The Gist of Kurukshetra: June 2014

The Gist of Kurukshetra: June 2014

BOOSTING RURAL DEVELOPMENT THROUGH AGRI-INFRASTRUCTURE

What a tragedy it has been for the agriculture sector in India. While we celebrate the agricultural production in the country reaching an all time high, at the same time the country is unable to store the excessive produce. Along with land, labour and capital the income emanating from agriculture is being directly linked to the quality of infrastructure. The agricultural infrastructure includes all of the basic services, facilities, equipment, and institutions needed for the economic growth and efficient functioning of the food and fiber markets. Infrastructure is basically supporting both physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function.

Infrastructure has been one of the much neglected aspects of Indian agriculture. Agriculture in India lacks minimum necessary infrastructure and this is holding India back. A recent statement of minister of Agriculture in the Rajya Sabha confirmed the loss due to lack of inadequate infrastructure to the tune of rupees 44,000 crore. Of this the value of annual wastage of fruits and vegetables was estimated at rupees 13,309 crore. The Saumitra Chaudhari committee constituted by the planning commission in 2012 had put the total cold storage capacity requirements in the country at 61.3 million tonnes as against the present annual capacity of around 29 million tonnes. There is thus a gap of 32 million tonnes.

Infrastructure and Development : The investment in infrastructure impacts positively the economic development, Rostow (1960) while discussing the different stages of growth of economy argued that expansion and improvement of the transport and the infrastructure is a necessary precondition for capital formation and increase in the production and productivity. It should be noted that the infrastructure in the agricultural sector enhances the comparative advantage of that region in which the infrastructural investment is made. When the region gains comparative advantage in the agricultural activities, the net result is increase in the production and productivity of various agricultural goods and services in general. An empirical study by Binswanger et al (1993) revealed that increased marketing infrastructure that includes components such as road facilities in India enhanced the total agricultural output with the elasticity of 0.20. Similarly a study by Ahmed and Hussain (1990) concluded that the fertilizer use in the agricultural sector increases with the improvement in the quality of road. An important benefit derived from the agricultural infrastructure is that it helps to increase the level of value added products in the region.

Multiplier Effect : The major focus of infrastructural investment has been on irrigation, transportation, electric power, agricultural markets, etc and these not only contributed to the agricultural growth at the macro level but also to wide disparity between different regions in terms of agricultural growth. The introduction of a resource conserving technology such as the drip or sprinkler in dry land areas lessens the ground water exploitation in that area. This would result more ground water available for farmer fields downstream. Another important aspect of the introduction of this technology will be that the expenses on digging wells or arranging for tanks for irrigation will be saved which the farmer can use for other social functions. When the water is available to the farmers he can also go for change in his cropping pattern; he can now grow high value crops earn more income and thus improve his social status. Similarly the dams have the primary aim of electricity generation and irrigation can also be used for fishing. The additional area of land brought under cultivation due to construction of an irrigation dam would lead to increased consumption of inputs like fertilizer, weedicides etc. To match to the demand of this increased consumption we would have to either increase the capacity of the existing on or establish new units. This would provide employment to many.

Agri marketing infrastructure : The agri marketing infrastructure is another important component. Agri marketing infrastructure includes infrastructure for collection, drying, grading, labeling and packaging of the produce. This needs market yards, offices and platforms for loading and unloading of the produce. Rural markets and that too well regulated are a core component of the agri market infrastructure. These help in preventing the exploitation of the farmers at the hands of middlemen and brokers. Information regarding provision of timely information is also essential. For that we need to set up e-kiosks through which timely information could be sent to the farming community. They can also go for e-trading and futures trading.

NABARD's initiative : NABARD has also been providing Rural Infrastructure Development Fund (RIDF) since 1995. This RIDF finances the states for creation of rural infrastructure like rural roads, minor and medium irrigation projects, agricultural market yards etc. It has also supported watershed development in about 2 million hectares of land around the country investing about rupees 1600 crores to demonstrate people centered approaches of conserving soil and water.

