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Issues with Agriculture in India

  • 12 Jan 2021
  • 7 min read

Why in News

The protest by thousands of farmers at Delhi’s borders have brought to focus a range of issues in agriculture in India.

Key Points

  • Concerns of Protesting Farmers:
    • These laws signal the beginning of the end of open-ended procurement of wheat and paddy.
    • The success of states (Punjab and Haryana) in creating the infrastructure for procurement may now become the reason for withdrawal of support of the Centre.
    • Stocking by corporates, especially those which are in modern retail and e-commerce
  • Land Size:
    • Decreasing Area: Area under agriculture has been shrinking, it reduced from 159.5 million hectares (mn ha) in 2010-11 to 157 mn ha in 2015-16.
    • Increase in Land Holdings: The number of operational holdings has been rising (increased from 138.3 million to about 146 million) owing to increasing population.
      • This leads to falling average landholdings’ size of farmers, which has come down from 1.2 ha to about 1.08 ha.
    • Forced Selling: Smaller landholdings produce smaller pockets of produce, aggregation of which becomes essential for even a trolley-load to be carried to an Agricultural Produce Market Committee (APMC) mandi or a nearby market.
      • Due to small holdings caused by fragmentation, small and marginal farmers are forced to sell their produce at the farm gate itself.
      • This is especially so in states that have a weak network of APMC mandis.
    • No Access to Modern Technology: Bringing new technologies and practices to such a large number of smallholders scattered over a vast countryside and integrating them with the modern input and output markets is a huge challenge for Indian agriculture.
  • More Farm Labourers than Farmers:
    • A farmer is usually a farm owner, while employees of the farm are farm labourers, farmhands, etc.
    • Employment in Agri-sector: As per recent estimates from the Labour Bureau, 45% of India’s workforce is employed in agriculture. .
    • Labours in Agri-sector: According to Census 2011, 55% of the agri-workforce comprises agri-labourers.
    • No support for Labours: It is tough to drive or sustain growth in agriculture since farm labourers get no policy support or incentive to invest in farming.
    • Owners Getting the Benefit: All benefits like seed kit, fertilisers, pesticides, farm machinery, micro-irrigation, land development assistance etc. are meant only for those who can prove land ownership.
  • Falling Investment in Agriculture:
    • The Gross Capital Formation (GCF) in agriculture as a percentage of the total GCF in the economy has fallen from 8.5 % in Financial Year 2011-12 to 6.5 % in Financial Year 2018-19. This is because the share of private investment has shrunk.
    • Though public investment has gone up it is not sufficient to check the slide or keep the GCF at FY12 level.
  • Subsidy and Related Issues:.
    • Flowing to Businesses: A number of subsidies meant for agriculture also flow to businesses, e.g grants given to food processing units and cold chain projects.
    • Net Loss of Farmers: As per the Indian Council for Research on International Economic Relations- Organisation for Economic Co-operation and Development (ICRIER-OECD) report, despite the plethora of schemes run to support and subsidise Indian farmers, because of regressive policies on the marketing side (both domestic and international trade policies) and the deficit of basic infrastructure for storage, transportation etc., Indian farmers suffered net losses and thus emerged to be net taxed despite receiving subsidies.
  • Minimum Support Price (MSP) and Related Issues:
    • Selective Procurement: The government declares MSP for 23 crops, only wheat and paddy (rice) are procured in large quantities as they are required to meet the requirement of the Public Distribution System (PDS), which is about 65 million tonnes.
    • Stagnant Rates of MSP: The government declaration of Minimum support prices do not increase at par with increase in cost of production.
    • Unequal Access: The benefits of this scheme do not reach all farmers and for all crops. There are many regions of the country like the north-eastern region where the implementation is too weak.
    • Non Scientific Practices: MSP leads to non-scientific agricultural practices whereby the soil, water are stressed to an extent of degrading ground water table and salinisation of soil.

Way Forward

  • If India has to move away from procurement-based support, at present restricted to certain crops only, a more attractive income support scheme has to be conceived coupled with much higher investment, both public and private, in agri-infrastructure.
  • The Rashtriya Krishi Vikas Yojana (RKVY) incentivised the states, which increased their expenditure on agriculture. The Centre’s assistance for such states should be higher.
  • Focused research on crops grown in low-productivity states can deliver better seeds, which can withstand the challenge of higher temperature due to climate change.
  • Democratic norms and processes like open public debate, dialogue with stakeholders and detailed Parliamentary scrutiny to ensure every aspect and implication of a public policy goes through meticulous examination before being adopted and implemented is crucial to fix the issues with agriculture.


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