(The Gist of Kurukshetra) AGRICULTURE FOR RURAL TRANSFORMATION [SEPTEMBER-2018]

(The Gist of Kurukshetra) AGRICULTURE FOR RURAL TRANSFORMATION

[SEPTEMBER-2018]

AGRICULTURE FOR RURAL TRANSFORMATION

Agriculture and allied activities are the prime source for livelihood support to about 70% of India’s population living in over 6.40 lakh villages (Census, 2011). Consequently, agricultural J development is central to all strategies of rural development. Agriculture employs almost half of the workforce where alternate source of employment is limited and likely to remain limited in a low income country like ours. Rural India witnessed a very positive development during the last decade moving towards high income activities like dairying, poultry, horticulture, and aquaculture along with group formation. The income augmentation enterprises have shown positive dynamism with market innovations. Dominated by food security concerns, the policies in past were more centric to green revolution technologies and regions leaving behind sizeable geographies, which are water stressed.

While the average investments in the irrigated command development ranged from Rs. 2.5 to 3.0 lakh per ha, only Rs. 0.12 to 0.15 lakh/ha was invested in rainfed areas through integrated water management programme (IWMP). The estimates suggest that for unlocking the potential of rainfed agriculture, an investment of Rs. 0.50 lakh/ha or more is needed.

The centrality of agricultural development for rural transformation is apparent from the N550 data on distribution of agricultural households for income by major activities which indicated that more than 92% households in rural areas have agriculture as this major activity for income generation. The farming and livestock rearing together provide about 67.2 % of the income of the agricultural households. About 60% of the income per month is received from cultivation and farming followed by 32% from wages. The non-farm business provides only 8% of the monthly income to agricultural households.

Higher Investment for Inclusive Development:

The public spending in agriculture and allied sectors has increased significantly by Central Government during 2014 to 2018. The cumulative allocation/expenditure of Ministry of Agriculture has been over Rs. 153100 crore during last three years (Figure 3). The sizeable increase has been effected in livestock sector to raise the income of the farmers.

Expanding the Focused Funds

Long Term Irrigation Fund with initial corpus of about Rs.20,000 crore was established in NABARD in 2015-16 which was further augmented with Rs. 20000 crore in 2016-17.

Food Processing Fund of Rs. 2000 crore in NABARD for extending affordable credit to designated food parks and the individual food processing units in the designated food parks.

Micro Irrigation Fund of Rs. 5,000 crores in NABARD to achieve the goal, ‘per drop more crop’.

Dairy Processing and Infrastructure Development Fund of Rs. 8,000 crores in NABARD. Initially, the Fund will start with a corpus of Rs. 2,000 crores. Dairy is an important source of additional income for the farmers. Availability of milk processing facility and other infrastructure will benefit the farmers through value addition. It will revitalize the milk processing units set up under the Operation Flood Programme.

Fisheries & Aquaculture Infrastructure Development Fund (FAIDF) and Animal Husbandry Infrastructure Development Fund (AHIDF) for financing infrastructure requirement of fisheries animal husbandry sector. Total Corpus of these two new Funds is Rs. 10,000 crore.

Making Natural Resources More Productive and Rewarding:

A major part of rural population is primarily dependent on agri-based activities for their livelihood where land and water, due to depletion and deterioration, has become the limiting factors. Integrated development of land and water is the pivotal to rural; development. The availability of land per household is 1.16 ha and water at 1544 m3 per capita per annum. While land is unsustainable to support a normal family, India is a water stressed country with 1544 m3 per capita water availability annually. Many of the geographies are heading towards water scarce situation (below 1000 m3 per capita).

Raising Farm Productivity to Boost Income of Rural Households:

Globally our productivity is lower in almost all the commodities than any global standards. Seed and fertilizers have been central to augmenting productivity. Government established 125 seed hubs in leading state Agricultural Universities and ICAR Institutes across the country to augment the availability of seeds of pulses. Additional 25 seed hubs have been introduced since 2018-19 for increasing the availability of quality seeds of nutria-cereals. Soil health card scheme is operational to economize the fertilizer use. The soil health card helps farmers know the fertility status of his farm and get crop-specific prescription for the right mix of fertilizers and manure needed to achieve the higher productivity. Not only has his input mixed for fertilizer will get balanced saving on his costs but also improve the soil health. Over 10.73 crore soil health cards have been distributed amongst as many farm households. Neem coating has been introduced to reduce the leakages in urea distribution and enhance on-farm use efficiency and cut the cost of cultivation.

The crop residue management in NCR region has been given top priority through a new scheme to manage the crop residue at farmers’ fields through farm mechanization. Government introduced a Rs. 1151.80 crore scheme for in-situ management of crop residues through rural entrepreneurs.

Relieving the Rural Households from Risk:

Crop failure is a major stress which every household in the rural India faces at some point of time. The intensity and frequency is more in rainfed areas. This phenomenon affects both the farmers and the consumers in the rural areas. The Pradhan Mantri Fasal Bima Yojana (PMFBY) has been launched in January 2016 by subsuming multiple insurance schemes like National Agricultural Insurance Scheme, Modified NAIS,
etc. PMFBY is an efficient and effective adaptation tool to cover the risk in the rural areas. It has been made more inclusive with a meagre premium of only 1.5 to 2.0 % for arable cropping and 5% of the sum insured for fruits, vegetables and plantation crops. The allocation of PMFBY has been almost tripled since 2016-17. So far the scheme has been implemented by 24 States and 3 UTs and about 5.8 million ha of cropped area brought under insurance during 2016-17. Interestingly, about 24% of the farmers applied for insurance were non-loanee farmers.

