Content

1. Separating the wheat from the agri-policy chaff
2. Straws in the wind in South Block

Editorial: Separating the wheat from the agri-policy chaff

Context:

• In the on-going debates around the three new pieces of agricultural legislation and the farmers’ demand for continuation of minimum support prices (MSP), questions have often been raised whether the government should be using the taxpayers’ money to provide subsidies to the farming community in this country.

Relevance:

• GS Paper 3:  Farm subsidies and MSP and issues therein (direct and indirect); PDS (objectives, functioning, limitations, revamping, issues of buffer stocks & food security)

Mains Questions:

1. In the farm laws debate, the focus should be on the exchequer-farm subsidies issue and the spending on farm subsidies. Discuss. 15 Marks
2. Diversification of agricultural livelihoods through agri-allied sectors such as animal husbandry, forestry and fisheries has enhanced livelihood opportunities, strengthened resilience and led to considerable increase in labour force participation in the sector. Discuss 15 Marks

Dimensions of the Article:

• Status of Agriculture in India
• Factors affecting agricultural productivity
• Measures to improve the productivity
• Way Forward

Status of Agriculture in India.

• In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on the sector was close to 70%.
• Seven decades later, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
• The agriculture sector employs nearly half of the workforce in the country. However, it contributes to 17.5% of the GDP (at current prices in 2015-16).
• Over the past few decades, the manufacturing and services sectors have increasingly contributed to the growth of the economy, while the agriculture sector’s contribution has decreased from more than 50% of GDP in the 1950s to 15.4% in 2015-16 (at constant prices).
• India’s production of food grains has been increasing every year, and India is among the top producers of several crops such as wheat, rice, pulses, sugarcane and cotton.
• It is the highest producer of milk and second highest producer of fruits and vegetables.  In 2013, India contributed 25% to the world’s pulses production, the highest for any one country, 22% to the rice production and 13% to the wheat production. 
• It also accounted for about 25% of the total quantity of cotton produced, besides being the second highest exporter of cotton for the past several years. 

However, The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.

• Agriculture has been facing adverse terms of trade over extended periods since the 1980s, and even during the phases when the terms of trade have moved in its favour, for instance in the 1990s and again since 2012-13, there was no distinct upward trend.
• A more telling commentary in this regard is that since the middle of the 2000s, farming communities have almost consistently faced adverse terms of trade vis-à-vis non-farmers.
• The share of this sector in the total investment undertaken in the country consistently fell from about 18% in the 1950s to just above 11% in the 1980s. In the subsequent decades, the situation has got far worse with agriculture’s share not even reaching double digits.
• The agricultural yield (quantity of a crop produced per unit of land) is found to be lower in the case of most crops, as compared to other top producing countries such as China, Brazil and the United States.
• Although India is the second highest producer of paddy (rice) in the world (as of 2013), its yield is lower than China, Brazil and the USA.  It is also the leading producer of pulses, but its yield is the lowest.
• India’s productivity has also grown at a slower rate as compared to others.  For instance, while Brazil’s yield for rice increased from 1.3 tonne/ha in 1981 to 4.9 tonne/ha in 2011, India’s increased from 2.0 to 3.6.  China’s productivity in rice also grew from 4.3 to 6.7 in this period.

Factors affecting agriculture productivity:

Productivity measures the quantity of output produced with a given quantity of inputs. Long term productivity growth reflects improvements in farmers’ production efficiency and technological progress. In India agriculture productivity is very poor due to following reasons:

