The Narendra Modi government is learnt to be working on a grand plan to deal with India’s chronic agrarian distress, including incentives for home delivery startups to aggregate products from farmers, creating 10,000 farmer produce organisations, and a national warehousing network along highways among others.
According to a report by Moneycontrol, some components of the plan are likely to be announced by Finance Minister Nirmala Sitharaman in the Union Budget for 2019-20 on July 5. This also includes creating a mobile app-based system for direct marketing by farmers, a distinct fund for fish and aquatic farming, a village storage scheme of agri-produce and a special plan for using uncultivated rural land for solar farming.
The Centre is examining policy interventions to enable investment worth Rs 25 lakh crore, both by the government and the private sector, in India’s rural economy spread over a five year period.
Some of these will likely be mirrored in the new government’s first budget on July 5.
The new set of policies will also look at the extensive use of big data, artificial intelligence (AI) and blockchain technology as vehicles to enable farmers to get swifter and accurate information about weather, prices and other aspects.
A special mobile app based system is likely to be created that would aggregate suppliers of agri-implements for farmers to use on rental and custom hiring basis. The system will also give real time information on weather and market prices of various agro products. The budget could propose incentives to the private sector to develop such systems.
“Across different sectors, we have fragmentation in markets. The focus now needs to be to make India an integrated market. For that, lots of regulatory and logistics barriers need to be removed,” an official, who did not wish to be identified, said.
The government also intends to add one crore hectares of land under micro-irrigation as part of a broader strategy to lower Indian agriculture’s dependence on monsoon. Nearly 60 percent of India’s net sown area doesn’t have irrigation cover, making the farm sector exposed to weather whims.
This will be supplemented with a “fertigation” plan to promote prudent use of fertilisers. Fertigation is a process in which fertilizer is dissolved and distributed along with water in drip or spray irrigation system. Fertigation can potentially bring down fertiliser usage by 70-90 percent, cut down water usage by about 20 percent, and reduce environmental contamination.
It also reduces soil erosion, minimizes the risk of the roots contracting soil-borne diseases, reduces water consumption, reduces the amount of fertilizer used, increases the nutrients absorbed by the plants, and controls the precise time and rate of fertilizers being released.
The projects will be implemented under the Pradhan Mantri Krishi Sinchai Yojana. While 31 long-pending irrigation projects have been completed under the scheme, the government has targeted to complete work on the remaining 68 projects in phases by the next few months.
Over the last two years, farmers have been protesting in several states, demanding better prices and debt write-offs. Low retail prices may be heartening to consumers, but persistently low food prices, have meant that farmers’ income have remained flat.
India’s long slowdown in food prices – “disinflation” in economists’ jargon – may well be symptomatic of a problem of abundance
The current price crash is partly due to a bumper winter-sown crop that have flooded mandis. With few buyers, the glut has forced farmers to dump products at throwaway prices to clear up a piling mount of vegetables.
This is showing up in food inflation, a proxy to measure how costly or cheaper commonly consumed items have become on an annualised basis, which has moderated sharply.
In July 2018, the Centre had also announced a sharp rise in minimum support prices (MSPs) for 14 summer-sown kharif crops. The government has set the MSP at a minimum of 1.5 times the cost of cultivation, a proposal made in the budget for 2018-19, based on Commission on Agricultural Costs and Prices (CACP) calculations.
This was the biggest increase in the Narendra Modi government’s tenure in 2014-19.