Political Commentary: Doubling farm income, action needed in the fields

The Bharatiya Janata Party (BJP), if voted to power again, has promised that the new government will step up efforts to double the agriculture income by the year 2022. It also constitutes BJP-led government’s resolve to achieve a $1 trillion economy by 2025 from the present $475 billion. However, experts believe doubling the income is undoubtedly an ambitious target considering the agriculture sector's present state of affairs in Maharashtra.

A look at the numbers will clear the picture. Although, Maharashtra maintained the pace of growth in the gross state domestic product (GSDP) at 7.5% in 2018-19, the biggest decline was in the agricultural sector with a decline of 2.7% expected over the last year. The BJP government had blamed the low growth in the farm sector on the prevailing drought. The decline in the agri output was due to deficient rainfall. Except in 2016, the state received below average rainfall over the last few years.

The agriculture production has taken a major hit, as it is expected to grow at a paltry 0.4% in 2018-19 against 3.1% in 2017-18 and 2.9% growth in the overall agricultural growth of the economy. The crop production is expected to fall by 8% in the real gross state value added (GSVA) against 0.8%. Agriculture contributes 11% to the state GSDP.

Despite the big talk, the state has allocated 6.1% of its total budget towards agriculture and allied activities, which are lower than the allocations of other states (6.4%).

The growth in the agriculture sector has been fluctuating. The lower growth can be attributed to drought in the state on the back of uneven rainfall during the fiscal 2018-19. This year, the agriculture production may take hit again due to scanty rainfall in parts of Marathwada and southern Maharashtra, while floods in parts of western Maharashtra and other districts.

The real challenge lies in effectively tackling the problems of the small and marginal farmers. There are 1.76 crore farmers with land holding less than 2 hectares, and 67,000 farmers with land holding less than 1 hectare. Maharashtra, owing to climate change and fluctuating monsoon patterns, has a vast area, which is hit by drought every year. The level of agricultural distress in the affected regions results in less income realisation, loss of crop and lower productivity, thereby exposing the farmer to numerous risks, including agricultural, social and economical.

In its comprehensive analysis released in June this year, the National Bank for Agriculture and Rural Development (NABARD) has estimated that doubling the farmers’ income till 2022-23 over base year 2015-16, requires annual growth rate of 10.41% in farmers' income, which indicates a sharp acceleration in growth.

The major avenues within agriculture for growth are: a) Improvement in productivity b) Resource use efficiency or total factor productivity, saving production costs c) Remunerative prices of crops d) Increasing cropping intensity e) Diversification of high-value crops and non-farm income f) Technological integration g) Conversation and better utilisation of available natural resources (soil, water).

However, the government will have to overcome a number of hurdles to achieve its targets. Some of the roadblocks comprise mono-cropping pattern, inadequate post-harvest structure, delay in payment and sale of the produce (26%), lack of transparency in better price realisations, limited processing facilities and cold storage facilities.

Ironically, despite the partial implementation of crop loan-waiver scheme and thrust on the crop insurance scheme, the small and marginal farmers depend more on the informal sources like money lenders for credit for asset creation as compared to the medium and large-size landholders, which charge exorbitant rates of interest compared to formal sources of income.

Despite awareness about the insurance schemes and benefits, there is reluctance by the farmers to adopt crop insurance policies on account of lack of funds for payment of insurance premium, lack of trust on insurance companies and unfavourable policies. Between 2015 and 2018, the state recorded that more than 12,000 farmers committed suicide.

The Shiv Sena had repeatedly expressed concerns over improper disbursal of insurance compensation to farmers. It claimed due to its protest, insurance companies disbursed Rs960 crore to 10 lakh peasants. Under the Pradhan Mantri Fasal Bima Yojana (PMFBY), the farmers pay 2% of the premium amount, while 98% is borne by the government.

So, the ball will be in the court of new government to boost farm growth and income. Mere promises in poll manifestos won’t work, as the action is clearly needed on the fields.

Sanjay Jog

Senior Journalist and Analyst

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