1.

Need for a Medium-Term Strategy and Action Plan

●​ Agricultural development requires a medium-term strategy.

●​ Focus on raising farm incomes, equity, and sustainability.
●​ Policies and reforms are necessary for long-term impact.

2. Key Areas of Discussion

●​ Macroeconomic policies and issues related to doubling farm income.

●​ Policies for ensuring remunerative prices and addressing marketing issues.
●​ Policies on water and technology, including IT applications.
●​ Post-harvest activities, inclusiveness, climate change, and institutional reforms.

3. Macroeconomic Policies and Agriculture

●​ Traditional agricultural policies focus on farm-specific issues, but macro policies also
have significant effects.
●​ Fiscal, monetary, trade, tariff, and exchange rate policies impact agriculture both directly
and indirectly.
●​ Objectives of macroeconomic policies:
○​ Control inflation.
○​ Sustain public expenditure.
○​ Maintain fiscal balance.
●​ Fiscal policies should:
○​ Improve tax revenue.
○​ Increase public investment in agricultural infrastructure.
●​ Financial liberalization and trade policies can either promote or hinder agricultural
growth.
●​ Importance of promoting the rural non-farm sector and labor-intensive manufacturing to
reduce pressure on agriculture.

4. Role of Non-Agriculture in Agricultural Development

●​ Economist T.N. Srinivasan (2008): Low productivity in agriculture is due to lack of

absorption of labor in non-agriculture.
●​ Arthur Lewis Model (1954):
○​ Economic development requires shifting labor from subsistence agriculture to
modern industrial sectors.
 ○​ Capital accumulation in industry is necessary to absorb agricultural labor.
●​ Debate on whether agriculture or non-agriculture plays a bigger role in poverty reduction:
○​ Some studies argue that non-agriculture and urban growth are key for poverty
reduction.
○​ Others suggest that agriculture has a greater impact on reducing poverty (World
Bank, 2008; Gaiha, 2015).
○​ Christiaensen and Martin (2018): Agricultural growth is 2-3 times more effective
in poverty reduction than industrial or service sector growth.
●​ A balanced approach is necessary:
○​ Shifting labor from agriculture to non-agriculture is crucial.
○​ Agriculture remains the largest provider of livelihoods and is linked to other
sectors.

5. Doubling Farm Income (DFI)

●​ Several studies (NITI Aayog, Ashok Dalwai Committee, Chand, 2016) analyzed the
feasibility of doubling farm income by 2022.
●​ Six key sources of income growth for DFI:
○​ Increase in agricultural productivity.
○​ Growth in total factor productivity.
○​ Diversification to high-value crops.
○​ Increase in cropping intensity.
○​ Better terms of trade for farmers.
○​ Shift to non-farm and subsidiary activities.
●​ Government introduced programs for:
○​ Irrigation expansion.
○​ Crop insurance.
○​ Minimum Support Prices (MSP).
○​ Agricultural market reforms.

6. Insights from Dalwai Committee Report

●​ Farm income composition:

1.​ 60% from agriculture (crops + livestock).
2.​ Target to increase this to 70%.
3.​ Develop allied enterprises and support infrastructure to create additional income
sources and near-farm jobs.
●​ Challenges in achieving DFI:
1.​ Past trends:
■​ Farm income tripled in nominal terms (2003–2013).
■​ Real income growth was only 3.2% per annum.
 2.​ Required growth rate:
■​ To double farm income by 2022, income must grow at 10%+ per annum.
■​ But in 2014-2018, farm income growth was only 2.5% per annum.
3.​ Non-farm sector’s increasing role:
■​ NABARD survey (2015-16):
■​ Agriculture’s share in total farm income is 43%.
■​ Agriculture’s share in total rural income is only 23%.
■​ Non-farm sector growth is crucial for rural prosperity.
4.​ Need to go beyond agriculture:
■​ Government should promote non-farm opportunities in rural areas.
5.​ Regional disparities:
■​ Different classes of farmers have varying income levels.
■​ Small and marginal farmers (86% of total farmers) have low, volatile
incomes.
6.​ Profiling farmers for targeted policies:
■​ Identifying marginal farmers who successfully diversified can provide
lessons.
■​ Eastern region needs more focus as it houses 60% of low-income
marginal farmers.
7.​ Addressing agricultural laborers' income:
■​ Special policies needed for agricultural laborers.
8.​ Environmental concerns:
■​ High agricultural growth can harm the environment.
■​ Zero Budget Natural Farming (ZBNF) can improve sustainability.

