From Plate to Plough: Get smarter on the farm

Mains Paper: 3 | Agriculture   
Prelims level: Input subsidies 
Mains level: Revitalizing India’s agriculture policy 

Introduction 

• Public capital formation in agriculture has been declining from 3.9 per cent of agri-GDP in 1980-81 to 2.2 per cent in 2014-15 and recovered to 2.6 per cent in 2016-17.
• The input subsidies on fertilisers, water, power, crop insurance and agri-credit have risen from 2.8 per cent to 8 per cent of agricultural GDP during the same period. 

Points highlighted by the Union Finance Minister 

• Union Finance Minister remarked that India needs a good blend of investments and subsidies in its agriculture policy. 
• It was heartening to hear him say that luckily, there is not a severe constraint on resources to invest in rural areas, be it roads, water (irrigation), sanitation, and even housing. 
• Including agri-research and development (R&D) and quality education in this list of rural investments would have ensured handsome pay offs.
• It reducing poverty and propelling agri-growth at a much faster pace than has been the case so far. This is the clear message of the book.
• Most countries support agriculture to ensure food security and/or enhance farmers’ income. 
• The main policy instruments to support farmers in India include subsidised fertilisers, power, agri-credit and crop insurance on the input side, and minimum support prices for major crops on the output front. 
• In a recent study, conducted jointly by the OECD and ICRIER, estimated that India’s trade and marketing policies have inflicted a huge negative price burden upon the country’s farmers. 
• The Producer Support Estimate (PSE) for India works out to be minus (-) 14 per cent of the gross farm receipts for the period 2000-01 to 2016-17.
• This is primarily because of restrictive export policies (minimum export prices, export bans or export duties) and domestic marketing policies (due to the Essential Commodities Act, APMC, etc).

Important points highlighted in this book 

• The public capital formation in agriculture has been declining from 3.9 per cent of agri-GDP in 1980-81 to 2.2 per cent in 2014-15 — it recovered to 2.6 per cent in 2016-17.
• The input subsidies on fertilisers, water, power, crop insurance and agri-credit have risen from 2.8 per cent to 8 per cent of the agricultural GDP during the same period. 
• The results show that expenditure incurred on Agri-R&E (Research and Education), roads or education are five to 10 times more powerful in alleviating poverty or increasing agri-GDP than a similar expenditure made on input subsidies.

What will be the policy suggestions?

• Investment in public irrigation is very expensive, as it involves long lags, and the gap between the potential created and potential utilised has increased over time. 
• To give higher returns, this leaky system must be fixed, it should be made more transparent and the gap between potential created and utilised bridged.
• The present system of delivering subsidies through the pricing policy needs to be shifted to an income policy, which could be well-targeted, and leakages minimised on the lines of JAM trinity. 
• Many OECD countries, as well as emerging countries such as China, are moving in that direction. Indian farms can also benefit from this move where input subsidies at least are given as DBT on a per hectare (ha) basis.
• The investments need to be prioritised towards agricultural research and development, roads and education. Interestingly, at the global level, the private sector is leading in agri-R&D.
• The big six companies have been investing more than $7 billion a year, which is almost seven times the expenditure incurred by the Indian Council Agricultural Research (ICAR). 

Conclusion 

• India needs to access that technology, it needs to develop a proper IPR regime, which is in the interest of farmers as well as investors. 
• India has a lesson to learn from China in this aspect as well. ChemChina, a PSU, has taken over Syngenta Corporation — a leading player in crop protection and seeds — for $43 billion.

Online Coaching for UPSC PRE Exam

General Studies Pre. Cum Mains Study Materials

UPSC Prelims Questions: 

Q.1) Which of the following agencies has launched India's first 'Agricultural Marketing and Farmer Friendly Reforms Index'?
(a) Union Ministry of Agriculture
(b) NITI Ayog
(c) Food Corporation of India
(d) Small Farmers’ Agriculture – Business Consortium
Answer:  B

UPSC Mains Questions:
Q.1) India needs to revitalize their agriculture policy rather than giving it subsides. Critically examine the statement.