New Delhi: Growth in farm incomes will be aided by a reduction in the number of farmers and value addition of produce, apart from rising growth in agriculture gross domestic product (GDP), according to farm sector expert and NITI Aayog member Ramesh Chand. Edited excerpts from an interview:
India’s agriculture GDP growth rate has averaged 2.5% in the past four years. Is this enough to double farmer incomes by 2022, as promised by the government?
The target was set with 2015-16 as base year. Since then, growth has been close to 4% per year. If growth averages 4% over a period of seven years, it would contribute nearly a third to the desired growth in incomes. Growth in physical production is not the only component. The rest should come from increase in terms of trade for agriculture and better price realisation by farmers via higher minimum support prices (MSPs) and post harvest value addition—that should contribute another third. Broadly speaking, the rest should come from factors like a reduction in number of cultivators, which is already happening, that the same cake is to be shared among fewer people. If past trends intensify, in the next seven years, the number of cultivators is expected to reduce by 10% at least.
This year’s kharif harvest is estimated at a record level. Initial crop arrivals in Madhya Pradesh and Rajasthan show that farmers are selling at prices lower than MSP. Will the recently launched procurement scheme, PM-AASHA help?
Normally, market arrivals will happen in the October to December period. Early crop arrivals in September-end may have high moisture content due to humid conditions. The agriculture ministry has to ensure that state government’s put in place mechanisms required to ensure MSPs—without that, prices will get depressed with higher production.
MSP-based farm support distorts production patterns. Farmers, for instance, planted more water-intensive rice and sugarcane than coarse grains. Do you see a long-term problem there?
Of course, that is the duty of the agriculture prices commission. Otherwise, if MSP is to be fixed at 1.5 times the costs, you don’t require any commission. The role of the Commission for Agricultural Costs and Prices (CACP, which recommends MSP to the government) is now much more challenging. They should have done this balancing... it is in their terms of reference to see that cropping patterns are not distorted. These crops (rice and cane) are water-intensive and draw more on subsidies, and their demand is not rising to the same extent as production. Through rice, we are virtually exporting water.
States like Telangana have started direct income support schemes while other states and the centre are pushing price support schemes. What do you prefer?
I feel ultimately we should move towards income support... that’s the global trend. Price support has many problems like distorting markets, and procurement by public agencies turn out to be very costly and inefficient. The problem with the Telangana model is that it is not linked to anything... like power or fertilisers usage. Income support should come as a substitute of some other subsidy to farmers, and not become a top-up.