Government Intervention : The government of India now provides financial assistance in the form of grant in aid at the rate of 50 percent of the total cost of plants and machinery and technical civil works in general areas and at the rate of 75 percent in difficult areas including north eastern states for creation of cold chain infrastructure with a ceiling of rupees 10 crore. The government has also formulated a scheme called as PEG for creation of additional storage capacity for guaranteed hiring by the Food Corporation of India. In this scheme against a target of 60 lakh tonne capacity creation in the year 2013-14, 3.36 lakh was completed up to July 2013.
The government of India has already taken some initiatives for safety of farm produce. India's first horticulture train started operation in June last year carrying onions from Nashik farmers to Kolkata. This has proved very successful for small farmers who do not have to become victim of middlemen and commission agents.

Ten mega food parks have been approved in Andhra Pradesh, Punjab, Jharkhand, Assam, West Bengal, Uttarakhand, Tamil Nadu, Karnataka, Bihar and Tripura. These Mega Food Parks are aimed at accelerating the pace of food processing in the country backed by an efficient food supply chain. Besides this the parks will provide employment opportunities for so many peoples.

What to do : Most of the perishable items are produced in the villages which remain confined to these due to the absence of road networks. The existing road and rail facilities are inadequate. Most of the areas which produce good quality fruits are still inaccessible. This coupled with the rough terrain of the area and lack of regulatory markets make the farming community to suffer a lot at the hands of the local traders. Farmers have no information about the market price. There is an urgent need to establish suitable infrastructure like the use of information communication technology (ICT) for benefit of farming community. The technology like e-kiosks and e-choupals of Indian Tobacco Company in Madhya Pradesh and other states of the country are doing a great job. Each electronic kiosk is connected to a number of villages.

Irrigation is another area which requires infrastructure upgradation. With suitable infrastructure the irrigation potential can be increased. The utilization of available water for agriculture too is far from efficient. Wastage of water is huge in surface irrigation systems. The inability to conserve adequate water and curb its indiscriminate utilization, including rampant wasteful exploitation of water is also a cause of concern. The problem is more severe in dry land area of the country which accounts for more than 60 percent of the total cultivable area. Suitable water conserving infrastructure like the drip irrigation and sprinkler irrigation should be installed in these areas. Water conservation techniques like water sheds, rainwater harvesting and other measures can bring additional area under irrigation in these water scarce regions.

Similarly we can also invest in creating community grain storage Banks where the farmers can store their excessive food grains. This will also prevent them from distress selling as they can wait for the right time to sell their produce.

At the same time greater emphasis has to be laid on research infrastructure by establishing a number of new institutes, national research centers for several crops and livestock to address the local problems and come out with site specific solutions. To conclude, infrastructure potentially can influence rural economic performance through three ways. These are (i) individual development by the increased use of existing resources-land, labor, capital, etc. (ii) bringing additional resources to rural areas and (iii) socio-economic development by creating assets and making rural economies more productive.

RURAL INFRASTRUCTURE KEY TO INCLUSIVE GROWTH

The recurrent theme of public discourse during the last one decade has been 'inclusive growth.' Inclusive growth is essential for social and economic equity. Since India's majority of people live in villages, it is easily seen that rural infrastructure is a major component for ensuring inclusive growth.

Development of Infrastructure envisages creation of values through engineering consultancy. Rural development entails structural changes in the socio-economic situation to achieve improved living standard of low-income population and making the process of their development self-sustained. It includes economic development with close integration among various sections and sectors; and economic growth, specifically of the rural poor. In fact, it requires area based development as well as beneficiary oriented programmes.

Development of rural areas is slow due to improper and inadequate provision of infrastructure as compare to urban areas. That's why rural share in GDP is always less. The planning and development of human settlements and provision of required infrastructure are much better in urban areas. Rural population migrates to urban cities for employment opportunities and better facilities. Besides, the limited capacity of rural economy to accommodate the increasing population sends the labour force as surplus to migrate large cities.

Rural infrastructure is not only a key component of rural development but also an important ingredient in ensuring any sustainable poverty reduction programme. The proper development of infrastructure in rural areas improves rural economy and quality of life. It promotes better productivity, increased agricultural incomes, adequate employment and so on and so forth.

Hence the "Bharat Nirman" time bound business plan for action in rural infrastructure. It envisages action in the following areas:

  • Irrigation
  • Rural Roads
  • Rural Housing
  • Rural Water Supply
  • Rural Electrification
  • Rural Telecommunication Connectivity, etc.

