Reforming Indian agriculture by sprinkles and drips

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By Narayan Ramachandran

India’s agricultural policy for the next decade should shift away from cereal (and quantity) centricity and be primarily focused on water effectiveness

Each year in India, one half of a billion people pray for rain. The rain has to be just right. Too little and there is drought. Too much and there are floods. In either of these cases, their agricultural crop does not provide them sufficient livelihood. Misery generally follows in its wake.

Seven decades after independence, Indian agriculture remains hostage to the whims of the rain gods during the monsoon season. The principal reason for this is that 73 million hectares out of a net sown area of 141 million hectares are unirrigated and rainfall dependent. The spatial distribution of rain too has deep impact. This year, for instance, rains have been plentiful in central and south India, normal in western India and deficient in the east and the North-East. Even though foodgrain production will probably top a record 280 million tonnes this year (third year of record in a row), there will be large geographical pockets of output deficiency and household stress.

To add insult to injury, climate change is likely to add long-run volatility to agricultural yield. In an excellent chapter on the subject, the Economic Survey 2017-18 (Chapter 6) suggests that farmer income losses could range from 15% to 18% and could rise to between 20% and 25% in unirrigated areas. The survey asserts that in the absence of adaptation by farmers and changes in policy, there is likely to be an average loss of 12%. An increase in average temperatures, a decline in average rainfall and an increase in the number of dry days may together conspire to create this impact. The survey also points out that while real Indian agricultural output growth has grown from about 2% average in the first decades to over 3% now and the annual volatility (measured by standard deviation) has been reduced from 6% to about 3%, the growth is below China’s and the volatility of output is higher than China’s for the same period.

After disastrous experimentation with the Great Leap Forward in the late 1950s by Chairman Mao Zedong, China’s serious agricultural reform began in 1978. Deng Xiaoping decollectivized agriculture and handed back control of farming to households (a certain portion of output was required to be sold back to the state).

In the first 20 years of reform, foodgrain output increased from 300 million to 500 million tonnes. At the same time, cereal centricity was replaced by a focus on meat, eggs, aquatic product and fruit. This shift in assortment was very successful with cereal production per capita increasing by 27% but aquatic and fruit production increasing 700% in the first two decades. In some ways, China’s challenges are tougher than India’s, with only 15% of total land being arable in China (against about 40% in India) and vast areas being inhospitable to agriculture in the north, north-west and south-west of the country. China has also a shorter agricultural season than India (five months versus 10 months). Despite the spectacular past success, the country has now become a net importer of food and Chinese agriculture faces challenges from water shortage and climate change. The focus of Chinese agriculture policy has shifted from quantity to quality and better water and fertilizer use.

What should India do? India’s agricultural policy for the next decade should shift away from cereal (and quantity) centricity and be primarily focused on water effectiveness. For political reasons, Indian policy has not been able to evolve from “farmer welfare” to “agricultural household sustainability”. The lack of long-term policy planning combined with a welfare-oriented policy results in a periodic loan-waiver approach which perpetuates a poor credit culture in the agriculture sector and, consequently, a fragile state balance sheet. This is a vicious circle of waiver addiction and debt, both at the rural household and state level. Federal policy itself is trapped by the seventh schedule of the Constitution, which makes agriculture, dairy, meat and fisheries a state subject.

A comprehensive reform process in agriculture would start with a constitutional amendment that makes agriculture and water (use) a concurrent subject in the Constitution—there has been precedent for this in the 42nd Amendment of 1976. The purpose of this amendment would be to provide a federal fillip to states, with a primary emphasis on water effectiveness. This water effectiveness project will not only focus on bringing more areas under irrigation in a sustainable manner (not with capital but with a thoughtful district by district approach) but also focus on sprinkler and drip irrigation. In addition, the water effectiveness emphasis should insist on agricultural power being priced to the farmer. The only way to reduce gross misuse of ground water is to price the main input (electricity to pump that water out). Of course, other factors like seed quality, balanced fertilizer input (nitrogen, phosphate and potash), route to market and reduction in information asymmetry are important, but the principal problem has been a lack of focus.

A water effectiveness focus for agriculture policy will improve yield, change cropping patterns and reduce misery. It is the only way to mitigate the significant impact likely from climate change.

P.S: “We know only too well that what we are doing is nothing more than a drop in the ocean. But if the drop were not there, the ocean would be missing something,” said Mother Teresa.

Narayan Ramachandran is chairman, InKlude Labs. Read his earlier columns at www.livemint.com/avisiblehand

Source: Livemint

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