Punjab farmers are agitating now more than the new farm laws. They are braving cold nights at Delhi’s borders as they worry that these new laws will hit their incomes adversely, and they want to guard their incomes. There is nothing at all incorrect in that—not only wanting to guard what one particular is earning but aspiring to earn extra on a sustained basis. How do we do that is the moot query, beyond the context of the present impasse more than the new farm laws. Hoping that protests stay peaceful, and a answer is located amicably, let us concentrate on Punjab farmers’ incomes, an problem that will keep relevant even just after the protests are more than.
It is properly recognized that Punjab rendered a yeoman’s service in ushering in the Green Revolution in the nation in late 1960s by means of mid-1980s. India was desperately brief of grains in 1965, and heavily dependent on PL 480 imports from the US—to tune of nearly 10 million tonnes (mt) against rupee payments, as India did not have adequate foreign exchange to purchase wheat from the worldwide markets.
The complete foreign exchange reserves of the nation at that time could not purchase extra than 7 mt. It is against this backdrop that the minimum assistance value (MSP) method was devised in 1965.
That backdrop has entirely changed now. Today, India is saddled with massive grains stocks with the Food Corporation of India (FCI) these touched 97 mt in June 2020 against a buffer stock requirement of 41.2 mt. The financial expense of that excess grain, beyond the buffer stock norm, was extra than Rs 1.8 lakh crore—dead capital locked in devoid of significantly goal. That’s the circumstance of the current grain management method primarily based on MSP and open-ended procurement. On the foreign exchange front, India has extra than $575 billion, significantly larger than the levels necessary to be comfy on imports.
When the backdrop adjustments, societies have to have to devise modify that can lead to larger levels of improvement, else they stagnate and stay stuck in a low-equilibrium trap. Schumpeter’s approach of “creative destruction” of the old and inefficient is a basic law behind improvement of nations about the planet. India is no exception.
It is also worth noting that Punjab, in 1966, when Haryana was carved out of it and portion of its territory was transferred to Himachal, had the highest per capita revenue amongst all states. It remained a frontrunner in per capita revenue till nearly early 2000. Thereafter, it began sliding incredibly quickly, falling from the initially position to under-10th position in the ranking of main states of India.
If smaller sized states are also integrated in the ranking, Punjab’s position fell to 13th by 2018-19. There are various factors behind this, ranging from lack of industrialisation to not catching up even with the modern day services sector like IT, monetary services, and so on.
But, let me concentrate right here on agriculture and how to make Punjab fantastic once again, creating on its previous glory, and regain its best position, at least on the agricultural front if not in services or market.
Punjab’s agriculture is blessed with nearly 99% irrigation against an all-India figure of small much less than half, and Maharashtra’s irrigation cover of just 20%. Punjab’s typical holding size is 3.62 ha against an all-India holding size of 1.08ha (Bihar with just .4 ha).
Punjab’s fertiliser consumption per ha is about 212kgs/ha vis-à-vis the all-India level of 135 kg/ha. No wonder the productivity levels of wheat and rice in Punjab stand at 5 tonnes/ha and 4 tonnes/ha, respectively, against the all-India typical of 3.5t/ha and 2.6t/ha.
In Punjab, total farm households are just 1.09 million against a total of 146.45 million nationally. The subsidy provision to Punjab farmers by means of totally free energy by the state government (2020-21 price range) amounts to Rs 8,275 crore, and the fertiliser subsidy (from the Centre) that went to Punjab was to the tune of about Rs 5,000 crore in 2019-20. Overall subsidy, just from energy and fertilisers, for that reason, would quantity to roughly Rs 13,275 crore. That implies each and every farming family members in Punjab got a subsidy of Rs 1,21,788, or let us say, Rs 1.22 lakh. This is the highest subsidy that any farming household gets in India. The Punjab farming household has the highest revenue in India, nearly two-and-half instances the revenue that an typical farming household gets in India.
But, if one particular is to assess the true contribution of farmers/states to agriculture and incomes, the ideal way is to see what is the agri-GDP per ha of gross copped region in that state. This is an essential catch-all indicator, as it captures the effect of productivity, diversification, costs of outputs and inputs, subsidies, and so on, in just one particular indicator. On that indicator, regrettably, Punjab is placed 11th amongst main agri-states (see graphic).
It may perhaps be noted that the states in the south, Andhra Pradesh, Tamil Nadu and Kerala, which are significantly extra diversified towards higher-worth crops/livestock (poultry, dairy, fruits, vegetables, spices, fisheries, and so on), or even West Bengal and Himachal Pradesh score more than Punjab.
The indication is clear: If Punjab farmers want to raise their incomes considerably, double or even triple, they have to have to steadily move away from MSP-primarily based wheat and rice cultivation to higher-worth crops and livestock, the demand for which is rising at 3-5 instances larger than that of cereals.
What is necessary is a package for diversification of Punjab agriculture, say, of Rs 10,000 crore package spread more than 5 years. The Centre and the state can pitch in that, say on 60:40 ratio and that will be a win-win circumstance for all. Once farmers knowledge this and double their incomes, they will not stay stuck with MSP trap!
Can the Narendra Modi government at the Centre and the Amarinder Singh one particular in Punjab join hands to discover a sustainable answer to rising the state’s farmers’ incomes and also curb depletion of the its water level, soil high-quality, and air purity? Only then they can make Punjab fantastic once again!
The author is Infosys chair professor for agriculture, Icrier