Technological and Institutional Reforms of Indian Agriculture
Reform is the engine of development, without which no amount of fuel (money) can make things move forward. Since India is a “Krishi Pradhan Desh“, where more than 60% of the workforce is involved directly or indirectly with this agricultural sector, reform in agriculture is one of the most important aspects of policymaking in India for inclusive development.
At the time of independence, Indian agriculture needed desperate reforms due to:
- Vulnerability due to uneven distribution of water resources
- Inefficient farming
- Dependency of about 85% of population
- Deterioration under British colonialism
- Need of raw materials to kick start the manufacturing sector.
To tackle the above challenges, the First FYP focused on increasing the area under irrigation and developing ancillary industries for agriculture. The plan was a huge success and led to an increase in production and stabilization of the economy. With the focus of the Second FYP shifting to the secondary sector, agriculture suffered a setback, with India plummeting into a food crisis.
Revolutions and Establishment of Institutions
Suffering International Humiliation in the face of the food crisis, India embarked on a journey of self-sufficiency and never looked back again. The following reforms were introduced:
- Food Corporation of India (FCI) and National Agricultural Cooperative Marketing Federation were formed respectively, in the years 1965 and 1958 for price support, price regulation, and distribution of grains under the Public Distribution System (PDS) which was first started on 14 January 1945.
- At the same time, Minimum Support Price (MSP) was started to protect the interests of farmers and to encourage farmers to adopt newer technology. MSP now covers 23 crops.
- Green Revolution (GR), the first major technological reform, was initiated in 1966. Since it involved intensification of agriculture with the help of High Yielding Variety (HYV) seeds, promoting mechanisation and required irrigation and chemical fertilizers, GR entailed high investments. This resulted in the concentration of GR in the relatively well off areas of Punjab, Haryana and Western UP regions.
- To expand the reach of GR, in 2011, the Government launched Bringing Green Revolution to Eastern India as part of Rashtriya Krishi Vikas Yojana.
- Taking a cue from GR, White Revolution or Operation Flood was initiated in 1970. Technological milestones like producing milk powder from buffalo milk for the first time in the world were achieved. The milk cooperatives were set up all across the country. Today, there are more than 70000 milk cooperatives with about 3.5 crore farmers attached to them. With about 200 million tonnes of production, India is the largest producer of milk globally.
- Buoyant with the success of the two revolutions, India is now targeting Rainbow Revolution – Yellow Revolution for Oilseeds, Blue Revolution for Fisheries, Golden Revolution for Fruits and so on. A variety of schemes, like Pradhan Mantri Matsya Sampada Yojana, Mission for Integrated Development of Horticulture (MIDH), etc. are being run by the government promoting these revolutions.
- During the 1960s and 70s, Agricultural Produce Market Committee (APMC) mandis were established by many states to protect the interests of farmers against intermediaries and money lenders. Due to the restricting nature of these mandis, Government has come up with the Model APMC Act 2003 and 2017, which among other things advocates the contract farming model. To further protect the interests of farmers, eNAM was launched in 2016 as a pan-India digital portal for trading agricultural commodities. It networks mandis all across India and ensures that farmers get the best price for their crops by enabling price discovery in real time.
In the 1970s, to ensure a more equitable distribution of land resources, land ceiling laws were introduced, which capped the area of land one could hold. Land consolidation was introduced at the same time to reverse the land fragmentation problem, which resulted in inefficient utilization of resources.
Reforms in Financial Institutions
Most of the farmers on the eve of Independence were poor. Hence, financial institutions were reformed as below:
- Bank nationalization and Priority Sector Lending mandate helped in the betterment of credit facilities to farmers. This increased agriculture credit forty times within the first decade of nationalization. At present, 18% of all loans are to be given to the agriculture sector by commercial banks.
- National Bank for Agriculture and Rural Development (NABARD) was established in 1982 to boosting financial credit to agriculture as one of the aims. The most significant step in this direction taken by NABARD is Kisan Credit Card (KCC) scheme, which was started in 1988. Using KCC, a farmer can withdraw funds for farming and domestic needs.
- Regional Rural Banks concept was introduced in 1975 to meet the local demand of rural areas for agricultural credit and other banking facilities. Over 40 RRBs have been set up in India so far.
- Crop insurance was introduced in 1972 to reduce the vulnerability arising out of low irrigation potential and irregularities of monsoon. However, it was in 1985 when the government started offering a widespread Comprehensive Crop Insurance Scheme (CCIS). This was replaced by National Agriculture Insurance Scheme (NAIS) in 1999. Both CCIS and NAIS suffered from the problem of claims higher than premiums.
- Pradhan Mantri Fasal Bima Yojana initiated in 2016, has subsumed all the crop insurance schemes. The premium rate is 1.5% for Rabi and 2% for Kharif crops and 5% for annual commercial and horticultural crops. There is no upper limit for Government subsidies.
Irrigation and Water Conservation Technology Reforms
Till the mid-70s, efforts were made to create irrigation potential. However, the actual utilization was very low. To narrow this gap, Command Area Development Programme was initiated in 1974. The scheme was finally subsumed in Accelerated Irrigation Benefit Programme (AIBP), now a part of Pradhan Mantri Krishi Sinchai Yojana (PMKSY). PMKSY is targeting to bring technological reforms in irrigation through micro-irrigation techniques like sprinkler and drip irrigation. The micro-irrigation methods help in efficient utilisation of water as well as fertilizers and pesticides (More Drop Per Crop).
In the 1980s, for optimum use of resources, sustainable outcomes and integrated planning, three area development programmes were launched — Drought Prone Area Programme, Desert Development Programme, and Integrated Wasteland Development Programme. Later all three were merged into the Watershed Development Component of Prime Minister Krishi Sinchayee Yojana (WDC-PMKSY).
By the 1980s, agricultural productivity started declining due to a decline in investments in irrigation projects and time overruns of existing projects. The LPG Reforms of 1991, though started reviving the economy as a whole, but could not do much for the agricultural sector. However, globalization allowed technology to be imported, which has impacted Indian agriculture in the long term.
Storage Technological Reforms
Post-harvest losses have also been a major impediment to the growth of the agricultural sector. To reduce such losses, NABARD has set up Warehouse Infrastructure Fund (WIF) to promote the construction of cold storage and warehouses. The government has launched the Pradhan Mantri Kisan SAMPADA Yojana, which is a comprehensive scheme covering, among other things, all aspects of post-harvest losses. It includes the scheme of Mega Food Parks (for collection and processing in a hub and spoke model) and Integrated Cold Chain and Value Addition Infrastructure (for establishing cold chains for perishables). MIDH also has a component promoting Cold Chains for horticultural commodities.
Since Independence India has undertaken a lot of institutional and technological reforms in agriculture. From land reforms to financial reforms, India has come a long way. Still, there is a long road to go. The decreasing landholding size, unreliable monsoons, and climate change are posing newer threats. These will require more innovative reforms for our farmers to thrive and the food security of India is ensured. Technological solutions like biotechnology and bioengineering, along with institutional reforms through government policies will play a very important role in securing the future of agriculture in India.