, much like the ease of doing business index. This is inclusive of creating an enabling environment via provision of the above-mention factors with the least amount of hassles. Apart from boosting overall productivity of the sector, this can be taken care of by commodity-based organisations and minimum support price, with an authority that focuses on marketing, storage and processing of the goods, as the Swaminathan recommendations suggest.
To tackle these concerns, the government has taken up the Price Stabilisation Fund (PSF) to control prices and volatility of agricultural products, tackling concerns of inflation. The government has also launched an e-platform called ‘e-NAM’ , i.e., an electronic agricultural market to ensure farmers benefit from remunerative prices for their produce in the market.
Given the policies in action, holistically speaking, there is a need to speed up a little to ensure that agriculture and its allied activities show increased productivity, with the hope that a competitiveness boost in agriculture will boost other sectors, hopefully nurturing food processing clusters and, therefore, make India triumphant in competitiveness. The hope is the policies will work in a way that agricultural productivity shoots up, and the farmers are able to benefit from it.
(Amit Kapoor is chair, Institute for Competitiveness, India. The views expressed are personal. He can be contacted at firstname.lastname@example.org and tweets @kautiliya. Paramjeet Chawla, senior researcher, Institute for Competitiveness, India has contributed to the article)