Agricultural Sector and Marketing Reforms – eNAM, Model APMC Act, Eco Survey Reco, etc.

A high growth plan for Indian agriculture

Note4Students

From UPSC perspective, the following things are important :

Prelims level : AMFFRI

Mains level : Paper 3- Diversified strategies for agriculture growth

The article deals with the issue discussed in the recently published book ‘Revitalising Indian Agriculture and Boosting Farmer Incomes’. It suggests strategies for six Indian states and underlies the importance of the diversified approach to different states.

Why agriculture is central to Indian economy

  • Agriculture engages close to 42 per cent of the country’s workforce.
  • With its close interlinkage with poverty, it is best positioned to alleviate problems of malnutrition and hunger.
  • In addition, agriculture supplies inputs for other industries.
  • It is critical for triggering a multiplier effect in the economy, where a financially empowered farming community triggers a demand-led growth, particularly for manufactured products and services.
  • There is no doubt that the sector needs to grow not just for those employed in it but also for the economy as a whole.

Growth strategy needs to take into account diversity across the states

  • The growth process of agriculture should not just more efficient, and inclusive of India’s small and marginal but is also sustainable — both financially and environmentally.
  • But then comes the question of the diversity in Indian states, where they differ as much on factors of production like land and water as they do on access to market opportunities.
  • They even differ in their vulnerabilities to climate and weather changes.
  • This begs the question, should the roadmap not be customised to the needs, vulnerabilities, and resource-base of each state?

Strategies for six states

  • The recently published book “Revitalising Indian Agriculture and Boosting Farmer Incomes” proposes strategies for six Indian states: Punjab, Madhya Pradesh, Gujarat, Uttar Pradesh, Bihar and Odisha.
  • In the six states, three factors explained most of the agrarian growth.
  • One, access to infrastructure — mainly irrigation and roads.
  • Two, diversification to high value agricultural products like fruits, vegetables, and allied activities like dairy and poultry.
  • Three, price incentives or favourable terms of trade.
  • Bringing markets closer to farmers and increasing the efficiency of the value-chains emerged as an important factor that explained agricultural growth in Gujarat, Madhya Pradesh, Odisha, and Bihar.
  • By ensuring timely access to sufficient irrigation, states like Gujarat and Punjab could explain their high performances.
  • Role of uninterrupted quality power too emerged important in this.
  • Diversification of the agricultural basket of a state was found to strengthen a state’s agri-performance.

Relation between growth rate and policy reforms

  • The requirement to undertake policy reforms, mainly related to marketing, emerged as a key driver and predictor of growth.
  • The NITI Aayog’s Agricultural Markets and Farmer Friendly Reforms Index — AMFFRI evaluates Indian states on the extent to which each of them undertook required agri-reforms.
  • A low AMFFRI rank implies the state is undertaking desired reforms.
  • It was found that states that undertook reforms, and were thus ranked low on AMFFRI, witnessed a relatively faster agri-GDP growth rate.
  • States which did not undertake required reforms, and thus were ranked high on the AMFFRI witnessed relatively lower agri-GDP growth rates.
  • There were some exceptions: Karnataka, Haryana and Maharashtra.
  • These states undertook reforms, and thus had low AMFFRI ranks, but they witnessed a low agri-GDP growth rate.
  • This is likely to be attributed to the delayed effect of reforms on the agri-performance.

Way forward

  • As a part of the roadmap, the book makes a case for states to move beyond production-centric approach to a value-chain approach with FPOs at its centre.
  • It highlights importance and requirement of growing public investments in basic infrastructure.
  • And finally, in the longer run, rationalising subsidies via direct income transfer is suggested.

Consider the question “Despite its comparatively lower contribution to the GDP, agriculture plays a central role in the Indian economy. What are the factors that make agriculture central to the economy? Suggest the pathway to fuel the growth of the sector.”

Conclusion

If the government follows this path of investing in infrastructure, ensuring a more diversified agriculture and linking small-holder FPOs with markets, it will pay rich dividends not only to the farming community but also the entire economy.

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