Indian agriculture needs a New Deal now

The repeal of agri laws heralds a new era, but right steps needed to maximise agri productivity.

Indian agriculture needs a New Deal now

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Read more on - Polity | Economy | Schemes | S&T | Environment

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• The story: The government promised to usher in a total transformation in Indian agriculture, via the three new farm bills, viz., (i) The Farmers' Produce Trade and Commerce (Promotion and Facilitation) Bill, (ii) The Farmers (Empowerment and Protection) Agreement of Price Assurance and Farm Services Bill, and (iii) The Essential Commodities (Amendment) Bill. These three were pushed through Indian parliament rapidly, despite many questions raised by experts, farmers and MPs.
• Repeal and what next: Finally, after a huge protest that lasted a year, the laws were repealed. What comes next, now?

1. The first bill was supposed to reform the APMCs of Indian states, by opening up sale outside APMC mandis and by building an e-highway for agri trade. Goal was better price discovery [APMC - Agricultural Produce Market Committees]
2. The second bill was to help start contract farming in India, and tackled issues related to agribusiness, processing, and so on
3. The third bill removed many items from the list of essential commodities - cereals, oils, oilseeds, pulses, onion, potatoes - to speed up free trade

• Existing reforms: In past 20 years, many reforms did happen. 18 of the 36 states and UTs have done erforms and permitted private markets already (outside of APMCs). Contract farming exists in more than 20 states, and 19 states allow farmers to sell directly to private parties.
• Agrarian crisis in India: The average operational far size is 1.13 ha in India today, and 90% of total holdings are small and marginal. The top 10% households are cultivating 50% or more of land, and bottom 50% are doing just 0.5% of India's cultivable lands.

1. 2/3 of Indian agriculture is rainfed
2. Average farmer income level is Rs.9000 per month (so Rs.1 lakh per annum, a paltry sum given the expenditures incurred by farming households)
3. While a new roadmap of Indian agri is created, these truths have to be remembered. Core principle has to be - "the food, water and farm income security cannot be compromised with."

• Protections needed: The new farm laws tried freeing up both sides of the production chain - contract farming at production end and selling in open markets at marketing end. But without ironclad safety guarantees, farmer interest will always be under a cloud.
• MSP demand: Farm communities, spurred by the Dr MS Swaminathan committee report, have been asking for MSP.

1. Farmers want the MSPs to be based on a comprehensive cost formula (C2), and not government formula (A2 - cash transactions and payments made on seeds, labour, pesticides, fertilizers)
2. Farmers want costing to include rent on the owned land and interest on owned capital and also the family labour

• Contract farming bill: It must give a proper judicial process, which was avoided. If both these things can be taken care of, forward movement is possible.
• MSPs and water: In the long run, MSPs will have to be for all crops, not just around 25, and the issue of water stress will have to be tackled.

1. Mihir Shah Committee has warned already that India is exhausting its groundwater resources rapidly due to over-exploitation of aquifers. A total rethink on using surface and ground water is needed.
2. That report wanted a demand side management of water for all sectors, eco-zone based farming, and wider procurement process to push growing of millets and other crops (so that water-intensive cropping may reduce).

• Summary: A "New Deal" is needed for Indian farmers, keeping in mind the long-term view, and not based on instant corporate or political interests.
• EXAM QUESTIONS: (1) 1. Explain what is meant by a holistic approach to tackling groundwater depletion problem. What has cropping patterns got to do with it? (2) Some experts say that Indian farming now needs a "New Deal". What exactly is that? Explain. (3) List five statistical data points that hint at the true state of Indian agriculture.

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