Rural and Agriculture Financial Inclusion:

The empirical studies of the past indicated an increase of 2 per capita per month income in a farm household due to institutional credit. The institutional flow of credit to farmers has increased Over 18 folds since 2000-01 (Figure 3) to provide cheap credit to farmers. However, the access to credit to small and marginal farmers has been a concern along with the higher interest rates. Two significant steps were taken in the recent past-interest subvention on the short-term crop loan upto Rs. 3 lakh and broad basing the Kisan Credit Card (KCC) scheme to include term credit and consumption needs, besides some risk cover against accidental death. A farmer, who repays the loan on time, becomes eligible to get crop loan at 4 per cent rate of interest. Post-harvest loans are also being granted against Negotiable Warehouse Receipts (NWRs) with benefit of interest subvention.

Diversified Income Augmenting Activities:

The pull factor of higher income in urban areas and push of lack or underemployment in rural areas are triggering migration to urban Centres. The process helps increasing the commercialization of agriculture. The reforms in contract farming, tariff and tax regimes, export promotion, credit have been done for achieving optimum commercialization in agriculture along with prioritizing of value chain development with a scale commensurate with national income and employment. Diversification towards high value commodities can enhance the income of farmers substantially as evident from the value of output data for year 2013-14 (CSO, 2013-14) The fruits and vegetable crops on average generate Rs. 3.30 lakh worth of output per ha compared to Rs 0.38 lakh by cereals, Rs 0.29 lakh by pulses and 0.49 lakh per ha by oilseeds. This suggests an attractive scope of raising the value of farm output by diversifying from field crops to fruits and vegetables.

Rural Infrastructure Development:

The agro-based setting of rural economy is changing towards more diversified activities. However, such development is constrained by poor infrastructure as evidenced from rural road density, access to irrigation, power supply, market facility and network, godown, cold storages, cold chain and processing infrastructure. It is estimated that gap of 99% exists in pack houses, 85% in reefer vans, 10% in cold storages and 91% in ripening chambers. The primary space of marketing is market yards. On an average one market yard is distributed about 463 sq. km (12 km radius) against the desirable level of one at every 80 sq km (5 km radius). The disparity is vast amongst states. One wholesale market at every 6 km radius exists in Punjab against one at 45 km radius in Assam. The farm mechanization is also very low at 1.84 kw/ha against 2.2 kw/ha envisaged by the experts. A number of centrally sponsored schemes and central sector schemes are under operation which provides Incentives to farmers and entrepreneurs for infrastructure development.

Reinvigorating Value Chain in rural areas:

The annual post-harvest loss is estimated at Rs. 92651 crore. The synergies amongst the programmes of Agriculture, Food Processing, and Commerce for developing effective procurement linkages, processing facilities, retail chains and export import have been emphasised. Pooling of resources for cold chain, and warehousing infrastructure development and PM Kisan Sampada Yojana of MOFPI could help mobilizing the initial funding. Specific targeted actions has been undertaken towards establishment of mega food parks, forming agro-processing clusters, modernizing abattoirs, establishing integrated cold chain and value addition infrastructure, technology up gradation for expansion of food processing, forming backward and forward linkages including warehousing, setting up food testing labs.

Remunerative Price to Rural households:

The price policy has aimed to offer remunerative prices to producers through minimum support prices (MSP). However, the implementation of MSP has never been inclusive and limited to some produce (rice, wheat, cotton and sugarcane) and geographies (Punjab, Haryana, Chhattisgarh, Madhya Pradesh, UP, Andhra Pradesh). It has been observed that farmers in all states and for almost all major agricultural commodities are seeking price guarantee like MSP. Government took a path breaking decision to provide Minimum Support Price (MSP) equivalent or more than 150% of the cost of production. The MSP so announced will change the entire canvass of rural income. The implementation of MSP, for the first time, is being made inclusive. A mechanism has been thought through to implement the MSP for all the 25 notified crops in all the States. NITI Aayog has suggested three mechanisms of market assurance, price deficiency payment and procurement by private stockist on MSP. A comprehensive mechanism integrating all three is likely to be rolled out shortly to target at least 40% of marketable surplus of these craps.

Integrating Small and Marginal Farmers with Value Chain:

Over 3500 FPOs formed under various initiatives in the country. They are real carrier of transformation for small and marginal farmers of rural India. India. NABARD under its Producer Organization Development Fund (PODF) has provided credit plus assistance to over 200 P05 during the last 4-5 years. Based on the experiences gained under PODF, the Government created a dedicated corpus of Rs. 200 crore in NABARD in 2014-15 for promotion and nurturing of 2000 new FPOs. Subsequently, NABARD promoted 2174 new FPOs across 29 States. An explicit focus on cluster based approach to developing agriculture in a dispersed manner can potentially form the basis of future public and private agribusiness initiatives. Further, aggregation though Farmer Producer Companies (FPCs) has a dominant role in bringing forth specialization and scale to an otherwise fragmented sector, along with necessary managerial and technical backing. Government has announced a 100 percent tax deduction to FPCs with turnover of less than Rs 100 crore during next 5 year.

Conclusion:

Agriculture, as a profession in rural space, has been progressing, albeit with a slower pace than other sectors of economy. The recent initiatives have made it more inclusive with suitable blend of food security along with income security priorities. While major initiatives and programmes are on course for creating an ecosystem to boost the income of the rural households, it will only sustain if reforms are mainstreamed along with developmental plans. The innovations for convergence of rural development priorities and programmes with farming technologies that economize the cost of inputs and produce more from less of natural resources will lead to rural prosperity while transforming the agriculture.

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