Make agriculture profitable again

The new government must address the rural crisis through a strategic policy shift to achieve its Viksit Bharat 2047 goal.

Following a gruelling election spread over several weeks and filled with much rancour, a new government is in place in New Delhi. The new government must shift focus to rural India, or Bharat, reeling under crisis. This will ensure India, as a whole, becomes vikasit, or developed. India is undergoing a deep economic crisis caused by near stagnation in the rural economy. Reviving the rural economy should be the top priority of New
Delhi, as Bharat has the largest number of consumers who contribute significantly to the Gross Domestic Product (GDP). 

Food: A grim scenario

India is still reeling from the very severe heat wave that lasted more than two months from April to May and is showing no signs of abating as the anxiously awaited southwest monsoon remains elusive. The May Wholesale Price Index (WPI) inflation spiked to a 15-month high due to rising food prices. The WPI measures the overall changes in producer prices over time, serving as an inflation indicator based on the prices of goods before they reach consumers. Vegetable prices have soared by 30–50 per cent, and a kilogramme of beans costs over Rs 100. A sheep weighing 10 kg cost Rs 25,000 in Hyderabad, around the time of Eid ul Adha. The heatwave in May spurred the inflation rate for vegetables to the highest level in nine months at 32.4 per cent and a six-month high of 5.8 per cent for fruits. Retail inflation has been far above the RBI’s target of 4 per cent for the past several months. 

An escalation in WPI indicates a rise in production costs. Farming is no longer as profitable as it once was; it does not even support farmers’ basic sustenance. Further, various assessments show that those who took up distress-earning activities such as urban migration to work in the construction sector and other daily-wage jobs are returning to the villages, joining the rural agricultural workforce by default. This simply means an already stagnating sector has more people to support, leading to lower earnings and negatively impacting consumption. This explains the sluggish rural consumption expenditure that critically affects overall national private consumption and expenditure. It also explains the rising unemployment and underemployment, which I discussed earlier in this column. This critical issue was not logically addressed by any political party during the two-month-long frenetic election campaign.

Neglecting the farmers

While farmers continue to produce record amounts of crops, ensuring the country’s self-sufficiency in food, their own economic status has effectively dipped. New Delhi’s imagination has not extended beyond the “minimum support price (MSP) syndrome.” Farmers’ grievances include declining returns from farming and the added crisis of erratic weather events that damage crops. Protesting farmers mainly demand two forms of support: policies ensuring fair prices for their produce and insurance against crop losses, primarily arising from weather aberrations. The market is not in favour of farmers, but it can be through government policies aimed at supporting them. Instead, to protect consumers against price rises, the government allows large-scale imports of agricultural produce. This must stop. 

What must New Delhi do?

The Government of India has a plethora of schemes and strategies to assist farmers, such as the price stabilisation fund and crop insurance. Both the central and state governments have over 200 such schemes, but the experience on the ground shows that none of them have effectively reached even 15 per cent of Indian farmers. Hence, New Delhi’s first agenda should be to “repurpose” these “farmer-friendly” schemes into “farmer-enabling” schemes, similar to those in sectors such as manufacturing.

Agriculture as an economic sector has seldom received the strategic nurturing it deserves. Since the Green Revolution, India has witnessed many changes in its economic profile. New economic sectors have emerged in the last five decades, and the manner in which India adopted them to evolve as an emerging economy is an example of the support agriculture needs. Take the case of information technology. Within two decades of its arrival in India, as a new-age economic sector, India put all its might into emerging as an IT global leader. On the other hand, the government’s approach to farmers and farming, which feed all Indians, has not been one of consistent support, except for politically correct schemes and budgets. 

It is clear that the shift to the non-farm sector, such as information technology, is neither fast nor remunerative. There have been recent instances of offloading thousands of workers in the IT sector. This policy has been India’s official pathway to ensure employment and livelihood for the booming workforce. Now that this is not very effective, as thought before, the new government must adopt a new approach: make agriculture profitable again. This has the added benefit of ensuring gainful employment as well as a boom in the rural economy. But it needs a new deal for the farmers, who, like those in the new economic sectors, should be “enabled” to prosper. 

Indian farmers are intelligent, and new knowledge in the agriculture sector should be brought to their attention. Agricultural extension initiatives must be strengthened to keep farmers updated on the latest developments in sustainable agricultural practices, such as innovative soil testing methodologies and microbial farming as an effective alternative to chemical farming. This must form part of the “farmer enabling” exercise in India. 

(The author is a former professor at the Royal Society, Belgium)