A New Path In The Wild

When Union Finance Minister Nirmala Sitharaman announced the third tranche of her relief package for an economy paralysed by a mysterious virus, a significant part of it was for agriculture.  Among the big gun allocations for farmers out of the mammoth Rs 20 lakh crore relief kitty for the Indian economy, were a Rs 10,000 crore scheme for formulation of Micro Food Enterprises (MFEs), Rs 20,000 crore for fishermen through the Pradhan Mantri Matsya Sampada Yojana (PMMSY), Rs 1 lakh crore for an Agri Infrastructure Fund and Rs 15,000 crore for setting up an Animal Husbandry Infrastructure Development Fund. Obviously, none of these measures were specific to a Covid-19 infested environment.

These schemes and proposals, which included “Measures for Governance and Administrative Reforms” for the agriculture sector and amendments to the Essential Commodities Act (ESA), were all part of the broader mission to upscale and upgrade Indian agriculture to global standards and of course, double farmers’ incomes by 2022. The draconian Essential Commodities Act of 1957 restrained farm produce exports and supply of some agricultural commodities. The Act will now only be applicable during national calamities. 

The reforms were already on the agenda of the government. The proliferation of the novel coronavirus and the social distancing norms that became necessary because of it, have only expedited the process, particularly measures to create farm gate infrastructure and a legal framework to enable farmers to sell their produce at the best possible price. Sitharaman announced agriculture marketing reforms to provide choices to farmers and measures for agricultural produce price and quality assurance. 

Some Immediate Relief

The lockdown stipulations have been considerably relaxed for agriculture, keeping the Kharif (summer crop) sowing in view. The agrochemical sector has been exempted from lockdown stipulations too, before the onset of the Kharif sowing season. Among the first measures announced by the Union government after the countrywide lockdown was the first instalment of the PM-Kisan Samman Nidhi payments to farmers for the new fiscal. The scheme puts Rs 2,000 into the bank accounts of 8.7 crore small and marginal farmers. Simultaneously, wages under the MGNREGS scheme were raised from Rs 182 to Rs 202 per day. 

Settlement of the PM Fasal Bima scheme is also in full swing. Private insurance giants like Future Generali India Insurance corroborate the government’s claims. The group alone has settled claims worth Rs 276 crore in the first two months of the lockdown. 

Even so, Pushpendra Singh, president of the Kisan Shakti Sangh, rues that the impact of the proposals would only show in the long term. He feels that not counting the first tranche of the PM KISAN funds released for small farmers, the distressed farming community had not been given much immediate relief.

Former Union minister, Yoginder K. Alagh, though, saw the massive Rs 74,300 crore the Union government had spent to procure crops from farmers through various agencies, as a laudable step. Anup Rau, MD and CEO of Future Generali India Insurance too feels that some of the load had been taken off the farmers’ shoulders. “Farmers across the country were expecting enablement of uninterrupted harvesting of crops, as well as smooth procurement operations during the ongoing lockdown, which coincides with the Rabi harvesting season,” he says. Some farmers, he points out, were not able to harvest and sell their produce because of the lockdown. 

A powerful farmers union, the Bhartiya Kisan Sangh (the farmers outfit of the Rashtriya Swayamsevak Sangh) supports the government measures. Bhartiya Kisan Sangh national committee member, Badri Narayan Chaudhary says, “You may call it adjustment of funds announced in the Budget but we are happy because a farmer knows how exactly to get it. (relief)” He points out moreover, that the path to doubling farmers income by 2022 had never been abandoned. 

The Food Security Issue

The ground realities are a much played out cliché, but worth reiterating all the same. Agriculture and its allied sectors continue to be the largest livelihood provider in India, particularly in rural Bharat which outpaces urban India in terms of both population and turf. In some states, agriculture continues to be a significant contributor to the gross domestic product (GDP). 

Sustainable agriculture, in terms of soil conservation, sustainable natural resources management and biodiversity protection and environmentally sustainable technologies, could lead to holistic development of rural Bharat and ensure both rural employment – and food security for the nation. It is a process that has already begun through policy initiatives like the Green Revolution (that turned the fortunes of farmers in Punjab, Haryana and west Uttar Pradesh), a White Revolution (that makes India the top most milk producer in the world), a Yellow Revolution (to enhance edible oils production) and a Blue Revolution, focused on pisciculture and aquaculture.  

Agriculture continues to be the principal means of livelihood of over 58.4 per cent of India’s population. The small farmer may raise some fowl or cattle too, but essentially lives off the produce of the land. Agriculture contributes to approximately a fifth of India’s GDP. It accounts for about 10 per cent of India’s export earnings and provides raw material to a large number of industries. To cut a long story short, India has to sustain her farmers and more so, when a deadly virus impedes commercial activities even in the rural hinterland and when the food security of the entire nation depends upon it. 

