Eliminating poverty in India- Economic impacts of agriculture and poverty

FAMILIES LIVING IN SLUM - DELHI, INDIA. CDREF00526.
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Agriculture, is necessary for economic growth of every country. The agriculture sector provides economic opportunities to farmers and effectively contributes in national income. More than 50% of Indians depend on agriculture as their primary source of income. In spite being a key booster to India’s economy, individuals working in this sector are very poor as compared to people working in other sectors. As mentioned previously, these individuals living in rural India struggle every day, and undergo difficult circumstances for survival mainly because of two reasons: lack of land and lack of proper infrastructure.Flourishing agricultural sector not only means increase in national income but significantly reduces poverty by providing better opportunities to individuals living in rural India, making them overcome their socioeconomic challenges and giving them better life.Despite having high employment rates, farmers are struggling to keep up in this sector because of the out-of-date agricultural systems and technology, followed by issues such as climate change and weather.

For generations, farmers have relied on animals for farm work.However, there are now efficient technological tools availablewhich change the way of life for an India farmer. Unfortunately, farmers have no adequate access of these modern equipment’sbecause of their economic status. Farmers in India have no access to mounted power tillers which will make farming significantly easyand much faster.

In an effort to address this issue, the Department of Agriculture invited experts to identify solutions and refinespecific agriculture sectors which lacked heavily due to inefficient financial aid.The central government then made several policieswhich could bring farmers out of poverty. Through mechanization, the government reached out to farmersin an effort to help them in increasing their crop productivity and reducing crop losses, and increasing the productivity of labour. Mechanization is critical for farmers as it provides necessary resourcesallowing themproduce food efficiently, and making their work less physical. On the contrary, most of the farmers in India cannot afford mechanization because of their socio-economic conditions, which is why government pooled some of its resources to the sector. It is important for policy makers to find effective and efficient ways to make mechanization reachable for Indian farmers, doing this will be a positive step in the right direction in slowing the grip of poverty in India.

Not long ago, the Department of Agriculture launched farm machinery banks. These banks were established to provide machinery access to the farmers. By visiting these banks, farmers will have the opportunity to use necessary machines for farming.Since its announcement, only one pilot bank has been setup so far, although it has received huge positive response from the farmers.Besides this, banks such as the State Bank of India have begun offering financial assistance to those who need to buy machinery for their farms.Currently, SBI is financing up to 100% if the farmer requests to take up a loan for one million. However, if the loan exceeds more than that, SBI is ready to lend the farmer 75% to 85% of the funds.

To avail such benefits, the Bank of India first requests a land recordand a basic quotation of the assets and then discusses the repayment of the loan (six months’ instalment) depending upon the crop and the harvest season.Through such initiatives, government has begun supporting farmers through mechanization. However, it is important for policy makers to follow up the progress and take necessary feedback from farmers availing themselves such initiatives.

However, mechanisation is the best possible way of updating individuals with technology, more than half of India’s agriculture lack the essential innovation, irrigation.An irrigation system is one of the most important tool for agriculture. Without adequate irrigation crops die because of water and farmers struggle in poverty. Besides having a reliable irrigation system, many farmers rely on monsoon. Since weather cannot be predicted, farmers are suffering heavily from financial instability. Within the first half of 2015, farmers became victims of severe drought and it was for the first time in the history of agriculture sector, farmers changed their profession and opted odd jobs for survival. When India witness’s large droughts, more than 86 million people across 14 states are affected. Situations such as these, forces an individual to survive in severe poverty. Today, the agricultural economy is desperate for irrigation reformsand necessary infrastructure. Fulfilling these will guarantee farmers with more profit and output.

He stated earlier, agriculture in India plays a significant role in India’s economy. Contributing to almost 50% employment in the nation, agriculture is arguably, the only sector keeping the people above the poverty line.However, adequate financial aid and technical training are essential in improving farmer’s socio-economic situation. It is important for policy makers to identify and develop concrete solutions to help strengthen agriculture sector, to make it efficient and profitable sector for farmersin India.