7. International Perspective on DFI

●​ Mikecz & Vos (2016) Study:

○​ Examined land and labor productivity trends in 140 countries (2015-2030).
○​ Found 41 countries successfully doubled productivity within 15 years.
○​ Government intervention played a key role in increasing productivity.

8. Conclusion on DFI

●​ Regardless of whether DFI is achieved by 2022, improving farm income must remain a
priority.
●​ Shift in focus from production to income-based policies is the right approach.
●​ A mix of agricultural and non-agricultural development strategies is essential for
long-term economic growth.
Price and Marketing Policies in Indian Agriculture
1. Importance of Pricing in Agriculture

●​ Price has always been a critical factor in agricultural policies, even during the Green
Revolution.
●​ Despite various policy interventions, Indian farmers have struggled to receive
remunerative prices over the past 70 years.
●​ Farmers face price issues in all types of years—whether normal, drought-prone, or
even surplus years—due to distortions in pricing and marketing policies.

2. Price Variations Across Regions

●​ Agricultural prices vary significantly across different regions in India.

●​ Study by Chatterjee and Kapur (2017):
○​ Used high-frequency price data from the AgMarket portal.
○​ Found that the standard deviation of log (real) prices across mandis was 0.17,
higher than other developing nations.
○​ Despite improvements in rural roads and communication technologies, the
price variations remain.
○​ Around 39% of price variation remains unexplained, possibly due to
region-specific factors.

3. Issues with Minimum Support Price (MSP) Policy

●​ Limited Scope: MSP benefits are mainly for rice and wheat, with unequal regional
distribution.
●​ Limited Access: Many farmers still do not receive the MSP benefits in regions where
procurement is weak.
●​ Impact on Diversification: The overemphasis on rice and wheat discourages
diversification into other crops.

Recent Government Initiative: MSP at 1.5x A2+FL

●​ Government announced MSP at 1.5 times the A2+FL cost (A2 = paid-out cost, FL =
family labor cost) for all Kharif crops.
●​ Concerns about Inflation: Higher MSPs may lead to increased food prices and
general inflation.
●​ Farmer Taxation Issue:
 ○​ A study by OECD and ICRIER (Gulati & Cahill, 2018) found that Producer
Support Estimates (PSE) were negative by 14% from 2000-2017.
○​ This suggests that Indian farmers are net taxed compared to farmers in other
countries.

Challenges of MSP Implementation

●​ Lack of Procurement Infrastructure: MSP increases are meaningless unless

procurement mechanisms are strong.
●​ Limited Procurement Coverage: Government mainly procures rice and wheat, with
limited intervention for other crops.

4. Government Schemes for Price and Income Support

(A) Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA)

Aimed at ensuring remunerative prices for farmers through three components:

1.​ Price Support Scheme (PSS)​

○​ Government agencies procure pulses, oilseeds, and copra at MSP.

○​ Procurement is done by NAFED (National Agricultural Cooperative Marketing
Federation) and FCI (Food Corporation of India).
2.​ Price Deficiency Payment Scheme (PDPS)​

○​ Farmers sell in the open market but receive the difference between MSP and
the actual market price.
○​ This was experimented in Madhya Pradesh (Bhavantar Bhugtan Yojana) but
faced manipulation issues by traders.
3.​ Private Procurement & Stockist Scheme (PPPS)​

○​ Private sector participation in procurement and storage.

○​ Implementation remains uncertain as many states have not opted in.

(B) Rythu Bandhu Scheme (Telangana)

●​ A direct income support scheme, not a price support scheme.

