Agriculture needs a new paradigm: Economic Survey

New Delhi: Indian agriculture is a victim of past successes—especially the green revolution years— and needs a paradigm shift in policies and priorities for a structural makeover, the Economic Survey released on Friday said.

The way out of declining growth in agriculture—owing to two consecutive drought years—will come through expansion of irrigation coverage via efficient micro-irrigation technologies, cultivation of less water-intensive crops, and a revamp of research and extension services, it added.

There is a deep segmentation of agricultural markets in India and farm incomes will get a boost if this is remedied, the survey said.

For productivity improvement, the survey urged expansion of irrigation cover and adoption of appropriate technologies for efficient utilization of water.

As per the survey, only 34% of the total cropped area in India is irrigated. In addition, there are regional disparities in irrigated farming. “There is need for increasing the coverage of irrigated area across the country to increase productivity in agriculture,” it said.

Meeting the high and growing demand for pulses will require large increases in production on irrigated land, the survey said, but cautioned that this will not occur if policies are focused on cereals and sugarcane.

Calling Indian agriculture “cereal-centric”, the survey said the country needs to grow more pulses as part of a “rainbow revolution” to match changing diets.

Indian farmers will need a favourable minimum support price (MSP) regime for growing less water-intensive crops like pulses and oilseeds, the Economic Survey said.

It added that the reformed MSP regime has to incorporate the social benefits of growing pulses and must be backed by a strong procurement system.

The social returns of pulse production are higher than the private returns as pulses not only use less water and fertilizers but also fix atmospheric nitrogen, the survey said.

“The emphasis on pulses and oilseeds is a welcome step and the government should put in place resources to widen the food basket under the National Food Security Act,” said Himanshu, associate professor of economics at Jawaharlal Nehru University, Delhi.

“This will help improve the availability of pulses and result in better nutritional outcomes. However, more allocation towards this must not be accompanied by cuts in other areas like irrigation or research which also need more funding,” Himanshu added.

Citing numbers from the National Sample Survey, the Economic Survey said that the average annual income of the median farmer net of production costs is less than Rs.20,000 in 17 states.

According to the survey, farmers could be assured of a floor price for their crops—when prices crash—through direct bank transfer of a portion of the difference between market prices and MSP.

However, greater market integration is essential in the form of a national market to ensure higher farm gate prices, according to the Economic Survey. “A lot more needs to be done by the states, including creating better physical infrastructure, improved price dissemination campaigns, and removing laws that force farmers to sell to local monopolies,” the survey observed.

It added: “Nearly seventy years after independence, India is still far from being one nation in agriculture.”

Agricultural research, the Economic Survey said, has been plagued by severe underinvestment and neglect in recent years. While universities are facing a resource crunch and lab-to-land disconnect, extension services in states are weak.

“Given the large externalities (of public research), the centre needs to play a more important role,” the survey said, adding, “India’s current spending on agriculture research is considerably below that of China and as a share of agriculture GDP even less than Bangladesh and Indonesia.”

On using genetically modified (GM) technology, the survey observed that a host of studies have demonstrated significant net benefits of GM crops, with countries like Brazil and China opening up to new GM technologies and aggressively building their own research capacity.

However, it said, there are good reasons for some of the public apprehensions on GM. “The regulatory process in India needs to evolve so as to address the concerns in a way that does not come in the way of adapting high-yielding technologies and rapidly moving towards the world’s agro-technological frontier,” it said.