Day 13 – Q 2. Reforms in the agricultural sector are an important prerequisite for ensuring inclusive growth. Discuss. 

2. Reforms in the agricultural sector are an important prerequisite for ensuring inclusive growth. Discuss. 

समावेशी विकास सुनिश्चित करने के लिए कृषि क्षेत्र में सुधार एक महत्वपूर्ण कदम है। चर्चा करें।

Demand of the question:

It expects students to write about the need of reforms in the agricultural sector as an important prerequisite for ensuring inclusive growth.

Introduction:

The central government recently introduced major agricultural market reforms. It will allow farmers to sell their produce outside mandies on platforms of e-trading, lifting restrictions on key commodities such as cereals, pulses, onion and potato and freedom to enter into agreement with private players. 

Body:

Inclusive growth is economic growth that is distributed fairly across the society and creates opportunities for all, as per OECD report. 

• Agriculture in India is largest private profession and largest informal labour market; reforms in such huge sector will certainly benefit large sections of society and recent measures of quantum jump through ordinances are right steps in that direction. 
• Reforms were brought through three ordinances: The Essential Commodities (Amendment) Ordinance 2020, The Farming Produce Trade and Commerce (Promotion and Facilitation) Ordinance, 2020, and The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Ordinance, 2020.

Need of reforms in agriculture sector:

• At the time of independence, the share of agriculture in total GDP was more than 55 per cent and about 70 per cent of the population was dependent on the agriculture sector for their livelihood. 
• In the post independence era, stagnant production, low productivity, traditional technology, and poor rural infrastructure were the major challenges for the Government. 
• According to the agriculture census 2015-16, the real income of farmers doubled in almost 20 years from 1993-94 to 2015-16. As the target to double farmers’ income by 2022 is nearing, reforms on land, market, price, and to ameliorate supply side constraints were necessary.

• Almost 44 per cent of the country’s labour force is engaged in agriculture. The average annual growth rate in real terms in agriculture as well as its allied sectors has remained static in the last six years, in turn impacting farmer’s income, as per the Economic Survey 2019-20. 
• The annual growth rate in real terms in agriculture and its allied sectors was 2.88 per cent from 2014-15 to 2018-19, according to the Survey. The estimated growth rate in 2019-20 is 2.9 per cent. Economic Survey Report 2020 also emphasised the importance of sustainable agricultural practices to support small and marginal farmers, who constitute 87 per cent of India’s peasants.

• National Sample Survey Office (NSSO) data shows that more than one-fifth of rural households with self-employment in agriculture have income less than the poverty line.

• Agriculture labour productivity in terms of gross value added (GVA) in India is less than a third of that in China and 1% of that in the US.  Rural sector is net importer vis-e-vis urban areas which indicate outward flow of money.
• Women in agriculture are affected by issues of recognition and in the absence of land rights, female agricultural labourers, farm widows, and tenant farmers are left bereft of recognition as farmers, and the consequent entitlements. According to Oxfam (2013), around 80 per cent of farm work is undertaken by women in India. However, they own only 13 per cent of the land. Women constitute over 42 per cent of the agricultural labour force in India, but own less than two per cent of farmland. 
• According to the Food and Agricultural Organization (FAO, 2011), empowering women through land and ownership rights has the potential of raising total agricultural output in developing countries by 2.5 to 4 per cent and can reduce hunger across the world by 12-17 per cent.
• According to the National Crime Records Bureau, farmer protests increased from 628 in 2014 to 4,837 in 2016, making evident the disenchanted and displaced agricultural workforce of the country.

Inclusive growth through reforms:

• Livestock wealth is much more equitably distributed than wealth associated with land. Livestock producers, including traditional pastoralists and smallholders, are both victims of natural resource degradation and contributors to it. Livestock rearing is a key livelihood and risk mitigation strategy for small and marginal farmers, particularly across the rain-fed regions of India.
• Livestock rearing at the household level is largely a women-led activity, and therefore income from livestock rearing and decisions related to management of livestock within the household are primarily taken by women. 
• Need to Increase focus on reforms with national mission on sustainable agriculture.
• There are some emerging land issues such as increase in demand for land for non-agricultural purposes including special economic zones, displacement of farmers, tribals and others due to development projects. There is a need for careful land acquisition. Land alienation is a serious problem in tribal areas.
• Agriculture reforms and Greening rural development will contribute to inclusive growth by enabling the target growth rate of agriculture of 4 percent, which is important due to agriculture’s multiplier effects and due to the continued dependence of 58 percent of India’s rural population for livelihoods on agriculture, regenerating common land and water bodies, which offer sustenance to the rural poor through provisioning of goods and ecosystem services, ‘crowding in’ private investment in green businesses:  renewable energy generation, organic input chains and advisory services, green product supply chains, production of environment-friendly construction materials.
• As reiterated in the past, the Agricultural Developmental Council (ADC) in line with the GST Council is a dire need to make agricultural reforms more expressive and representative. For better income distribution, there is also a need to revisit regional crop planning and the agro-climatic zone model at the highest possible level so as to make agriculture the engine of sustainable economic growth in India 2.0 by 2022.

However, on positive side during the first year (2019-20) of the second term of government, gross value added (GVA) in agriculture and allied sectors registered a growth of 4 per cent. This is commendable, especially when juxtaposed with the growth of overall GVA of the economy at 3.9 per cent, and overall GDP (including net taxes) at 4.2 per cent. 

Conclusion:

Despite of impact of COVID-19 is on full display in current financial year 2020-21, and when the GDP may register a negative growth of as high as -5 per cent, agriculture may still surprise with a positive growth of 2.5 per cent, as per CRISIL’s recent forecast. Path of economic recovery goes through the agricultural sector and reforms in such time will have multiplier effect.