Problems With Indian Agriculture

Recently, India witnessed several protests and agitations by the farmers. This trigged the debate about agriculture related problems in India. Here we have explained what are those problems which have been plaguing agriculture sector in India.

Agriculture Problems in IndiaIndia celebrated the 100th anniversary of Gandhi Ji’s Champaran protest which was done for the indigo cultivators of Bihar’s Champaran district. This was his first mass political protest after his return from South Africa.
And fifty years ago, in 1960s, the peasants of Naxalbari in West Bengal started their violent uprising against landlords.

Modern Indian history has been marked by several peasant revolts that were based on underlying economic fault lines.
Currently, the agricultural sector is going through most stressed phase in the last three decades. India saw such distress caused by consecutive deficient rains during the drought of 1986-87 and 1987-88.
And, in 2014 India suffered a bad monsoon which only aggravated the crisis in agriculture.

As it’s a well known fact that around 65% of India’s agriculture depending on rain and more than half the population on agriculture, too little or too much rain is always a harbinger of trouble.  In recent months there have been many protests led by the farmers of various states such as Andhra Pradesh, Madhya Pradesh and Punjab.
So, in such agricultural circumstances, it is important know what are those major reasons which have been causing severe problems in Indian agriculture.

1. Rural- Urban Divide

India’s most of the farming is done in rural parts of the country. While India has witnessed an improvement in rural fortunes, it has not been enough to bridge India’s rural-urban gap.
While rural monthly per capita expenditure grew at an insipid annual rate of 0.8% between 1993-94 and 2004-05, it grew at a much faster pace of 3.3% a year between 2004-05 and 2011-12 (at constant 1987-88 prices).
But, the growth rate of urban incomes has been faster, and the difference between rural and urban consumption increased slightly over this period. Thus, despite rising rural incomes and falling rural poverty, disenchantment with farming has only grown in the countryside.
A 2014 survey by Lokniti showed that around 40% of farmers were dissatisfied with their economic condition. The figure was more than 60% in eastern India. More than 70% farmers thought city life was better than village life.

2. Lack of Investment in Agriculture

There has been a paucity of fresh investments in agriculture sectors. Several economists have given various reasons for this. Many believe that land inequality as the root cause of agricultural stagnation. It is argued that under the landlord-tenant farming arrangement, all production expenses were borne by the latter because of the competition to secure tenancy.

And the tenants lacked investible resources which adversely affected agricultural productivity.

It would take extraordinarily high rates of profits for the landlord to undertake investment in agriculture instead of investing capital in otherwise high-return activities like usury, which had assured returns.
As a result, investments in agriculture were lacklustre and the sector suffered.

3. Lack of Effective Policies

Despite several efforts done by the governments in order to solve the problems related to agriculture in India, India has no coherent agriculture policy in place. There is also a broad agreement on the need for a coherent farm policy that addresses issues of sustainability and productivity growth in Indian agriculture.

There are both political and economic reasons for the neglect of broad-based farm interventions by the Indian state over the past decades.
Like India, most of the developing countries after they gained independence in the second half of the past century have ignored the structural development of their agriculture sector. India has focused more on its industrial development than it has thought about its agricultural development.

4. Negligence of Natural resources

India has not preserved and developed its natural resources when it comes to farming. Little was done in order to preserve resources mainly related to irrigation. The severity of the situation is evident from the stories of migration and severe water crisis in Maharashtra and elsewhere.

5. Impact of Demonetization

Incidences of stress in agriculture have begun to appear because of demonetization. In this fiscal year, there was a decrease in farm products. Cash is the primary mode of transaction in agriculture sector which contributes 15% to India’s total output.

Agriculture is impacted through the input-output channels as well as price and output feedback effects. Sale, transport, marketing and distribution of ready produce to wholesale centres or mandis, is dominantly cash-dependent.

Apart from it, other disruptions were caused by the demonetization such as increased wastage of perishables, breaks in the supply chains, lower revenues that show up as trade dues instead of cash in hand and when credited into bank accounts with limited access affect the sector.

6. Excessive Interventions on Prices

In India there are several restraints on price control. Those restraints are to be freed from Indian agriculture. Apart from it, commercial risks due to volatile prices, restrictions on movement of farm produce, and the lack of access to global markets are in need of corrective measures.
 Many experts argue that the solution to farm distress lay in dismantling the system of state controls that were in effect a massive tax on farming.

7. Irrigation Facilities

Government statistics have rarely shown any increase in the total net irrigated area in India. Total irrigated area has been rotating around 63 million hectares and constitutes only 45 per cent of the total area sown in the country.
Some improvement in irrigation facility has happened in Assam, Madhya Pradesh, Jammu and Kashmir and Rajasthan in recent years. But it seems to be insignificant in view of a massive increase in real public investment in major, medium and minor irrigation from Rs .235 billion in 2004-05 to Rs. 309 billion in 2013-14.

India has increased its capital expenditure in major projects by 3.5 times, while the investment in minor irrigation increased by 2.5 times only.
A virtually stagnancy in irrigated area puts questions about the efficiency of the ongoing investments and the quantum of investment that is also required to widen area under irrigation.

The government data also reveals that the ratio of irrigation potential created from public expenditure is higher for minor irrigation projects than medium and large irrigation projects. Making it worse, minor irrigation projects have received only scant attention from policymakers over time. But, in reality, minor irrigation structures are very important for recharging of wells, flood control and drought mitigation.

8. Sluggish Fertilizer Industry

In India, the fertilizer sector has not witnessed any major fresh investment in the last 15 years. Some urea manufacturers are even seriously thinking of downing their shutters. Such scenario is arising when the highest growth in demand for fertilizers in the world is in India. As a result, imports are rising and production is largely stagnant.

The reason of this is that Indian fertilizer policy is in a mess. Unpaid fertilizer subsidy bills to the industry have reached beyond Rs 40,000 Cr, and will likely reach Rs 48,000 Cr by the end of this fiscal year.
The budgetary allocation of about Rs 73,000 Cr for fertilizer subsidy is nowhere near the reality on the ground — arrears are mounting year after year.
Apart from it, India imports nearly more than one-third of nitrogen for consumption today, compared to less than 10 per cent or so in 2000-01.

9. Dependency on Monsoon

In India, most of the agricultural areas are un-irrigated. That is why monsoon remains crucial for the overall growth in the agricultural sector. In such a case the dependence of the rural economy on monsoon cannot be overstated.

The pattern in area sown is completely guided by the variation in the monsoon season as a bad monsoon directly impacts the cost of cultivation and makes sowing of large areas unprofitable for the farmers.
Similar issues are also linked with the production and yield of the kharif crops which are rain-fed in most agricultural states.

10. Inefficiency of Farmer Producer Organizations

In India, Farmer producer organizations (FPOs) must be strengthened. One issue which must be addressed is that whether small and marginal farmers are benefiting from FPOs.
And, the lessons should be learnt by FPOS from milk cooperatives. Incentives can be given to commodity-specific FPOs to develop value chains. For example, FPOs for pulses can be developed on a large scale.

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