Budget 2016: Modernising rural economy must be Modi's mission

Anshuman Tiwari
Anshuman TiwariFeb 19, 2016 | 08:58

Budget 2016: Modernising rural economy must be Modi's mission

Last fortnight, when Prime Minister Narendra Modi mentioned crop insurance in his Maan ki Baat programme, people well aware of the state of agriculture justifiably grew anxious. This was not because government's efforts do not inspire or encourage, but because in spite of three crop failures, Indian politicians are still handling farming with a mindset of disaster management, not of reform.


The crisis in agriculture had deepened well before the government set the tone for a new crop insurance scheme. Rural distress had knocked the door of the government last year. Remember failure of kharif and rabi crops and fresh round of farmers' suicide, including the one at in last April, right under the nose of government at the capital's Jantar Mantar. However, marred by incrementalism, the government kept on waiting for the rural economy to sink deeper. Crop insurance initiatives are fine, but if the challenges of farming are to get priority, something else needs to be done. Crop insurance is needed, and the new scheme is better than earlier experiments, but in India the economics of crop insurance, complexities of schemes and past experiences regarding them are far from reassuring.

Lessons learned over the last six decades of agricultural activities show that instead of opening multiple fronts, merely one or two time-bound mega initiatives would suffice for revival of farming. If the upcoming budget is going to be sensitive to agriculture, it needs to put the creation of irrigation capabilities into mission mode. With only 35 per cent irrigated land and two-thirds of agriculture solely dependent on rain, the farm sector is not even capable of feeding the farmers, leave alone the export and markets.


Going by 12th Plan documents, as many as 337 irrigation projects have been suspended. This includes 154 large, 148 medium and 35 extension and modernisation projects. By creating the National Irrigation Fund (proposed in the 12th Plan) in the budget, or by devising a comprehensive irrigation and construction programme, the central government can get the projects completed in a time-bound manner. By connecting MNREGA to building of irrigation facilities, rural employment targets can also be met. Irrigation is the only area left with the scope of large-scale constructions. This can propel the demand for steel, cement, technology and finally enhance employment.

The next priority of the government should be the creation of a domestic free market for agricultural produce and that too in the mission mode. Let alone the non-BJP governments, even BJP governments did not pay heed to Modi government's call for abolishing agri-products marketing act.

A seamless and free domestic market of agro-products is the vital solution to farming woes. Without such market, our agriculture will continue to fail in scoring any benefits from the burgeoning markets of 125 crore consumers. According to data from the ministry of trade, India's food and grocery trade is the world's sixth largest. Growing at a rate of 104 per cent, it is likely to reach $482 billion by 2020. This market has enough demand for India's beleaguered farming sector.


Farmer producer companies, made by combining small landholdings, are finding solutions to the woes of small farmers. According to government statistics released in 2014, about 235 farmer producer companies have been registered. Nearly 4.33 lakh farmers will be a part of it. Likewise, the record output of grains and oil seeds in Bihar and Madhya Pradesh, a milk revolution in Uttar Pradesh, establishment of new records in the production of fruits and vegetables in several areas of the country and minor irrigation in Gujarat are regional successes worth noting.

These successes need a countrywide free market for their produce. There can be no better opportunity for changing market laws and making a common national agri-market in India. The ruling coalition at the Centre also happens to rule in 12 states. If a dozen states change their market laws, it will not be difficult to persuade others to change them.

The new generation of farmers is well aware of the fact that feeding 125 crore people cannot be a loss-making enterprise. By increasing production, income and diversity over the last one decade, the country's farmers have reflected their approach to modernity. Agriculture is harmed not by a lack of industriousness of farmers, or low demand, but by limited policy reforms.

Due to climatic reasons, agriculture is going through its worst phase in the last two decades. However, previous good days indicate Indian agriculture is ready to transform itself. To overcome the current crisis, the government may opt for old tricks of subsidy and loan waiver or it may resort to superficial initiatives like soil health card and crop insurance. Alternatively, agriculture can be taken out of the perpetual disaster-prone status by launching big reforms like irrigation in mission mode and common national market for farm produce. The modernisation of the rural economy should be the greatest mission of the Modi government. And, the Budget 2016 is standing closest to the launch of it.

Last updated: February 19, 2016 | 09:07
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