The government is poised to put out a comprehensive new agriculture policy that will push for a diversification away from foodgrain, at the same time ensuring against any shortfall in production levels by stepping up productivity.
As an incentive to step up investments in this sector, the government will also offer matching funds to states for any additional spending that they are willing to undertake.
The moves come as Indian agriculture, which has stagnated for the last five years, is now threatening to slip into a decline.
To enlist the support of state governments and ensure their participation, the Centre has convened a meeting of the National Development Council (NDC) on Tuesday.
Headed by Prime Minister Manmohan Singh, NDC is a high-level forum comprising cabinet ministers, all state chief ministers and Montek Singh Ahluwalia, deputy chairman of the Planning Commission.
This is the first time since the United Progressive Alliance (UPA) government took charge that an NDC is being convened, specifically on agriculture. Earlier in the month, the PM held a full Planning Commission meeting and discussed several reports prepared by NDC subcommittee working groups as also by other experts.
At its core, the policy is seeking to set aside stop gap measures and, instead concentrate on long-term solutions that will push agricultural productivity across the board.
It will, among other things, require state governments to not only maintain investment levels in agriculture at existing levels, but also come up with a decentralized strategy that will extend it to each of their districts. Foodgrain production has actually shown a decline in the last five years. Output has dropped from 212.9 million tonnes (mt) in 2001-02 to 209.17mt in 2006-07. At the same time, the growth in yields is now less than half of what was witnessed in the 1980s.
Ahluwalia, for one, says he believes that by transferring knowledge gathered at research centres to farmers, yields can be doubled in many areas. Some economists, however, harbour differing views.
“We are getting obsessed by this notion of food security. The government fails to understand that per capita consumption of foodgrain has come down in the last 20 years and will further come down in the coming 10 years,” says Ashok Gulati, director, International Food Policy Research Institute.
Gulati also says that the projected rate of growth of demand for foodgrain should be in the range 1.6-1.7% and not 2.2-2.3% as the government envisages. “Then we can always import,” he says. “Why so much of fuss on government’s announcement of importing 5mt of wheat?” he asks.
According to S. Raghuraman, head of trade research at Agriwatch, importing foodgrain should be an option. “Wheat from Pakistan has actually proved viable as its landed cost works out to around Rs1,050 per quintal at Indian ports, whereas Punjab wheat at Rs850 per quintal-plus local levies, expenses and transportation cost will work out to not less than Rs1,100 per quintal,” he points out.
Critics also feel that raising the minimum support price (MSP) as an effective tool for achieving food security is not working. As of 18 May, total wheat procurement was only 10.5mt despite the MSP on wheat having gone up by Rs150 per quintal to Rs850.
“With the peak season almost over, the procurement should have been upwards of 13mt. At this rate, inflationary tendencies will fuel by November-December,” says Raghuraman.
The NDC meeting is also expected to take up a Planning Commission proposal on irrigation under which it had suggested reviving abandoned canals, besides emphasizing rainwater management and getting states to work under the guidance of the National Rainfed Area Authority.
However, one agricultural expert who didn’t want to be quoted questions this strategy. “Recommendations were made two years back and work is starting only now, it will take another two years before we can see some results,” he says.
Gulati believes that the government has laid too much emphasis developing major and medium projects, which mostly facilitate rice and sugar cane. Instead, he argues that it should divert its attention to states such as Madhya Pradesh, Bihar, Chhattisgarh, Orissa and West Bengal, where water is available.
“While these states only produce two tonnes of foodgrain per hectare, in Punjab, Haryana and western UP, the yield is already four-five tonnes per hectare; given the technological frontier they can go up by two-three tonnes per hectare,” says Gulati.
Agricultural experts also differ on the proposal to be put up before NDC that will encourage public-private-partnership through contract farming in areas such as logistics, food processing and marketing.
To do so, they say, the government needs to amend the Essential Commodities Act, Agriculture Produce Marketing Committee legislation and also, land leasing norms.