ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Reforming Indian Agriculture

Reforms in four areas should be the priority if the current government’s agenda of doubling farmer incomes is to be accomplished in the coming years. First, the focus of agricultural policies must shift from production per se to farmers’ livelihoods. Second, policies to improve the allocation and efficiency of land and water are essential if these critical resources are to be conserved. Third, reforms are needed to help farmers cope with the growing risks of weather and price volatility. Fourth, agricultural markets must be opened to greater competition and provided with better infrastructure if farmers are to realise better returns for produce, without trading off the low-income consumers’ nutritional security.

A longer version of this paper has been published as a Center for the Advanced Study of India (CASI) Working Paper, jointly produced by CASI and the Indian Council for Research on International Economic Relations (ICRIER).

India’s agriculture policies have had multiple mandates, including a production imperative (national food security), a consumer imperative (keeping food prices low for a large low-income population), and a farmer welfare imperative (large input subsidies and now income support through Praddhan Mantri Kisan Samman Nidhi [PM-Kisan]). The tensions between these mandates have resulted in costly, contradictory policies whose costs have been increasingly borne by farmers, the government purse, and the natural environment. The current government’s agenda of doubling farmer incomes by raising productivity and cutting down costs, and going for diversification towards high value agriculture, is potentially a welcome departure in this context and we are guided by this shift. But given the many challenges facing the current government, why should agriculture and food be a top priority? First, more Indians depend directly or indirectly on agriculture for employment than on any other sector, with 80% of India’s extremely poor people living in rural areas and most of them being marginal farmers, farm labourers (GoI 2013). Second, agriculture holds a key to reducing India’s double burden of under- and over-nutrition, directly affecting public health and worker productivity. Third, agriculture has the potential to spur, rather than be a drag on India’s overall gross domestic product (GDP) growth. Agricultural growth of 4% and more is achievable with the right reforms and would add at least a percentage point to GDP, increase exports and improve India’s trade deficit. Fourth, India’s vital land and water resources, which farmers used for agricultural production, must be utilised more sustainably, especially in the face of mounting scarcity, environmental degradation, and climate change.

Finally, history tells us that economic transformation in developing nations is propelled by increases in agricultural incomes underpinning industrial growth. The latest example being China (Gulati and Fan 2007). Raising farm productivity is critical for long-term increase in farmer incomes in India, as land fragmentation means that many Indian farmers are farming plots of such small sizes (especially those below 1 hectare) that even doubling their incomes would leave them with meagre earnings.

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Updated On : 15th Jan, 2021
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