Rejuvenating Agriculture in India : Addressing twin concerns of Food Security & Financial Inclusion !
With 60% of Indian families still depending on agriculture income for livelihood, India today is largest producer of milk, pulses, and spices, maintains the largest cattle herd, have the largest area under wheat, rice and cotton. Despite the increased production, hunger and malnutrition levels are extremely high and much wider spread that we assume and think.
Although the agriculture growth rate and per unit productivity remains a big challenge and big area of concern, India can emerge as “Agricultural Power”. Agribusiness can empower India emerge as “Global Agricultural Super Power”.
With mounting pressure of a growing population, the change in food consumption patterns, the need for higher productivity per unit of input, demand of value added products, ensuring the educated youth could be retained in agriculture and above all the need to ensure food security of the country, Agriculture is now being seen as next big opportunity by the entrepreneurs, corporate houses, banks and financial institutions.
We need to recognize that Agriculture development to a large extent may address the “two most critical areas” which are currently drawing the maximum attention from Government, Regulators, Financial institutions and Corporates i.e., “Food security” and “Financial Inclusion”. These twin areas are closely “intertwined” and eject India into the “next phase of economic growth” which we all aspire for, that which will be which lot more participative, broad based & inclusive and has the fuel to become real engine which can propel country into next stage of growth trajectory.
While “Food security” of the country can be only ensured by pushing the “Agriculture growth”, the “Financial Inclusion” in India can truly be delivered through a framework which has “Small and Marginal Farmers” at its heart.
I am trying to outline broad “Five areas” of work and attention which the new Government may address to give the much required boost to “Indian Agriculture” and “inclusive growth”. We have mostly 10 point programs. Let’s have a 5 point program. Implementation is the Key.
- Remove the multiplicity of Agriculture policy framework
In general the country is suffering from multiplicity of policies and frameworks which have not been able to address the target segment in a very focused manner and have failed yield the desired results. The same is more true for Agriculture. It is time we review the multiple policies on Farmers, Agriculture, , Horticulture, Medicinal plants, Processing, Irrigation, Live Stock , Milk, Fisheries, Agriculture extension etc. Many of the policies and departments have no synergy and sometimes they end up working for cross purpose.
The country needs “Comprehensive Agriculture Framework with Unified market Approach” which include agriculture and financial inclusion policies need to focus on attaining economic well-being of the bulk of farming community, retaining educated youth in agriculture and rejuvenating the Indian agriculture. This would automatically help create multiple livelihood opportunities through crop livestock integrated farming systems, agro processing and allied businesses. The need for unified markets with relaxed controls shall help the producer and processor and the buyer discover the right price.
There is imminent need address inefficiencies, realign the policies and even dovetail the various policies aspiring to achieve “Agriculture and Inclusive growth” for our country especially the small & marginal farmers, agri-wage earners, tenant farmers?
A comprehensive Framework encompassing all aspects of Agriculture may surely be a step forward to achieve “true & lasting financial inclusion” and may contribute to creation sustainable food and nutritional security for the country.
- Set up Robust “ Minor and Micro Irrigation” Framework for country
India has population as much as 15% of the world’s population but has only about 4% of the world’s fresh water resources. In country such as India, 64% of cultivated land is dependent on monsoons. The economic significance of irrigation is to reduce over dependence on monsoons, advanced agricultural productivity, bringing more land under cultivation, reducing instability in output levels, control of floods and prevention of droughts.
Water scenario has got deteriorated due result of increasing population, rising demand for irrigation in India to raise high-yielding varieties of crops, rapid urbanization and industrialization, electricity generation, impact of global warming and erratic rainfall. The focus needs to be on completion projects, reviewing the utilization of resources and initiating strategic actions for efficient management of water resources.
Over the years, there has been a manifested lack of attention to water legislation, water conservation, water use efficiency, water harvesting and recycling and infrastructure. There number of incomplete projects accompanied by low utilization of irrigation potential already created shows that return on capital invested in creating irrigation facilities is inordinately delayed or almost lost. The open irrigation needs to be replaced by piped and micro-irrigation network.
Given the high level of groundwater over exploitation there is an imminent need to draw animplementable road map for curb over exploitation of ground water and implementation micro-irrigation.
- Key is capital formation in agriculture and Productivity
While the country is steadily emerging as a global agricultural hub, we still need to address serious issues and concerns on slow agriculture growth rate, lack of capital formation in agriculture, fragmented agriculture landholding, inadequate irrigation facilities, over exploitation of ground water and poor productivity per unit land. This would lot of long term investment in agribusiness (especially private sector), innovations in agriculture sciences, better agri- inputs, better technology, focus on natural resources conservation and create a robust framework for modernization of agriculture.
Agriculture credit is the most critical non-land input for development of Agriculture. Credit Flow Policies to agriculture need to be more focussed in ploughing in capital investment in agriculture rather than just ensuring continuity of agriculture. This can be enabled by addressing the capital needs from Farm to Firm, Pre-harvest credit to Post harvest Management, Infusing capital for medium to long term agriculture infrastructure. Currently the credit flow mainly focuses on short term crop loans.
- Enable Agri-Value chains and shift from “Agriculture” to “Agribusiness”
India’s food security will depend on increased crop productivity, higher milk yield, increase its production of grains, fruits and vegetables, reduction in food wastage, managing land and water resources optimally & developing a robust Agri-marketing Infrastructure and Agri-logistics infrastructure and enabling policies for capital investment in this sector.
Basically the need is to develop value chains in Agriculture like the Dairy Value Chain which is fairly well developed. The 3F approach of connecting [ Farm to Firm to Fork ] would be ideal but much of the gap remains between [Farm to Firm] .
For Corporate houses, banks and financial institutions, it calls for designing innovative schemes, develop new products, developing institutional framework and understanding and developing the various Agri-value chains, devising appropriate framework, besides investment in technology and upgrading skills and above all attract youth in agriculture.
This is also critical to meet the demand of a growing population, to provide optimal nutrition to a large segment of society and to become a global food hub.
- Financial Inclusion Policy with Small, Marginal & Tenant farmers at its “Heart”
More than 2/3rd of India’s population is dependent on Agriculture and allied agriculture activities. Bulk of our farming community belongs to Small and marginal category who own 83 % operational holdings with 63% of farmers being marginal and having landholding <1ha. Any Financial Inclusion framework which is not aligned to these facts and ignores to genuinely take care of the interests of agriculture and of the small & marginal farmers, may never deliver the real “Inclusion”.
While the flow of credit to agriculture has increased significantly in the recent times at an annual compounded growth rate of about 25% with potential off take of USD 200 bn in FY14-15, the flow to lower segment still remains inadequate. The Financial inclusion and Credit flow framework should encourage entrepreneurs, corporate houses and societies to work with Small, Marginal and Tenant Farmers.
A sound Agri-financial inclusion policy should focus on bringing lasting improvement in the economic condition of the small, marginal and tenant farmers and sharecroppers and wagers.
Policy efforts need should be move away from obligatory approach to enabling business opportunities that generates sustained profits.
Effective implementation of policy initiatives will call for comprehensive reforms and strong public, private and people partnerships in the management of agriculture in India.
Wish all the best to the Shri. Narendra Modi ji & the New Government. Agriculture is 20% planning and 80% Execution. Agriculture needs to be liberated from traditional policy framework for it grow and prosper. It can propel India to next Growth trajectory of 12% Plus and eliminate poverty to more than 75% in next 10 years.