Govt approves Rs50,000 crore irrigation package to boost agriculture

Cabinet also moots creation of a national agriculture market to help farmers get better crop prices

   

Sayantan Bera

The Pradhan Mantri Krishi Sinchai Yojana will ensure that all farm lands get water for cultivation, finance minister Arun Jaitley said at a briefing on cabinet decisions. Photo: Priyanka Parashar/Mint

New Delhi: In a bid to remove persistent bottlenecks in Indian agriculture and revive growth, the government on Thursday approved a Rs.50,000 crore irrigation package and took the first step to create a national market for agricultural produce.

Both measures look to derisk Indian farming. At present most farmers are dependent on the annual monsoon to grow their summer crops, even while they struggle to get a fair price for their produce due to rigidities in the market that prevent a fair price discovery.

A combination of factors—neglect of investments in agriculture, drought last year, followed by unseasonal rains, the end of the global commodity super cycle and a cutback in development programmes—has created a situation of rural distress.

The government recently announced compensation packages for farmers who have suffered damage due to unseasonal rains this winter. The latest measures now look to provide a more long-term resolution to the structural challenges faced by Indian agriculture.

The Pradhan Mantri Krishi Sinchai Yojana (PMKSY), Prime Minister Narendra Modi’s flagship irrigation scheme, will ensure that all farm lands get water for cultivation, finance minister Arun Jaitley said at a briefing on cabinet decisions. “Plans will be prepared at district and state level that will promote conservation and efficient management (of water resources),” he said.

The scheme will also promote precision-irrigation technologies, enhance recharge of aquifers and introduce sustainable water conservation practices, a government release said.

At present more than half of crop lands lack irrigation and farmers depend on the June to September south-west monsoon for growing Kharif crops such as paddy, pulses, oilseeds and cotton.

The latest funding of Rs.50,000 crore, spread over five years, means a doubling of the central budget for irrigation and could go a long way in drought-proofing Indian agriculture. The contribution of states will be over and above this sum. The project had been initially allotted Rs.5,300 crore in the 2015 union budget.

At the national level, the irrigation scheme will be monitored by a steering committee chaired by the Prime Minister along with other ministers from the department of agriculture, water resources and rural development.

“The decision to increase funding on irrigation projects is crucial as this will substantially increase crop productivity and revive growth in the agriculture sector that is plummeting,” said Ramesh Chand, director of National Institute of Agricultural Economics and Policy Research, Delhi, and member, national task force on agriculture, NITI Aayog.

Setbacks due to bad weather in 2014-15 led to a 5.3% dip in foodgrain production and the agricultural growth rate dropped to a low of 0.2%, fuelling farm distress and a spate of farmer suicides. Part of this distress was due to a sudden slump in prices of key crops like rice, wheat, cotton and potato.

To address this, the cabinet approved the creation of a national agricultural market through an electronic platform to provide farmers and traders with access to opportunities for purchase and sale of agri-commodities in a transparent manner.

“The electronic platform is an indirect route to ensure better prices for farmers through non-price factors by increasing connectivity, competition and reducing price spreads in different agricultural markets,” said Chand.

The goal of the e-marketing platform is to reform agricultural marketing, improve access to markets and transparent price discovery for farmers, said a government statement.

“It would also increase (farmers’) access to markets through warehouse-based sales and thus obviate the need to transport his produce to the mandi (wholesale markets),” it added.

The central sector scheme for promotion of the national common market will be set up through the Agri-Tech Infrastructure Fund with a budget of Rs.200 crore. The target is to bring 585 regulated wholesale markets across the country on board the electronic platform in the next three years.

According to the press release, 250 markets will come under the e-platform this year, another 200 in 2016-17 and 135 in 2017-18.

For integration with the national e-platform, states will have to reform existing markets by giving a single licence that will be valid across the state, a single-point levy of market fee and provision for electronic auction for price discovery. This, the government hopes, will provide better prices to farmers, improve the agriculture supply chain and reduce wastage.