Re-imagining farmers’ welfare (Existing subsidies are not working well)

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 Re-imagining farmers’ welfare (Existing subsidies are not working well)

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

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• Total loan waivers: SBI Research found that over past 10 years, a total of Rs.4.7 trillion worth farm loan waivers were given away by Centre and State governments. That's equal to 82% of industry level NPAs today.
• Is farm distress over: Despite huge waivers, farm distress has not ended. Suicides continue, distress deepens. Hence, a new approach is needed.
• Bad side-effect: Farm loan waivers have ruined the credit culture among farmers, and further weakened the weak banking system. Farm loan NPAs in 2018-19 rose to 12.4 % of total bad loans (8.1% in 2015-16). Incentive to pay properly is reducing.
• Indebtedness remains: Despite waivers, indebtedness hasn't ended. 

1. More than 60% land is cultivated by tenant farmers, not landowners, who get no benefits at all
2. Their borrowings are from moneylenders at high rates, and they invariably get stuck
3. PM KISAN (Kisan Samman Nidhi) offers Rs.6000 direct to all farm families (total Rs.89000 cr), but even that is not for landless tenant farmers! (so effectiveness limited)

• Outlays pushed up: Sadly, the govt. has only kept raising farm scheme outlays in response. That's true for PM-KISAN, fertiliser subsidy, crop insurance, farmer pension, food subsidy, etc.

1. Total subsidy now is Rs.4.15 trillion (2019-20) compared to Rs.2.1 tr in 2017-18.
2. More spending + periodic farm loan waivers have not relieved farmers, but burdened the overall economy. Low rural demand has pushed GDP growth to below 5%.

• A new approach: Change the entire approach now.

1. Change product-based subsidy to process-based subsidy. Example - fertiliser subsidies worth Rs.80000 cr p.a. It is true fertilizers pushed up farm output, but rampant use damaged soil too. So change it to subsidy for "Precision Farming". 
2. In Precision farming, all processes are scientifically planned - preparing the land, sowing the seeds, flood irrigation, fertiliser application, pesticide spraying.
3. Western style large farms don't exist in India. So, hiring of equipments is best.
4. Equipments like sensors, drones, satellite support, tractors, harvesters, planters can all be hired.
5. Higher output, better quality and sustainable agriculture is thus possible. Subsidies should be given for these.

• Drip irrigation in rice cultivation: It results in upto 50% saving in water usage, and farmers can avoid inundating fields (1400 litres per kg rice produced). Benefits are - higher yield, and huge drop in methane emissions! At present of the total 44 million hectares, only 25 m ha is under drip.
• Canal-fed irrigation: Build agri infra like irrigation canals (52% is still rain-fed in India), storage and warehousing, etc. 
• Summary : The time to rethink farm subsidies has arrived, and a new approach will help everyone.

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