Four good steps that will yield results:Mar 05, 2010 Financial Express

The finance minister has quite correctly put agriculture on the radar in this year’s Budget against the background of the drought that has somewhat spoilt the otherwise amazing growth story. He has focused on the immediate requirements as well as the medium-term goal of making agriculture self-sustaining. The four-pronged approach to be pursued, covers issues relating to making agriculture stronger through the spread of the Green Revolution, improving logistics support for this revolution, providing immediate relief to farmers affected by the drought, and probably using the food processing industry route to complete the chain through firmer binding.
It has been a constant plea to the government to restart the Green Revolution, which was quite successful in the seventies. To refresh memory, the approach was to use better HYV seeds (high-yielding variety), fertilisers, pesticides, irrigation facilities, etc to improve farm productivity. The Green Revolution, however, turned out to be a wheat revolution and was confined to the states of Haryana, Punjab and Western UP. As is normally the case, once agriculture became stable, there was a distinct dwindling of interest in pursuing the goal, as the nation preferred industrialisation as the engine of growth from the mid-eighties onwards. The current approach to the Green Revolution is two-fold. The first is to stretch it to new regions, as the soil in the states of Bihar, Jharkhand, Orissa and Eastern UP is fertile and should be leveraged to enhance production. This will also help the farmers to move to higher income levels and to that extent reduce the level of regional imbalances.
The second is the focus on pulses and oilseeds. The idea is to create 60,000 pulses and oilseeds villages with an outlay of Rs 300 crore. One can assume that the money would be spent specifically on improving production levels in targeted areas. This is significant because India walks the edge on these two sets of crop. The conundrum here is that while shortages in oilseeds can be met through higher imports of vegetable oils—India imports around 40-45% of its edible oil requirements—the same does not hold for pulses.
Further, as was witnessed this year, even within pulses there is a schism, where substitution is not that easy between, say, arhar and chana or urad and chana. As pulses are staples, this move, which hopefully is an initial step in a series of other measures that will be taken, will help to tide over the problem. India does import 10-20% of its pulses requirements, but given the limited supplies and variations in harvest seasons, there are invariably phases of price stress when domestic crops fail.
The second strategy is directed towards reducing wastages. It is estimated that the total losses in farm production could range between 10% and 30% for various crops due to the limited supply of cold chains, transport and warehousing facilities. The Budget has stressed the problem at the level of the FCI, wherein procurement and storage of grains has resulted in considerable wastage due to the non-availability of warehousing space. The FCI, CWC and SWCs combined has warehousing space of around 45-50 million tonne, which is inadequate, and timely availability of private space is a problem that accentuates the possibility of wastage. Reduction in wastages would automatically lead to higher availability of farm products.
This strategy has been linked to the food-processing sector as part of the third prong, where the forward linkage to making agriculture more commercial has been built in. ECBs have been permitted to set up cold storage facilities. This was necessary, since it has been estimated that there is a 60% gap in supply of stationary cold storage facilities and 80% gap in mobile cold storage facilities in the country. The Budget’s approach is fairly wholesome, as it interweaves overall production with logistics, and makes it more commercial at the retail stage.
The fourth route taken by the FM is to address the immediate concerns of farmers in terms of availability of credit and interest subvention. Credit availability is less of an issue today and the problem pertains to repayment of loans, especially at times when crops fail. By taking on the cost of subvention, immediate relief has been provided by the government so that banks can go ahead with the overall Plan.
The FM’s approach is fairly cogent and comprehensive and does not leave any loose ends. The total allocation of around Rs 700 crore (plus interest subvention) may not be too large and will have to be increased in subsequent years, as any effort towards making agriculture robust involves relentless focus and outlays, given that the canvas is expansive and the treatment must be deep rooted, both literally and figuratively.