●​ Provides ₹4000 per acre per season for farm investments.
●​ Issues:
○​ Tenant farmers excluded → Many suicides in Telangana are by tenant farmers.
○​ Requires better land records and financial resources for expansion.
5. Agricultural Market Reforms
●​ Problems in Agricultural Markets:​

1.​ Inefficient operations and long supply chains reduce farmer income.
2.​ Too many intermediaries → Farmers get very low prices.
3.​ Example: Farmers get ₹1/kg for tomatoes, while consumers pay ₹40/kg.
●​ Attempts at Market Reform:​

1.​ e-NAM (Electronic National Agriculture Market) was launched to create a

unified market, but progress is slow.
2.​ State reluctance to reform APMC (Agricultural Produce Market Committee)
markets due to political reasons.
●​ Lessons from Karnataka’s Agricultural Market Reforms (Aggarwal et al., 2017):​

1.​ Institutional Framework → Clear policies & governance.

2.​ Incentives for Participation → Farmers & traders should benefit.
3.​ Infrastructure Development → Physical & digital infrastructure to improve
efficiency.

6. Need to Shift from Cereal-Focused Policies

●​ Current Focus: Rice and wheat receive most government support (MSP, subsidies,
procurement).
●​ Issues:
○​ Large farmers benefit the most.
○​ Environmental impact: Overuse of water, fertilizers, and electricity.
●​ Need for Diversification:
○​ More support for pulses, oilseeds, fruits, and vegetables.
○​ Encouraging millets and other drought-resistant crops.

7. Post-Harvest Challenges & Solutions

●​ Storage & Processing Issues:​

○​ High post-harvest losses due to poor storage infrastructure.

 ○​ India processes very little of its fruits & vegetables compared to developed
nations.
○​ Over-regulation discourages investment in agri-processing & food industries.
●​ Missing Middle in Value Chains:​

○​ Small farmers lack direct market access.

○​ Need investment in logistics, cold storage, and food processing.
○​ Learning from developed countries where seamless farm-to-market supply
chains exist.
●​ Policy Recommendations:​

○​ Reduce stock limits & export bans (e.g., onion bans hurt farmers).
○​ Stable export policies → Unpredictable bans harm farmer earnings.
○​ Boost private sector participation by removing unnecessary controls.

8. Role of Start-ups in Agriculture

●​ Start-up India Initiative (2016) encourages agricultural innovations.​

●​ Types of Agri Start-ups:​

○​ Input Services: BigHaat.com, AgroStar, Skymet, EM3.

○​ Output & Marketing Services: Ninjacart, BigBasket, Flipkart.
●​ Challenges for Agri-Startups:​

○​ Only 1% of total start-up investments go into agriculture.

○​ Market failures require state intervention and dedicated funding.
●​ Recommendations:​

○​ ICAR business incubators should be restructured for better commercialization.

○​ Ministry of Agriculture should be included in start-up promotion policies.

Conclusion
●​ Agricultural price and marketing policies in India are highly distorted.
●​ MSP policies remain flawed and do not cover all farmers/crops.
●​ Reforms in agricultural markets, procurement, and diversification are necessary.
●​ Storage, value chains, and export stability must be prioritized.
●​ Encouraging start-ups and private investment can modernize Indian agriculture.
1. Basics of Agriculture: Water & Technology

●​ Essential Inputs: Seeds, fertilizers, credit, water, and technology are crucial for
agriculture.
●​ Investment Needs: Irrigation, rural infrastructure, and research & development (R&D)
must be prioritized to improve productivity and farmer incomes.
●​ Current Investment Trends:
○​ The ratio of Gross Capital Formation in agriculture to its GVA fluctuated from
18.2% (2011-12) to 16.4% (2015-16).
○​ Public investment in agriculture was only 2.8% of GVA in 2015-16.
○​ Studies suggest that public investment in rural infrastructure and R&D reduces
poverty.

2. Water: The Most Important Agricultural Input

●​ Irrigation & Policy Issues:​

○​ India has heavily invested in canal irrigation, but efficiency and sustainability
have been neglected.
○​ PM Krishi Sinchai Yojana (PMKSY) is a step in the right direction.
○​ Government subsidies on canal water and electricity lead to overuse and
inefficiency.
●​ Needed Reforms:​

○​ Increase public investment in irrigation.

