India News and Features Alliance (INFA) - 11th Plan Approach Paper:AGRICULTURE POLICY: A CRITIQUE,by T.D. Jagadesan, 24 August 2006

Accelerating the GDP growth in agriculture to around four per cent as envisaged in the Approach Paper for the Eleventh Plan (2007-12) is not an easy task. Actual growth of agricultural GDP, including forestry and fishing, was only one per cent per annum in the first three years of the Tenth Plan and even the most rosy projections for 2005-06 and 2006-07 would limit this below two per cent for the full five-year period as rightly pointed out by an eminent economist recently. The challenge posed is to more than double the growth rate achieved in the Tenth Plan. This will require action on both the demand and supply sides.

On the demand side there is evidence that farmers face adverse demand conditions. Not only has agricultural growth been low in the last decade, the prices received for agricultural products have also failed to keep pace with the costs or the general price level and, as a consequence, profitability has declined. Several exercises suggest that a four per cent growth of agriculture will not substantiate from the demand side unless aggregate GDP growth is much higher than eight per cent.

Some of the steps already taken, such as the recently-introduced National Rural Employment Guarantee Programme, will help the demand side in the 11^th Plan. The emphasis on expanding access and improving quality of public sector schools and health facilities may also help by reducing the need for private expenditure on these items by lower income groups and some of this expenditure will be redirected to generate demand for agriculture. Improved rural connectivity envisaged through Bharat Nirman can also trigger growth.

The supply side challenge of doubling agricultural growth is also formidable. This is especially so because no dramatic technological breakthrough comparable to the “green revolution” is presently in sight. We are also not exploiting the potential of existing technology. In fact, most of the growth required, in cereals, pulses and oilseeds is possible merely through plausible yield increase in currently low yield regions.

The National Commission on Farmers has drawn attention to the knowledge deficit. To overcome this, farmers, as emphasized by planners, will need effective links to universities and best practices. A good extension system can achieve this linkage but unfortunately the system has virtually collapsed in most States, partly as a result of constraints on non-Plan expenditure.

Lack of the credit at reasonable rates is a persistent problem, reflecting the collapse of the cooperative credit system. The failure of the organized credit system in extending credit has led to excessive dependence on informal sources usually at exorbitant interest rate. This is the root of farmer distress, a most regrettable one. Accelerated agricultural growth will require diversification into horticulture and floriculture which in turn imply structural changes in the relation between agriculture and non-agriculture. Agricultural scientists agree on this. Diversification requires effective marketing linkages, supported by modern marketing practices.

As farmers adopt new technology, and increase input intensities, they also face larger risks. These risks are often not well understood owing to lack of knowledge of the requirements of new seeds and new technology. All farmers do not have the ability to bear downside risks. Thus, we have seen farmer suicides when new seeds fail to deliver expected output, or when expenditure on bore wells proves infructuous, or when market prices collapse, as has been rightly emphasized. Farmers should be protected against such risks by appropriate measures.

The agricultural strategy for the 11^th Plan, many opined, must be based on recognition of the need for strategies specific to different agro-climatic zones. The nature of the technical constraints and crop development possibilities vary considerably. Viable policy packages must be devised for each zone keeping these variations in mind. This will need to be incorporated in the design of future plan schemes with improvements in Plan implementation and in administrative structure.

In the long run, growth in agricultural productivity can be sustained only through continuous technological progress. This calls for a well considered strategy for basic research, which is now all the more urgent in view of mounting pressure on scarce natural resources, climate change and also the shrinking availability of spill-overs. The 11^th Plan will have to focus on the National Agricultural Research System (NARS) to strengthen its basic research component. The country’s large agricultural research system needs to be thoroughly revamped and restructured in the light of the advice rendered by the high powered committees chaired respectively by Dr. Swaminathan and Dr. R.A. Mashelkar.

Water is critical input for agriculture and this calls for expansion of irrigation. Where it is possible and better water management in rainfed areas where assured irrigation is not possible. This is clearly an area where past policies have been inadequate. Performance in expanding irrigation has been disappointing with resources being spread thinly over many projects and a large number of irrigation projects remaining under construction for many years.

Investments in the major and medium irrigation sector will require large sources from the State Governments supported by Central assistance. However, implementation of these projects by State Governments is also important. Along with expansion of irrigation facilities, steps need to be taken to ensure that water is distributed equitably and that it is used efficiently. Participatory Irrigation Management (PIM) by organized water user associations empowered to set water charges, collect and retain substantial part of it, would help to maintain field channels, expand irrigated area, distribute water equitably. The 11^th Plan must expand reliance on PIM on a large scale.

Water is also critical for more than 60 per cent of cultivable land that is un-irrigated and rainfed. Groundwater management is critical for these areas and will therefore need much more focused attention in the 11^th Plan. Water must be recognized as a scare resource and every drop needs to be used efficiently. In this context, it must be recognized that some existing policies followed by the State Governments contribute to the problem.

Watershed management, rainwater harvesting and ground water recharge can help augment water availability in rainfed areas. The National Rainfed Areas Authority contemplated to be set up in the current year provides a vehicle for developing action plans for rainfed areas in close consultation with State Governments.

With an estimated 80 million hectares needing treatment, and average expenditure of Rs.10,000 per hectare, the total requirement of funds is about Rs.90,000 crore, according to pundits. For this magnitude of funding to be feasible during the 11^th Plan, it is absolutely essential that these programmes be covered with or at least supplemented by the Employment Guarantee Programme formulated by the torch-bearers of the Delhi Administration. ---INFA