By Nageshwar Patnaik in Bhubaneswar, April 1, 2021: Economic reforms in India began in the early 1980s with progressive relaxation of controls on investment and capacity utilization in industry, liberalization of imports and support to capital markets. However, the reforms introduced from July 1991 and continuing since then has brought about a change in the basic orientation of development policies in the country by placing greater reliance on markets for allocation of resources, emphasizing private initiative and encouraging domestic and global competition.

At the same time, the reforms in the agricultural sector have been slow and cautious for several reasons. This has rightly prompted Prime Minister Narendra Modi to say in his monthly Mann Ki Baat programme on Sunday that modernization in the agriculture sector is the need of the hour. He also asserted that adopting modern practices in the agriculture sector is imperative. In every aspect of life newness, modernization is essential, the PM reiterated saying that in order to create new employment opportunities in the agriculture sector, to increase farmers’ income, it is equally important to adopt new alternatives, innovations along with traditional agricultural practices.

Ironically, Modi’s call for embracing modern practices in agriculture comes at a time when hundreds of farmers have been camping at Delhi’s border for the last five months demanding the Centre to repeal the three contentious farm laws. But the government insists that these reform laws will boost farmers’ income by bringing investment, modern practices and allow them to sell their produce anywhere across the country at best prices.

Indian agrarian scene has moved drastically since independence. The government dispensed with large holdings and the landlord system. A large number of people became owners of very small land holdings. India is one of the largest producers of food grains globally, and its output in 2017-18 went up by 17.62 million tons compared to 2013-14. Though India has over 157.35 million hectares of land to cultivate, yields from farming are low and the pressure on land use is enormous.

This has made the agriculture sector become the most underperforming sector in the country. There was a need for a huge investment to bring the farm sector in shape. And the Modi government decided that the farm sector is a ripe case for disinvestment and to sell off to those who have interests in its investment. The government also has made significant announcements on reforming agriculture, particularly the regulatory framework for managing markets across the country. The reforms have been described as path-breaking, long-term changes that will significantly alter the terms of trade in favour of the farmer.

But in a country like India, the tasks of modernisation and structural change in agriculture were even more difficult and discouraging. The outmoded land tenure system, the primitive technology of cultivation and lack of an infrastructure for raising productivity proved formidable barriers to agricultural progress.

Small and marginal holdings (less than 2 ha) account for 85% of the total operational holdings, farming 157.35 million ha or 44% of the total operated area. The average size of holdings for all operational classes (small & marginal, medium and large) has declined over the years: down to 1.16 ha in 2010-11 from 2.82 ha in 1970-71. For over 30 years, since 1988, India has been trying to fix the poor quality of its land records; new schemes have begun yet again. But rural land markets remain mostly illiquid, trapping farmers in agriculture.

Some of these barriers have been overcome to an extent. Zamindari and other intermediary tenures have been almost eliminated. The technology of cultivation has changed substantially with the spread of high-yielding varieties and the extension of irrigation, a change which was facilitated by the elaborate network of agricultural research and extension set up during the planning era. The use of the new technology based on high yielding varieties and fertilisers spread rapidly only after 1965. This difference is reflected in the larger contribution of productivity gain to production growth in the period after 1964-65.

Several changes have taken place in agricultural credit and marketing. The system of cooperative credit has spread, lessening the dependence of the cultivator on exploitative money-lending and trading practices. Institutional term finance for agriculture has growth with the reorientation of the banking system and the establishment of Land Development Banks, Regional Rural Banks and apex institutions like the Agriculture Refinance and Development Corporation.

In agricultural marketing, the dominant role of the Food Corporation of India in foodgrain trade and the growth of marketing and processing cooperatives have helped both farmers and consumers. In the case of milk, cooperatives and urban milk supply schemes have captured, a substantial part of the market. These and other’ changes in the field of credit and marketing have altered the very unequal relationship between the farmer and the trader and, by doing so, have stimulated agricultural progress.

It is needless to say that India’s agricultural policies got a major boost since the Modi government came to power in 2014 and decided to focus on doubling farmers’ income by 2022. The government has also set an ambitious food grains production target of 291.1 million tons for 2019-20, an increase of 2.6% compared to the previous year, citing a favourable monsoon in the current season.

The government has chalked out plans to achieve the goal; from agriculture productivity, soil health cards, crop insurance, irrigation, total mechanisation, technology, animal husbandry and allied activities. But is it on the right track, many ask.

The Consortium of Indian Farmers Associations (CIFA), India’s apex professional farmer’s organisation engaged in effective policy level interventions on behalf of farmers from all over India, has said recently that in order to double farmers income, the government needs to implement a consistent export/import policy and proactive market intervention to attain fair prices for
agricultural produce.