Inadequate infrastructure and poverty

Infrastructure is vital for economic success of a country. Since 1990, India has been actively updating its infrastructure; although the process has been slow and has achieved minimal success in urban areas, on the contrary, no success in rural areas.These attempts have largely been unsuccessful as 70% of the projects are undertaken by the central government and some private entities.Undoubtedly, the public funding for infrastructures have been inefficientand has failed in providing adequate resources to promote infrastructure.This has created inadequate resources for infrastructure and has heavily fuelled the vicious cycle of poverty.

Some governments have been recycling funds to support infrastructure growth, however no real success has been achieved so far. Significant financial assistance from the private sector can greatly support infrastructure need. Over the years, private sector has been assisting government initiatives to pull the nation out of poverty.The private sector, which began its operations in 1990, has been supporting the economy through wide sectors such as manufacturing, agriculture, and information technology.Despite its massive assistance in eradicating poverty, the private sector too is now witnessing slower growth especially due to inadequate infrastructure resources.New infrastructure can open a lot of doors for business.

India is heavily lacking in infrastructure trade, which has now become a major cause in poverty.Without adequate resources and financial aid, the government is struggling to provide trade infrastructure, which if strengthened will significantly increase India’s economic productivity. One such example is the seaport infrastructure, which fails to support trade infrastructure in India. In order to have greater economic successes, it is necessary for policy makers to look beyond external trade, especially the trade agreements.Adequate trade infrastructure will be needed to facilitate trade and movement of goods. Establishing necessary trade infrastructure will greatly help in eradicating poverty by offering employment opportunities.

This type of infrastructure will open employment opportunities for those living in slumsand will open doors for investment opportunities in future. The government has now tripled the investment in infrastructure and now plans to spend over a trillion USD by 2017.The planned infrastructure model of the governments includes establishment of airports, ports, a rail corridor in Mumbai, along with numerous road developmentwhich will provide greater economic opportunities. It is also important for us to understand that; infrastructure development is necessary for elevating poverty in India. Policy makers should identify solutionswhich could potentially increase the trade between India and foreign markets.

Transportation infrastructure is in absolute need for a reform. Citizens living in tier 1 cities such as Delhi, Mumbai and Bangalore, heavily rely on personal transportation.Despite being a tier 1 city, Mumbai, for example,there is nothing concrete to offer as transportation infrastructure. Individuals living in Mumbai are paying twice on transport as compared to people living in other cities and sometimes walk to work. Transportation charges are high because the fees provided by public are used for maintaining infrastructure.

Additional to the issues in transportation, farmers living in rural India are having extreme difficulty in reaching to the marketthus, they are unable to sell their crops directly to the market. Most of the freight traffic in India occurs due to poor maintenance of roads.These roads are means for the farmers to sell their crops in markets in urban areas.Today, farmers need to hire a truck to sell his crops in urban areas because of the poor condition of roads which they will travel. The alternative to roads for farmers is to use the country’s rail network.India, inspite of having the fourth largest rail connectivity, due to poor maintenance, this connectivity has been distorted.It calls out for new reforms in infrastructure, thus the farmers are unable to make any profit. With well-maintained transportation, farmers will then be able to sell their crops in urban markets directly, availing profits. Policy makers have to identify new ways to improve transportation infrastructure in India. However, it is not less than a challenge, policy makers must identify early possible solutions to strengthen transportation infrastructure.

Concentrating on the development of its infrastructure, will open doors for greater economic and employment opportunities, which in turn will help in loosening the grip of poverty in future. Reduction of poverty rates in India means increase in nations economy, while strong infrastructure will result in strong economic growth. Thus, it is important for stakeholders to share innovative transportation infrastructure solutions and help farmers to directly sell in markets, increasing their chances for profit. It is also important to note the importance of internal and international trade and provide effective and efficient solutions benefiting all the stakeholders.

Source: Economy Lead (blog)

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