The current agrarian crisis in India is giving the NDA government at the Centre sleepless nights. Prime Minister Narendra Modi reportedly held a series of meetings with senior government officials last week to address the problem of dwindling agricultural output and rising prices of essential food items. According to various news reports, the latest concern coming out of the farm sector is the fear that India could in the near future become a net importer of essential commodities for the first time in many years. A growing population, consecutive drought years, falling commodity prices and a criminal lack of long-term investment in agriculture could seriously undermine India’s self-sufficiency when it comes to food items. Such shortfalls in farm output have opened the floodgates of foreign suppliers. Last month, according to a news story by Reuters, India made its first purchase of corn in 16 years. The country has also stepped up its purchase of lentils and oil meals, while traders fear that wheat and sugar stocks are depleting fast. One can pin the sorry state of Indian agriculture on the complete neglect by the government. If governments cannot come up with requisite solutions soon, India could end up as a serious importer of food items. The purchase of corn and lentils is just the beginning. The shortfall in agricultural production could also have a negative impact on overall economic growth. In the first half of the current fiscal, growth in agriculture fell from 2.4 percent a year earlier to 2 percent. Experts have argued that if India wants to see a GDP growth rate of 7.5 percent, the agriculture sector must grow above 3 percent. This is not to suggest that the government has not tried to address the current agrarian crisis. In a recent interview with a news channel, Union Finance Minister Arun Jaitley had unequivocally said the government needs to spend more on irrigation. In a country, where agriculture employs more than 60 percent of its population, it is shocking that less than 40 percent of the land is reliably irrigated.
The July-September monsoon accounts for about 80 percent of India’s total rainfall and affects both summer and winter sowing. In response, the Centre has decided to raise approximately Rs 86,000 crore by way of overseas loans to fund irrigation projects in India. The amount raised aims to add 1.3 crore hectares of irrigated farmland. The Indian government may reportedly approach the World Bank, Asian Development Bank and state-owned foreign banks for loans. On the forefront of the Centre’s borrowing programme is the government-run National Bank for Agriculture and Rural Development. In addition to this borrowing programme, the government has also announced a new crop insurance scheme, which seeks to address the growing distress in the countryside due to poor harvests. However, according to Ashok Gulati, a leading expert on Indian agriculture, “The bottom line is that crop damage assessment must be done within, at most, two weeks of the extreme weather event, and compensation to farmers deposited directly into their accounts within a week of the assessment — without their asking or even realising it. This would be the litmus test for the success of this (crop insurance) scheme and the perfect Lohri/ Bihu/ Pongal gift to farmers. Only then will the risks of farming be reduced, incentives for private investments in agriculture increased, and agricultural growth and farmers’ prosperity revived.” He goes on to argue that many details of the crop insurance scheme remain. For the time being, the government has decided to import more food grain to offset spiraling food prices. However, a lot more needs to be done. One hopes that the Centre continues to increase the coverage under a worthwhile crop insurance scheme and find quick solutions to expand the area under irrigation.