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Indian Agrarian economy is in shambles, what are its fault lines.

The crisis in the agrarian industry of India, which employs nearly 52% of the nation's working population, has assumed epidemic proportions and has pervaded throughout India, transcending all boundaries of states and climate.

One of the most glaring fault lines is the constant dip in crop production post liberalization. The agricultural production growth rate, which was steadily increasing during 1950-1990, was incidentally higher than the population growth rate, thus helping India achieve self-sufficiency in foodgrain output. However, the Mid-term Appraisal of the Tenth Five Year Plan (2002-07) estimated that the growth rate of the GDP in agriculture and allied sectors was just one per cent per annum during the year 2002-05. The reduction in per capita foodgrain availability forced India to import foodgrain from foreign markets at much higher price than domestic markets.

The influx of products like tea and coffee from Sri Lanka following the removal of restrictions on import and reduction in import duty, helped in reduction of prices of these goods in domestic markets which made their domestic cultivation unprofitable.

Even four decades later than the Green Revolution, a large fraction of crop fields lack adequate drainage trenches, sufficient electricity supply and irrigation facilities. Unlike in the United States, Indian farms rarely use highly mechanized farms for growing thousands of acres of food crops. Indian laws and customs also bar corporations from farming land directly for food crops. The government expenditure in areas like agriculture, irrigation, flood control, village industry, energy and transport, also declined from an average of 14.5 per cent in 1986-1990 to six per cent in 1995-2000.

The farmers find it difficult to invest in their farm production since they don't get adequate financial support from the banks and the government. Banks are averse to grant loans to farmers, fearing the high-risk nature of such loans. Even if a loan is provided, it comes with a huge interest rate. As a result, the farmers turn to deceitful moneylenders. Headed by Dr M.S. Swaminathan, National Commission for Agriculture also pointed out that elimination of the lending facilities of banks during the post-reform period has accelerated the crisis in agriculture. Owing to the WTO regulations and policy of minimum intervention by the government enunciated by the policy of globalization, the agricultural subsidies from the government have also reached a nadir.

The failure to repay loans pushes the farmers into debt trap. According to the National Crime Records Bureau report, 17,060 farmers committed suicide in the country in 2006 alone. The suicides have also increased due to the phenomenon of disguised unemployment in this sector. This negatively affects rural employment and makes agrarian sector a non-profitable sector for rural people. A major problem in agriculture today is the growing infertility of soil across the nation, due to imprudent use of chemical fertilizers. The growing amount of arsenic, uranium and other toxic substances in ground water is also a cause of concern.

The unavailability of cold storage houses is another big problem facing this sector. India has mere 5386 stand-alone cold storages, having a total capacity of 23.6 million MT for 200 MT of foodgrain production. Post-harvest losses of farm produce, especially of fruits, vegetables and other perishables, have been estimated to be over Rs. 1 trillion per annum, 57 per cent of which is due to avoidable wastage and the rest due to avoidable costs of storage and commissions. Moreover, an average Indian farmer realizes only 1/3rd of the total price paid by the final consumer as against 2/3rd with higher degree of retail. A World Bank Study of 2007 demonstrates that the average price a farmer receives for horticulture produce is barely 12 to 15% of what is paid at the retail outlet. Land acquisitions, in the name of public projects and Special Economic Zones, is also adding to the woes of farmers, as happened in Nandigram of West Bengal.

The exigency of the hour is for the government to give ample subsidies to farmers, to encourage efficient microfinance ventures in villages and to periodically revise the procurement prices of farm produce. Bold steps taken by the government will help in making India a prosperous nation and an agricultural superpower.

Arijit Goswami

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