It is often believed that the fate of the Prime Minister is decided by the mood in rural Bharat. The Narendra Modi-led NDA rode to power by creating a hope of doubling farmers' income by 2022 and provide 1.5 times profitability for the crop yields. Towards the end of the first term, the government focused more on short-term measures to alleviate rural distress. The government faced the heat of farmers' agitations in various states due to lower prices for their yield. Surplus agricultural produce during the first tenure and the government's measures on the inflation front contained the agri-commodity prices.
But, the Union Budget presented by the country's first full-time woman finance minister Nirmala Sitharaman has disappointed the farm sector. Despite the stress on 'Grameen Bharat' in the Union Budget speech with the slogan of 'Gaon, Garib aur Kisan’, the Budget was disappointing with no major policy breakthrough. The government missed the opportunity to come out with bold steps to alleviate the farm sector. Although agriculture is a state subject and structural reforms need to be made at the state level, some serious support from the central government can push the states by providing financial assistance or at least laying proper roadmap for the same.
In the Union Budget, the Centre leaned towards promoting Zero Budget farming using eco-friendly fertilizers and pesticides. Since it is at an experimental stage with acceptance at lower levels, it may take time to practically witness its outcome.
If we go by the current monsoon developments, the Southwest Monsoon which accounts for three fourth of India’s annual rainfall was disappointing. According to IMD data, there's already a 21% rainfall deficit that led to a decline in Kharif crops. Though the government has initiated some measures to assist the drought-prone areas with financial assistance through the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), Soil Health Card scheme and Pradhan Mantri Fasal Bima Yojana (PMFBY), the crisis still seems to be unresolved. In the Union Budget, the government announced to fix the minimum support prices above 50% of the farm production cost. These measures are good only on paper unless implemented effectively.
Some major schemes were announced by the Centre for the welfare of the farmers, including direct income support of Rs 6,000 annually. Along with this, some state-level programmes will help. But the major challenge will be improving farm output prices which will be possible only if we focus on creating online platforms for farm trade with transparent pricing followed by a quicker movement of the goods.
The yield of crops (the amount produced per unit of farmland) is lower than the world average. If we talk about the overall workforce, as per NITI Aayog, close to 49% of them rely on agriculture which constitutes around 15% of the GDP. Lack of proper mechanism to supply quality seeds, knowledge deficiency in the adoption of better technologies and lack of water resource management practices are major challenges to the farming sector.
If we have to grow at 7-8% per annum in terms of the GDP, there is an urgent need to shift our workforce from agriculture to manufacturing and services. World economies are investing heavily in the manufacturing and automation sectors. India should also shift its gear. To become a $5tn economy, the government should press the reforms button, accelerate investments in the farm sector and focus on 'Grameen Bharat' as it lays the foundation for much-needed growth by contributing a major portion to the GDP and employment. (The author is CEO Stock Broking, Karvy)