Infrastructure development has a key role to play in both economic growth and poverty reduction. Failure to accelerate investments in rural infrastructure will be a stumbling block to achieve the Millennium Development Goals. Further, it also severely limits opportunities to benefit from trade liberalisation, international capital markets and other potential benefits offered by globalisation, point out development watchers. No doubt, the creation of infrastructure in emerging 'rural-urban' clusters remains a "major challenge". To meet this challenge, the Rural Development Ministry is optimistic that its revamped project for developing amenities in such areas will yield results soon.

Currently, there are around 3,900 such clusters in the country which do not fall either in rural or urban category. Government has said it will undertake projects such as water supply, sanitation, street lighting, tourism and improvement of roads through public-private partnership mode in such areas. The Project is re-christened as new PURA (Provision of Urban Amenities in Rural Areas).

When PURA-2 is launched, the Centre will select the developers, while the state governments will choose the clusters for creation of infrastructure. The Ministry is committed to the grounding of good PURA projects across the country to ensure people in rural areas do not feel deprived of urban amenities and do not have the urge to migrate to cities in search of good living. According to the ministry, there are 4 Ps in the model as this is not only about Public Private Partnership, but also about involvement of People and communities at Gram Panchayat level.

The year 2013 witnessed stirring events in the area of rural development. One of them was The Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act. With its notification, it has replaced an archaic law of over a century-old.

During the year, government came out with its phase II of the Pradhan Mantri Gramin Sadak Yojana (PMGSY) to upgrade rural roads constructed under the programme. The Union Cabinet gave its approval for a proposal for launching the PMGSY-II. While the existing PMGSY scheme will continue, under PMGSY phase II, the roads already built for rural connectivity will be upgraded to enhance village infrastructure.

The Ministry, at the fag-end of the year, also announced significant changes to its flagship MNREGA programme seeking to ensure permanent and durable asset creation and introduction of penalty for delayed wage payments. It launched a new skill development scheme called 'Roshni' for rural youth from 24 most critical left-wing extremism affected districts in the country. The initiative aims at imparting skills and placement of 50,000 youth from these districts. The ministry selected six districts each from Jharkhand and Odisha, five from Chhattisgarh, two from Bihar and one each from Andhra Pradesh, Uttar Pradesh, West Bengal, Madhya Pradesh and Maharashtra for the scheme.

The programme will be implemented at a cost of Rs. 100 crore over the next three years : The government which initiated various programmes to deal with the challenge to Maoism has said that at least 50 per cent of the candidates covered under the scheme should be women and special efforts will be made to proactively cover Particularly Vulnerable Tribal Groups on a priority bais. The year also saw an ambitious programme 'Himayat' launched by the Rural Ministry in Jammu and Kashmir to train and give jobs to over one lakh youth from poor families evoking positive response from the youth.

Mahatma Gandhi's words that India lives in its villages rings true even today. The majority of its 1.2 billion people still live in villages and have agriculture as their means of livelihood. Any plan for the country cannot but have its particular focus on the development of the vast rural areas and the people inhibiting them.

As expected, the rural development was given its deserving priority in the union budget 2013-14. The rural development ministry, which carries out many of the government's pro-poor programmes, received a 46 per cent hike in its allocation. The budget proposed to allocate to the ministry Rs.80, 194 crore in 2013-14.

Food Security

Food security is as much a basic human right as the right to education or the right to health care. The National Food Security Bill was a promise of the .Government which it kept during the year.

NABARD

NABARD operates the Rural Infrastructure Development Fund (RIDF). RIDF has successfully utilised 18 tranches so far. A sum of Rs.5000 crore was made available to NABARD to finance construction of warehouses, godowns, silos and cold storage units designed to store agricultural produce, both in the public and the private sectors.

Road Construction

The road construction sector has reached a certain level of maturity. But it facts challenges not envisaged earlier, including financial stress, enhanced construction risk and contract management issues that are best addressed by an independent authority. Hence, Government has decided to constitute a regulatory authority for the road sector. Bottlenecks stalling road projects have been addressed and 3,000 kms of road projects in Gujarat, Madhya Pradesh, Maharashtra, Rajasthan and Uttar Pradesh will be awarded in the first six months of 2013-14.

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