If the Government wishes to grow the economy, then it needs to make an all-out effort to turn agriculture into a profitable business

As India plans to become a $5 trillion economy by 2024, it cannot ignore the importance of the farm sector in helping it achieve this target. This is because we are an agriculture-based economy and more than 50 per cent of the population depends on the agri sector for its livelihood. However, the poor state of the rural economy is an area of concern for everyone and is affecting the country’s fiscal health too. The Government would do well to pay attention to some of the predominant problems hampering the growth of this key sector in its pursuit of the $5 trillion dream.

Subsidise inputs: India is a consumption-driven market and not an export-driven one like China and Singapore. As per the report of the National Statistical Office (NSO), half of the country’s population lives in rural India. Hence, it becomes a critical consumption market for the fertiliser industry, seed industry, tractor producing companies, other items essential for farm production and a host of consumer goods. The Government needs to provide farmers essential inputs on subsidised rates, especially for those growers who have holdings that are smaller than five acres. 

Small and marginal farmers’ issues: The Government must focus on the problems plaguing small and marginal farmers. According to a report by the National Bank for Agriculture and Rural Development (NABARD) small and marginal farm holdings generate meagre incomes and result in farmers accruing major debts and then committing suicide due to the inability to pay off those loans. If the Indian economy has to be resurgent, the agriculture sector needs more subsidy and easy agri-credit for small and marginal farmers.

Develop the dairy sector: Dairy farmers can earn as much as 75-85 per cent of the market price by selling the milk produced on their farms to cooperative societies like AMUL and other major milk marketing companies. India also has the largest bovine population in the world. However, the milk production per animal is significantly low as compared to the other major dairy producers of the world. Moreover, nearly all of the dairy produce in India is consumed domestically, with the majority of it being sold as milk. On account of this, the dairy industry holds tremendous potential for value-addition and overall development and the Government must focus on this to better the lot of farmers.

Need to develop vegetable and fruit markets: Indian farmers earn scarcely 10 per cent of the market price for their perishable produces like vegetables and fruits. Since a market is the primary medium for farmers to exchange their produce for money, lack of connectivity to ensure that their harvest reaches buyers in time, results in lowering the farmers’ ability to monetise their produce. The Government needs to plug these gaps and provide farmers a way to get their produce to the markets at the earliest and provide cold storages and freezer trucks, better road and rail connectivity so that the 40 per cent of the produce that is lost now can be saved and this in turn improves the monetary gains of the growers.

Reduce imports: As we all know, agricultural imports cause domestic prices to fall and this directly hurts the farmers. The Government needs to focus on increasing agricultural production in the country and review its policy on bumper production. The Minimum Support Price should be reconsidered for the development of the farm  sector as farmers are producers and their interests must also be protected by policymakers, just like that of any citizen of the country.

Need for more agri-NBFCs: Adequate availability of finance is a prerequisite for the growth of any sector and the farm sector is no exception to this rule. However, the difficulties faced by growers in accessing loans when they need them the most have hampered the growth of the sector. Many farmers are either left un-served or underserved due to the lack of timely access to institutional finance via agri-loans. Without access to credit, most farmers with small holdings are restricted to farming, trading, processing practices that result in low levels of productivity. Although various financial institutions have come up and have set shops in rural India, the majority of agri stakeholders still have limited or no access to them. For the inclusive development of agriculture sector, financing is an important element and the Government must focus on developing this on a war footing.

Irrigation facilities: Farmers suffer due to floods in one part of the nation and drought in another area. The Government needs to focus on water management through river linkages and also provide subsidy for water conservation in rural areas for agrarian purposes.

If the Government wishes to stem the crisis plaguing the farm sector and grow the economy, then it needs to make an all-out effort to turn agriculture into a profitable business and make major policy decisions to achieve that goal.

(The writer is Associate Professor of Economics, Faculty of Business Management at the Marwadi University, Rajkot)