The budget can be an opportunity to fast track the growth engine in the agrarian sector. Undoubtedly, the sector is a dominating employment generating sector and contributes a significant proportion to the country’s GDP.
Even in the unfortunate pandemic, the sector climbed new heights with record production of various food grains, exhibiting resilience and ensuring food security. However, market experts feel that the success in terms of production that has ensured food security in the country, food inflation and volatility in prices continue to remain high causing inconvenience to consumers and uneven income for farmers.
Market analysts point out that farmers in India still work on agriculture models that are input-intensive, which affects their overall profitability. Enabling a lean agribusiness model should be a priority by developing shared economy platforms through which farmers can access farm equipment and machinery at substantially lower costs.
“Mechanisation in agriculture would improve productivity and yield, and India needs significant improvements in both these spheres. An impetus towards shared economy models and digitisation of agri-ecosystems in India would induce transparency into the entire sector empowering farmers to make informed decisions and improve their output and incomes," remarked Dhruv Sawhney, Business Head and Chief Operating Officer, nurture.farm.
"Another way to improve farmer incomes is to focus on adopting sustainable agricultural practices. Incentivising this for Indian farmers will have a two-pronged impact on the one hand, it will improve the carbon footprint of agriculture, making it climate-friendly and on the other, by leveraging carbon credits, farmers will have a scope to earn higher incomes. With the second-largest arable land in the world, India can be a world leader in establishing the potential impact on climate and farmer incomes by adopting sustainable agriculture practices. Enabling public-private partnerships in this domain can help Indian farmers leapfrog towards a climate-friendly, sustainable and profitable agriculture,” Sawhney said.
Experts further point out that it is time to address the sector on a multi-pronged basis and ensure that the sector is commercially viable for all stakeholders. Besides that, it is equally important that stakeholders should have access to organized cost-effective finance for sustenance for stable livelihood. At the same time, the government should emphasize the adoption of easy-to-use technology in the sector. Additionally, there should be robust structures for many more organized corporates to be part of agriculture and the government should strongly proactively promote agri-business start-up ecosystems.
“We must ensure that there is complete transparency on how the livelihood improvements will be delivered. Many stakeholders in the agriculture value chain are reliant on this sector, and we need to bring in clarity to empower them. No one should lose their livelihoods and we must ensure that it is addressed. Farmers are and should be the centre of focus in all discussions and they are the important stakeholders. We need to bring in significant transparency to them so that farmers can plan their livelihoods. The aspect of cost-effective organized finance with multiple options is highly needed for the farmers,” pointed out Palat Vijayaraghavan, Founder and CEO, Lawrencedale Agro Processing India (LEAF).
This expert further says that currently the choices are highly restricted to the farmers and it needs to change. He also says that the time is ripe for the Indian corporate sector to be part of the agriculture ecosystem in a more integrated manner.
“There is an immense knowledge base and capabilities in the organized sector. However, these capabilities, which can be transformational, are not reaching the farmers. We should comprehensively address this gap for the benefit of the farmers and consumers. Organized sector players in the market must ensure that no one loses in the ecosystem and that should be done on an immediate basis and which will instil confidence in the farmers. While empowering the corporate sector to take forward the innovations, the government has to proactively create programs to encourage and support ideas and innovation for the development of agriculture and the agri-business ecosystem. We need more vehicles and channels backed by the government to solve problems at scale,” added Vijayaraghavan,
Experts also point out that the budget can bring in multiple reforms in the agriculture sector such as improving micro-irrigation coverage, diversification programs to improve crop productivity, policy and budget outlay for integrated climate-smart agriculture practices, interest subsidy on agriculture for long term loans etc.
“It is important to accelerate India’s growth and adoption towards new-age agriculture practices with optimum utilization of resources. The average penetration of micro-irrigation in the irrigated area (drip and sprinkler) is estimated at 17 per cent which is much lesser compared to countries like Israel (90 per cent), Russia (78 per cent), Spain (75 per cent), the USA (55 per cent) and Brazil (52 per cent). We need to have an ambitious target and align the execution process to take micro-irrigation coverage to 60-70 per cent in the next 25 years. Identifying areas and crops to integrate the benefit of micro-irrigation with structured governance and execution strategy will help the country climb to a newer height of fiscal growth. To do so, the government may create a five years bucket of appropriate execution and monitoring roadmap for the next 25 years backed by adequate budgetary support consistently,” said Randhir Chauhan, the Managing Director, Netafim India and SVP, Netafim Limited.
This expert is also of the view that there should be a focus on renewable energy like solar as it would ensure energy security in the agriculture sector as well as in the rural landscape and address environmental concerns. He says that making farmers energy sufficient would also reduce the burden on government energy subsidy bills. “There should also be diversification programs to increase crop productivity. 12 per cent of the cropped area under Fruits and Vegetables (F&V) leads to 24 per cent in value terms, in contrast to 13 per cent area under oilseeds which gives only 6 per cent in value terms because of lack of scalability. Policymakers may consider promoting domestic oilseeds and oil palm cultivation with higher productivity measures to address the demand cycle. Similarly, disrupting rice cultivation that covers more area and water utilization through drip technology would improve yield, save water and reduce carbon emissions. Drip irrigation adoption also has the potential to facilitate crop diversification thus, making a direct impact on farmer incomes,” added Chauhan.
Experts also agree that there should be a continuous focus on creating infrastructures to support innovation and digitalization in agriculture. Currently, India is spending less than 1 per cent of Agri GDP in Research and Development (R&D). An agri innovation fund, which supports ag-tech solutions, start-ups, and digitalization at different levels of the agri value chain can transform the agriculture economy in the future.
Experts also are of the view that access to credit remains one of the critical elements in a sustainable and more importantly a growing ecosystem. Interest subsidy on agriculture for long term loans to help farmers with continual investment in farm mechanization and building advanced infrastructure would go a long way to develop a sustainable model in agriculture.