Siraj Hussain, a former Secretary in the Union Ministry of Agriculture, firmly believes that agriculture will possibly be the only sector that will shine in the financial year 2020-21. His opinion is borne out by National Sample Survey Office (NSSO) data. The NSSO projections for the April to June quarter of the ongoing fiscal show that farming as an economic activity was the least scathed by the lockdown. 

While agriculture’s contribution to the GDP is estimated to skid by -1.3 per cent during the quarter, that of the manufacturing sector could plummet by - 6.3 per cent. The construction and real estate industry is expected to contribute -13.3 per cent less to the nation’s GDP and the share of financial services, real estate and professional services could slip by a whopping -17.3 per cent.

Toward Self-reliance

The third tranche relief package measures for farmers announced on 15 May were all about creating and improving infrastructure for marketing, storage and better earnings from cultivation. The entire package, which will enable setting up cold chains and post-harvest management infrastructure, is worth close to the $19 billion relief package that the United States government has granted its farming community.

The Rs 10,000 crore scheme for formulation of Micro Food Enterprises (MFEs) will help two lakh MFEs adopt cluster-based approaches to process mango in Uttar Pradesh, kesar in Jammu and Kashmir, bamboo shoots in the North East, chili in Andhra Pradesh and tapioca in Tamil Nadu. This fund will help these enterprises explore export markets too. 

 A Rs 13,343 crore fund was launched to ensure 100 per cent vaccination of 53 crore cattle for foot-and-mouth disease. The Finance Minister announced a Rs 15,000 crore Animal Husbandry Infrastructure Development Fund to support investment in dairy processing. She announced Rs 4,000 crore to promote cultivation of herbs across 10 lakh hectares of land in the next two years. Rs 500 crore has been allocated for beekeeping initiatives to benefit two lakh beekeepers in rural areas. As Cropin Technology Founder and CEO, Krishna Kumar, points out, “It’s a good idea to give an instrumental height to the income of farmers.”

Some Old Wine

Are these measures new? Tabling the Union Budget for the 2020-21 financial year, the finance minister had announced a 16-point action plan for agriculture, focused on technology induction into farming and sustainable agriculture. She made a provision for Rs 2.83 lakh crore for agriculture and allied activities. The 15 May booster dose to the agro-economy is in reality a continuation of that agenda. 

Some like D.K. Srivastava, Chief Policy Advisor at EY, feel that the 15 May announcements have paved the way to a genuinely barrier-free, all-India market for agricultural produce. “One salient feature of this tranche is that the direct fiscal cost accounts for nearly 30 per cent of the estimated benefit which is much higher than that of the earlier two tranches,” says Srivastava.

Industry voices, like that of R. G. Agarwal, Chairman, Dhanuka Agritech, have applauded steps like amending the Essential Commodities Act, the proposal to modify the agriculture produce marketing committees (APMCs) and sustained improvement in E-NAM. Dhanuka though, was not in favour of the government’s decision to ban 12 insecticides through a recent notification.   The ban on these pesticides and insecticides, he feels, may impact crop yield. 

Rucha Randive, Economist at CARE Rating says, “Although the total package announced amounted to Rs 1.63 lakh crore, the direct outgo from the central government would be around Rs 50,000 crore spread over the years. For example, the expenditure under PM Matsya Sampada Yojana amounting to Rs 20,000 crore will be shared between the Centre, states and beneficiaries and the scheme will be implemented over the next five years.” 

Ashok M.R. Dalwai, Chairman of the Empowered Committee for Doubling the Farmers’ Income, says, “It’s a much-awaited progressive paradigm shift from the way agriculture has been practised in the country,”. Rajamanohar Somasundaram, founder of Aquaconnect, particularly lauds the provisions for the PM Matsya Sampada Yojana. The creation of such an integrated post-harvest supply chain doubles the fisheries production and accelerates the seafood export value to USD 10 billion by 2022. Also, this presents a great opportunity to transform our farmers, FPO's and processors from being just raw producers/exporters to value-added players like Thailand believes, Rajamanohar Somasundaram.

Rau feels the current pandemic has paved the way for progressive reforms, enabling contract farming within a legal framework, among them. The provision will enable farmers to enter into contracts with buyers with an assured sales price and quantities even before a crop is sown, and so ensure a secure income. As we said at the start, the relief for farmers was not pandemic specific and go far beyond. They chart out a new path, abandoning the old, guiding India’s farming community toward a more prosperous future.