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Indian agriculture outlook in 2020

Posted on 2020-01-02

The Government envisioning to up the size of the nations macro-economy to USD 5 trillion by 2024 treats agriculture sector as integral to this strategy, and the fulcrum of such a transformation. Specifically with regards to the country’s agricultural economy, the Government’s aim of improving the welfare of the farmers predicated upon doubling farmers’ income by 2022 is moving in the right direction, in synch with the principle of harmonizing the interests of the different stakeholders. The particular demands of the consumers for wholesome nutrition and of the ecology shall be continued to be optimally blended, as the nation moves towards achieving higher incomes and sustainability from the agricultural enterprise. 
 
India along with others on the planet has been facing the adverse impacts of climate change, particularly with reference to deviations in rainfall and temperature. Notwithstanding this, the production growth of various agricultural commodities indicates increasing resilience of the country’s farmers and farming. This is evidenced by foodgrains output of 285 million tonnes in 2017-18 as against 265 million tonnes in the year 2014-15. As per the 4th Advance Estimates, the year 2018-19 is expected to close with similar output and the government is targeting an output of 291 million tonnes for the year 2019-20. During 2018-19, while kharif output saw a rise over the previous year, the rabi season output saw some dip. This was due to low soil moisture content following less than normal south-west monsoons in different parts of the country. Rabi 2019-20 can be expected to see a bountiful output thanks to more than normal rainfall from the south-west monsoon, which has yielded a happy situation of good water reservoir storage and high soil moisture content.
 
The overall output of agriculture inclusive of foodgrains, oilseeds, fruits & vegetables, commercial crops, dairy and other animal products as also fish can be expected to be satisfactory for the year 2019-20. Monsoon patterns continue to be an important factor for India’s agriculture. However, the comforting factor is, that the year 2020 will benefit from recharged aquifers and higher soil moisture linked to the healthy rainfall 2019. Thus one can expect a good kharif harvest in 2020.
 
Since the last couple of years, the growth of agriculture is being perceived with greater reference to farmers’ income and not production per se. In this context, the status of prices that farmer receives and the agri-logistics that conveys all the produce from the farm-gate to the markets is more critical. The recent prices for foodgrains, pulses, oilseeds and dairy products have been demonstrating some market buoyancy, which is farmer-favoring. The importance of agricultural exports in expanding the scope for marketing efficiency in favour of the farmers cannot be brushed aside. It is with this view, that government for the first time came to adopt a comprehensive agriculture export policy in the year 2018. This is being taken forward with various initiatives including promoting large number of commodity clusters. Clusteralisation will facilitate global market integration by putting in place both backward and forward linkages. The year 2020 will certainly see large number of such clusters take off the ground. This buttressed by government’s focus on promoting 10,000 farmer producer organizations (FPOs) by 2022 will come to see visible action on the ground. The states have begun to adopt the Model Contract Farming & Services Act 2018, and Tamil Nadu is the first one to have done so. Many states should be coming onboard in 2020, to set a positive context for marketing efficiency and price risk negotiation. 
 
Simultaneously, rising trade sectarianism by major powers to carve out their respective zones of influence, and compromise of WTO (world trade organization) status by United States - the dominant member warrants, that India looks more closely to its domestic market in the year 2020. It will therefore, need to accelerate the pace of market transformation towards a new architecture that aims to transfer higher real prices to the farmers on their produce. The targeted on boarding of 400 more APLMCs/APMCs with eNAM, and establishing inter-operability with ReMS platform of Karnataka will see the strengthening of the ‘One-nation One-market’ environment. The year 2020 will also see creation of the first lot of GrAMs, progress on e-warehouse receipt system and greater flow of institutional credit on the platform of kisan credit cards (KCCs). The Ministries of Agriculture, and Animal Husbandry & Fisheries are targeting to cover all the eligible farmers including those practising animal husbandry and fisheries with KCCs. 
 
The year 2020 in a way marks the mid-point of the targeted time schedule for doubling farmers’ income (2016 to 2022). Various recommendations of the Inter-Ministerial Committee on Doubling Farmers’ Income (DFI) are under implementation. In the year 2019, the NITI Aayog constituted a Committee of Chief Ministers to suggest ways for speedy transformation of India’s agriculture. This Committee’s Report is due in 2020, which can be expected to pave the way for unhindered implementation of various DFI recommendation including reforms. These encompass a new market architecture, contract farming & services, easing of land lease, liberalized control orders under Essential Commodities Act and so on. This will sequel into a transformed, enterprise oriented and market-led agricultural value system. 
 
In addition to growth of agriculture production and farmer’s income, the focus can be expected to shift towards correcting today’s regional and commodity imbalances. In this context, more visible action can be foretold in respect of rainfed areas and low water duty crops like millets, pulses and oilseeds in the year 2020. Revision of water-shed guidelines alongwith emphasis on spring-sheds in the himalayan states will help the communities to adopt climate resilient technologies and negotiate climate change risks. This is being led by the government’s special arm for rainfed areas of the country, namely National Rainfed Area Authority (NRAA).  In the year 2020, NRAA should also be working more closely with the states to drought proof already identified 151 vulnerable districts in the country. It is well advised to sharpen water budgeting as a core concept, that gels well with the nation’s Jal Shakti Mission. This Mission aims to conserve water and use the scarce resource more efficiently.
 
Several initiatives have been taken by the Government over the last about 6 years which include the soil heath card (SHC), the pradhan mantri fasal bima yojana (PMFBY), paramparagat krishi vikas yojana (PKVY), PM-AASHA, PM-KISAN and so on. One can foresee a widening of these initiatives and even higher acceptance by all stakeholders including farmers in 2020. 
 
In leading up to realization of USD 5 trillion economy, the Government has just shared its National Infrastructure Pipeline. This pipeline amounts to Rs. 102 lakh crores of gross capital formation, that includes various components of agricultural investments, ‘In’ and ‘For’ agricultural economy, as recommended by the DFI Committee. The year 2020 will see the commencement of such investments and lay the foundation for a decadal future growth.

 

Source: BW BusinessWorld