[dropcap]I[/dropcap]NDIA'S economy expanded at a slower-than-expected pace at seven percent in the third fiscal quarter, the lowest in the last five years. Agriculture growth slowed to just 2.7 percent in the third quarter – which is lower than 4.2 percent in the second quarter and 4.6 percent in the same period last year.
Without durable reforms in the agrarian sector, the situation can, in fact, further deteriorate. Policy action and attention are urgently needed to address six interrelated challenges: (i) providing financial support to farmers; (ii) investing in the development of rural infrastructure; (iii) ensuring access to electricity; (iv) securing land rights (v) addressing water issues, particularly in light of climate change; (v) implementing an IPR policy on seeds and (vi) supporting labor augmenting technological changes.
In every election and for every political party, the agricultural household voters are a critical 'rural vote bank'. The promises to waive loans and increase Minimum Support Price (MSP) is the most popular and widely used tool by politicians to attract rural votes. However, during the intervening period between the elections, the political parties do little to improve agriculture productivity and to ease the issues of farmers.
The question here is whether the loan waivers or financial schemes do really help the farmers who are in dire need of support? The answer is complicated – financial schemes or loan waivers offered by state governments work only as a 'bandage solution' and profit only selective farmers. The poor and marginalized farmers, who hold small pieces of land, and cannot afford the resources to increase their agriculture productivity, are not empowered through such poorly thought out financial schemes.
An investment in agricultural infrastructures across the hinterland of India would have a larger and more effective impact. The government needs to focus on strategic policy for making farmers more capable of repaying loans from agricultural revenues; and instead of waiving loans and offering handouts, the government should support farmers by supplying quality seeds to improve the quality of farm produce and by developing irrigation infrastructure.
Under the present MSP scheme, only 24 crops are covered by the government and the farmers prefer to grow these selective commercial crops. Cultivation of commercial crops exclusively, with high fertilizer inputs, further deteriorates soil productivity and health of land-use systems. Instead of MSP for selective commercial crops, which creates false incentives, the government should consider an MSP policy that includes all agriculture produce.
In order to ease the burden on farmers, the most important and primary step which the government should take is to boost basic rural infrastructure. By developing cold storage and warehouses, processing centers, sorting-grading-packaging facilities, and direct access to urban and international markets for varied agricultural produce, the government could possibly change the entire rural economy more effectively.
The other major issue that farmers face, which was not addressed by the government, is easy and safe transportation, especially for dairy farmers. In the Indian hinterlands, dairy is a major source for supplementing the income for a majority of farmers. In the last couple of years, it is has become dangerous for dairy farmers to transport their livestock from one place to another, given the rise in 'cow vigilantism'.
The government has made no major effort to ensure the safety of the farmers who earn their livelihood for trading livestock. Due to poor rural connectivity and the absence of any kind of security, a popular source of earning for a majority of the rural population in India is slowly dying.
Another major challenge that needs attention is health and education infrastructure in rural India. For a robust rural economy, it is critical to have efficient health and education services for the rural population.
Sending a child to school can be as expensive a proposition as in the metro cities in India. Efficient rural education policy needs to consider not just the cost of schooling but also other costs that are borne by the students including examination fees, books, stationery, uniforms, and private tuitions. The government needs to restructure public spending on education to improve the quality of school education and also vocational training. Basic education will only make a rural child literate, but a specialized vocational course would help students contribute substantially to the development of the community.
Healthcare in rural India remains unaffordable, unreliable, and hard to access. Due to fragile healthcare infrastructure, lack of maintenance, shortage of doctors and nurses, and a dearth of resources, delivering organized medical care to the rural community in India remains a challenge. As a result, people from the remote countryside have to come to cities for medical care. The tragic scenes of patients sleeping outside the All India Medical Sciences -AIIMS metro station in Delhi and on the footpaths of Mumbai's Jerbai Wadia road adjoining the Tata Memorial Hospital are a stark reminder of the challenges faced by the poor residents of rural areas in accessing medical care. Rural patients who travel for treatment not only exhaust their savings but also have secure loans from family and friends to afford the expensive healthcare in the metros.
The long term universal health care can only be achieved through political consensus, efficient regulations and with the help of universal health insurance coverage.
Electricity has remained a critical input for transforming the rural landscape in India. However, even after introducing a plethora of policies and spending a huge amount of taxpayers' money, India has not achieved 100 percent of electricity access in the country. The Electricity Act, 2003 mandated the government to provide electricity to all areas, including remote villages. In 2004, the Ministry of Power through its letter vide No. 42/1/2001-D(RE) dated February 5, 2004, and its corrigendum vide letter No. 42/1/2001-D(RE) dated February 17, 2004, gave a definition of an electrified village. The Ministry said that a village would be declared as electrified, if:
Basic infrastructure such as Distribution Transformer and Distribution lines are provided in the inhabited locality as well as the Dalit Basti hamlet where it exists. Electricity is provided to provide to public places like Schools, Panchayat Office, Health Centers, Dispensaries, and Community Centers, etc.
The number of households electrified should be at least 10 percent of the total number of households in the village.
By using the above-mentioned definition, all the villages in India were electrified in 2018. But the challenge of electrification is not completed here as the power supply is not reliable yet and blackouts are frequent.
The first task of extending the electricity infrastructure in villages may have been fulfilled but the bigger challenge to ensure a reliable and affordable supply on a sustained basis has yet to be done. Fulfilling the full electricity demand in the remote villages of India is an expensive affair that is borne by state-owned power distribution companies. However, the state-owned electricity companies are struggling with debt due to lack of investment and upkeep of the local distribution infrastructure.
Therefore, even after the government claim of 100 percent electrification of rural India, the reliability of electricity supply is likely to remain a dream for a majority of the rural population, as there have been no real efforts to improve the quality of power supply.
The Parliamentary Standing Committee on Energy in its 41st report, released in December 2013, also said that "we need to move away from simply erecting poles and installing transformers – we need to monitor whether the actual supply is reaching the households". Without deeper institutional reforms and decisive policy action, even if the infrastructure of distribution is erected, electricity will not flow through it to the farmers, so they can irrigate their fields or light their homes.
The lives and livelihoods of Indian farmers will need to be improved with systemic and far-reaching policy attention rather than short term relief through ad-hoc schemes for loan waivers or superficial schemes for minimum support price for some of the crops. Political parties must not underestimate the electoral agency and judgment of farmers; Indian farmers, through their votes have often demonstrated that they understand their needs well.
[This is the second part of a three-part series. Part III will be published soon.]