• Increase in small land holdings: 140 million hectare of land is used as agricultural area, as of 2012-13. Over the years, this area has been fragmented into smaller pieces of land. The number of marginal land holdings (less than one hectare) increased from 36 million in 1971 to 93 million in 2011. Marginal and small land holdings face a number of issues, such as problems with using mechanisation and irrigation techniques.
  • Since smaller land holdings are either fragments of larger holdings which have been passed on within the family or have been informally leased by a large holder, farmers who cultivate these holdings often do not have a formal lease agreement.
  • The absence of such land records does not allow these farmers to access formal credit or be eligible for government benefits such input subsidies or crop insurance schemes.
• Land records and informal leasing: Of the total agricultural area under operation, 10% of land has been given out on agricultural leases, with the percentage of leased out land varying across states. 34% of the land in Andhra Pradesh, 25% in Punjab, 21% in Bihar and 18% in Sikkim has been leased out.  In the past, states such as Karnataka and West Bengal have attempted to provide legal rights to tenant farmers by forming electronic records of land holdings and giving tenant farmers the right to their produce.
• Access to agricultural credit and insurance: Access to agricultural credit is linked to the holding of land titles.  As a result, small and marginal farmers, who account for more than half of the total land holdings, and may not hold formal land titles, are unable to access institutionalized credit. Farmers may require credit for short term uses such as purchasing inputs, weeding, harvesting, sorting and transporting, or long term uses such as investing in agricultural machinery and equipment, or irrigation. 
  • Farmers with land holdings of less than a hectare primarily borrow from informal sources of credit such as moneylenders (41%), whereas those with land holdings of two or more hectares primarily borrow from banks (50% or more). 
  • Other major sources of agricultural credit include shopkeepers, relatives or friends, and co-operative societies. 
  • Key issues relating to agricultural credit are lack of access to formal credit owing to unclear land records, skewed ratio between short term and long term agricultural credit, and inadequate access to crop insurance.
• Short term and long term credit: Short term credit is generally taken for pre-harvest and post-harvest activities such as weeding, harvesting, sorting and transporting.  Long term credit is generally taken in order to invest in agricultural machinery and equipment, irrigation and other developmental activities, etc. 
  • Over the past few decades, the trend of short term and long term agricultural credit in the country has reversed. 
  • In 1990-91, a majority of crop loans taken was long term credit, whereas short term credit accounted for only about a quarter of all agricultural loans.
  • As of 2011-12, 61% of crop credit was short term, whereas long term credit had a share of 39%.
  • In addition, small and marginal farmers, who account for about 86% of total land holdings, take more short term loans than farmers with medium or large land holdings. 
  • This group of farmers also has the highest share of borrowings from informal sources of credit such as moneylenders, family and friends.
• Inadequate access to crop insurance: As of 2011, about 10% of Indian farmers were covered under a crop insurance scheme.[28]  Some persistent issues with the crop insurance system include:
  • Unawareness about insurance schemes,
  • Inadequate coverage of insurance schemes,
  • Assessment of the extent of damages in case of crop losses,
  • Timely settlement of claims.
• Availability of water: Currently, about 51% of the agricultural area cultivating food grains is covered by irrigation. The rest of the area is dependent on rainfall (rain-fed agriculture).  Sources of irrigation include ground water (wells, tube-wells) and surface water (canals, tanks).
  • There is a need to improve the efficiency of water use, especially in agriculture.  Irrigation currently consumes about 84% of the total available water in the country.
  • Nearly 65% of the irrigated land holdings use ground water sources such as tube wells and wells for irrigation.
  • The Economic Survey 2015-16 observed that India largely uses the technique of flood irrigation, where water is allowed flow in the field and seep into the soil. This results in the wastage of water since excess water seeps into the soil or flows off the surface without being utilised.
• Quality of soil: Soil is one of the most important factors in the productivity of agriculture.  Indian soil consists of primary nutrients such as nitrogen, phosphorous and potassium, secondary nutrients such as sulphur, calcium and magnesium, and micro-nutrients such as zinc, iron, and manganese.
  • While the levels of food production have increased over the past few decades, it has also led to issues such as an imbalance of nutrients in the soil, decline in the water table as well as the quality of water, and overall depletion of soil health. 
  • The Ministry of Agriculture has noted that the quality of Indian soil is deteriorating. About 5.3 billion tonnes of soil gets eroded annually, at a rate of about 16.4 tonne/hectare.
• Imbalance in use of fertilizers: The manufacture, sale, and distribution of fertilizers in the country is regulated by the Ministry of Chemicals and Fertilizers, under the Essential Commodities Act, 1955. 
  • There are three major types of nutrients used as fertilizers: Nitrogen (N), Phosphatic (P), and Potassic (K).  Of these, the pricing of urea (containing N fertilizer) is controlled by the government, while P and K fertilizers were decontrolled in 1992, on the recommendation of a Joint Parliamentary Committee. 
  • It has been observed that urea is used more than other fertilizers.  While the recommended ratio of use of the NPK fertilizers is 4:2:1, this ratio in India is currently at 6.7:2.4:1. Overuse of urea is especially observed in the states of Punjab, Haryana and Uttar Pradesh.
  • An imbalanced use of urea may lead to a loss of fertility in the soil over a period of time, affecting productivity.  Urea (N) is the most produced (86%), consumed (74%) and imported (52%) fertilizer in the country.[49]  The government determines the quantity of fertilizers to be imported based on their domestic availability.
• Fertilizer Subsidy: Currently the amount of subsidy to be given is determined based on the cost of production of the fertilizer company.49  Companies with a higher cost of production receive greater subsidies.  This reduces the companies’ incentive to reduce their cost of production.  Although the consumption of urea has been increasing over the past decade, no new domestic production capacity has been added in the past 15 years.
• Use of pesticides: The Economic Survey 2015-16 noted that the use of pesticides without proper guidelines has led to an increase in pesticide residue being found in food products in India.
• Access the quality seeds:  The private sector has also started playing a role in supplying some seeds such as hybrid maize, bajra, cotton and sunflower.  Some of the challenges identified in the development and distribution of quality seeds are
  • Access to quality seeds,
  • Inadequate research support.
• Agricultural machinery: Mechanization is another aspect with a significant impact on agricultural productivity.  The use of agricultural machinery in agriculture enables agricultural labour to be used in other activities. 
  • It makes activities such as tilling, spreading of seeds and fertilizers and harvesting more efficient, so that the cost of inputs is offset. 
  • It can also make the use of labour in agriculture more cost-effective.
  • The status of mechanisation in agriculture varies for different activities, although the overall level of mechanisation is still less than 50%, as compared to 90% in developed countries.
  • The highest level of mechanisation (60%-70%) is observed in harvesting and threshing activities and irrigation (37%).
• Post-Harvest Activities: Food wastage occurs at all levels of farming- the farmer, transporter, wholesaler and retailer. 
  • Some of the reasons for this wastage are crop damage, improper harvesting techniques, poor packaging and transportation, and poor storage.
  • Some of the issues with the state of storage facilities in the country are inadequate capacity and poor conditions of storage.
  • In cases where the storage capacity is found to be sufficient, the conditions of the godown are unfit, either because of the damp condition of the storage or because of its remote location. 

Measures to improve the productivity:

• The NITI Aayog has proposed a Model Land Leasing Law to provide for the legalisation of land leasing.21  This would ensure that land owners have the security of ownership rights, and land tenants are secure in their tenancy.  Legalisation of land tenancy would also ensure that farmers get access to formal credit, insurance, and inputs such as fertilizers. 
• A Committee on Financial Inclusion under the Reserve Bank of India had recommended that credit eligibility certificates, which would act as tenancy/lease certificates should be issued to tenant farmers. These certificates would enable also landless cultivators to obtain agricultural credit.  It recommended that the Reserve Bank of India should issue guidelines to banks, to give loans to farmers against these certificates.
• Pradhan Mantri Fasal Bima Yojana: The Pradhan Mantri Fasal Bima Yojana was launched by the central government in January 2016. The scheme aims to provide insurance coverage to farmers for crop failure, stabilise farmers’ income, and encourage farmers to adopt modern agricultural practices, among others. 
• The Commission for Agricultural Costs and Prices has recommended that quantitative ceilings should be fixed on the per hectare use of water. In addition, farmers using lesser water than the ceiling fixed should receive money equivalent to remaining units of water at the current domestic costs.  This would incentivize them to ration their use of water.
• The Ministry of Water Resources circulated a Model Bill for Groundwater, 2016, which may be adopted by states. The Bill provides an institutional framework for the protection and management of groundwater.  It states that groundwater is a common resource of all persons, and ownership of the land over a groundwater resource should not deprive others from accessing it.  It also states that industrial or bulk usage of groundwater will be priced.
• The Economic Survey 2016-17: has been recommended that farmers should move from flood irrigation to the drip or sprinkler irrigation systems (micro irrigation). This would help in conserving water as well as save on the cost of irrigation.  Using micro-irrigation systems (such as drip or sprinkler irrigation) has also been linked to an increase in the yield of crops.
• The Soil Health Card scheme: Under the scheme, all farmers are issued soil health cards, once every three years.  The soil health cards contain information such as the nutrient status of the soil, and the recommended dose of nutrients to be provided to the soil to improve its fertility.
• Nutrient based subsidy policy: The central government launched the nutrient based subsidy policy (NBS) in 2010 for P and K fertilizers. 
  • The policy was formulated with the objective of promoting a balanced use of N, P and K fertilizers. 
  • The policy allowed the manufacturers of P and K fertilizers to fix their maximum retail prices (MRPs) at reasonable levels. 
  • The subsidy provided would be based on per kilogram of the nutrient. 
  • The policy also provided for an additional subsidy to be paid to indigenous manufacturers of fertilizers. 
• A Committee that examined the role of Food Corporation of India recommended that cash transfers should be made to farmers to replace the current fertilizer subsidy regime. This would allow farmers to choose fertilizers in the combination best suited to their needs, and help them to fix the fertilizer imbalance in soil.
• The Standing Committee on Agriculture has also recommended that a Pesticides Development and Regulation Authority be created to regulate the manufacturing, import and sale of pesticides in the country. Other recommendations include developing an integrated pest-management system, which includes a mix of the mechanical and biological methods of pest control, and encourages the use of bio-pesticides.
• Genetically modified seed varieties: Genetically modified (GM) seeds are those where certain genes are modified to develop traits such as a resistance to pests and herbicide, and increased productivity.  Bt cotton is currently the only approved GM technology seed in India.
• Mega Food Parks: The Mega Food Parks scheme was launched by the Ministry of Food Processing Industries in 2008.
  • The scheme aims to create a mechanism of linking agricultural production to the markets, by involving farmers, processors and retailers together in a cluster-based approach. 
  • Expected outcomes of the scheme would be a higher price for farmers from their produce, creation of high quality food processing infrastructure, reduction in food wastage, and creation of an efficient food supply chain, among others. 

Way Forward:

India also needs to improve its management of agricultural practices on multiple fronts. Improvements in agriculture performance has weak linkage in improving nutrition, the agriculture sector can still improve nutrition through multiple ways:

• Increasing incomes of farming households,
• Diversifying production of crops,
• Empowering women,
• Strengthening agricultural diversity and productivity,
• Designing careful price and subsidy policies that should encourage the production and consumption of nutrient rich crops. 

Diversification of agricultural livelihoods through agri-allied sectors such as animal husbandry, forestry and fisheries has enhanced livelihood opportunities, strengthened resilience and led to considerable increase in labour force participation in the sector.

Editorial: Straws in the wind in South Block

Context:

• External Affairs Minister’s speech at the 4th Ramnath Goenka Lecture, 2019

Relevance:

• GS Paper 2: Indian Foreign Policy

Mains Questions:

1. Indian foreign policy is changing and will continue to evolve not only because the global environment is changing more rapidly than ever, but also because India is changing. Explain. 15 Marks
2. A  nation that has the aspiration to become a leading power someday cannot continue with unsettled borders, an un-integrated region and under-exploited opportunities. In this context, discuss the border issues of India with other countries.

Dimensions of the Article:

• Different phases of Indian Foreign Policy:
• India’s status at world level:
• Way Forward:

Different phases of Indian Foreign Policy:

• 1947-1962: Phase of optimistic non-alignment where India resisted the constraining of its choices and dilution of its sovereignty in a bipolar world. It saw energetic Indian diplomacy from Korea and Vietnam to the Suez and Hungary. However, India’s focus on diplomatic visibility sometimes led to overlooking the harsher realities of hard security. E.g.
  • Going to UN regarding J&K.
  • Rejecting the offer “east west swap deal” of China where India would recognise Chinese claims on Aksai Chin and China would give up its claims on the eastern sector.
  • The anticipated 1962 war, yet, the reluctance to attach overriding priority to securing borders.
• 1962-1971: Phase of recovery and realism: India looked beyond non-alignment making pragmatic choices on security and political challenges E.g. concluding a defence agreement with the US in 1964.
  • Also, domestic challenges were acute, with political turbulence and economic distress.
  • India faced a tense situation with Pakistan in 1965 and finally lead to creation of Bangladesh in 1971.
  • India became more realistic as it signed Indo-Soviet Treaty of 1971.
• 1971-1991: Phase of greater Indian regional assertion and phase of complexity:
  • E.g. Creation of Bangladesh, but ended with the Indian Peace Keeping Force (IPKF) misadventure in Sri Lanka.
  • Sino-US rapprochement of 1971 and role of Pakistan as the interlocutor meant India had to face the US-China-Pakistan axis.
  • India’s optimistic outlook on Pakistan in 1972 at Shimla, resulted in a hostile Pakistan and a continuing problem in Jammu & Kashmir.
• 1991-1999: Phase of unipolarity made it a challenging task to retain India’s strategic autonomy.
  • India responded with upgradation of diplomatic relations with Israel, outreach to Americans were done.
  • India opened up economically more to the world but fell behind ASEAN and China which opened up a decade earlier.
  • In 1998, India declared itself as Nuclear weapon power which led to US sanctions.
• 2000-2013: Vajpayee-Manmohan phase:
  • India gained the attributes of a balancing power, as China began to emerge as the 2nd pole in world geopolitics and moreover the centre of gravity of world geopolitics shifts towards Asia-Pacific region.
  • USA moved away from sanctions to Nuclear deal and in Kargil war and Operation Parakaram world community weighted in favour of India as India was a balancing power now. o India also used rising power of Russia and Japan to balance the complex geopolitical scenario.
• 2014-till now: Phase of Energetic engagement:
  • India’s rising global stature is evident from the overlooking posture of global community on the issue of abrogation of Article 370.
  • India’s Act East policy- emphasising a multi-polar Asia at the core of a multi-polar world.

India’s status at world level:

• India is being looked at, by the countries of global south for diplomatic and geopolitical help. For example
  • Indian navy has been deployed in Gulf region since the attacks on oil tankers.
  • India was re-elected to the UN’s International Narcotics Control Board (INCB) with the highest margin beating China’s candidate.
• International infrastructure projects are moving faster:
  • In Afghanistan, India completed Salma dam, Parliamentary building etc. Not even western countries were ready to take up these projects.
• Multilateralism:
  • India is a part of Alliance for Multilateralism and advocates for having rules, even if imperfect, rather than no rules.
• Climate change:
  • India is engaging actively with world community to mitigate its effects. o International Solar Alliance is headquartered in India.

Way Forward:

• Greater realism: The purposeful pursuit of national interest in shifting global dynamics may not be easy but it must be done.
• Economic drivers to guide diplomacy a lot more than earlier, instead of old dogmas like economic autarky, self-reliance, import substitution.
• Multi-polar world has emerged and all the pillars (e.g. US, China, Russia Japan etc.) have to be managed without compromising with anyone.
• Need of calculated risk-taking to take a quantum jump in global positioning. E.g. Uri and Doklam issue.
• Need to read the global discourse right: E.g. growing multipolarity, weaker multilateralism, need of larger economic and political rebalancing needs to be carefully analysed.