○​ Ensure sustainable groundwater use and conservation.
○​ Rationalize water and electricity pricing to prevent wastage.
○​ Involve farmers in irrigation management for better efficiency.
●​ Water Conflicts & Management:​

○​ Inter-state water disputes and local farm-level conflicts are increasing.

○​ The issue is not water scarcity, but poor management and distribution.
○​ Strategies for better water management include:
■​ More Crop Per Drop: Increase water productivity.
■​ Rainwater harvesting & conservation of groundwater.
■​ Drip irrigation to reduce water wastage.
■​ Reducing subsidies on water-intensive crops.

3. Land Policy & Tenure Reform

●​ Legalizing Land Tenure:

 ○​ A Model Leasing Act suggests legalizing land tenancy to secure landowners’
rights while protecting tenants.
○​ Ensuring tenant farmers can access credit and insurance.
●​ Land Records Modernization:
○​ Digital India – Land Records Modernization Programme (DILRMP) aims to
update land ownership records.
○​ Studies in Himachal Pradesh and Maharashtra show a mismatch between land
records and ground reality.
○​ Better record-keeping is essential for fair land distribution and dispute resolution.

4. Paradox in Irrigation Investment

●​ Despite huge investments in canal irrigation, net irrigated area under canals is
shrinking.
●​ From 1951 to the 11th Five-Year Plan, irrigation spending rose from ₹376 crores to
₹1,65,000 crores.
●​ Study of 210 irrigation projects:
○​ ₹1,30,000 crores invested, but irrigation coverage reduced by 2.4 million
hectares.
○​ Massive time and cost overruns in projects.
○​ Current water pricing covers less than 10% of operation & maintenance
(O&M) costs, making systems unsustainable.

5. Improving Water Use Efficiency

●​ Drought & Water Crisis:

○​ Successive droughts in 2014-15 and 2015-16 show the need for long-term water
strategies.
○​ India uses 2-3 times more water to grow 1 tonne of grain than China, Brazil, or
the USA.
○​ Better water efficiency could double irrigation coverage or cut water use by
50%.
●​ Drip Irrigation & Rainwater Harvesting:
○​ Drip irrigation is 10x more efficient than flood irrigation.
○​ However, less than 5% of sown area is under drip irrigation.
○​ Challenges: High initial capital cost, ineffective subsidy system.
○​ Solutions:
■​ Reduce capital costs.
■​ Improve subsidy mechanisms.
■​ Strengthen farmer awareness and training programs.

Conclusion
 ●​ Water management and technology adoption are essential for sustainable
agriculture.
●​ Investment in irrigation, rural infrastructure, and R&D is critical.
●​ Legal land reforms and digital records can improve land use efficiency.
●​ Efficient water use (like drip irrigation) and pricing reforms can help conserve
resources while increasing productivity.

Technology, Research, and Extension

1.​ India’s Agricultural Productivity is Low​

○​ Yields of many crops in India are lower than in other countries.

○​ Total factor productivity (how efficiently inputs are converted into outputs) is lower
than in Brazil, China, and Indonesia.
2.​ Reasons for Lower Productivity​

○​ India lags in technology, research, extension services, education, and

infrastructure like transport and energy.
○​ More investments are needed in these areas.
3.​ Importance of Technology​

○​ New agricultural technologies, particularly biotechnology, can boost productivity.

○​ BT Cotton has been successful, but India has not approved BT food crops like
Brinjal, Mustard, and Chickpea.
○​ Gene editing could be an alternative approach to improving crop yields.
4.​ Economic Inefficiency in Agriculture​

○​ Many Indian farmers do not use optimal inputs and crop choices.
○​ Farmers could increase their incomes three times with better decision-making
and advisory services.
○​ India’s investment in agricultural research and education is only 0.6% of
agricultural GDP, while other developing countries invest at least 1.0%.
5.​ Role of Information Technology​

○​ Digital India can help farmers through better connectivity and access to online
services.
○​ New technologies (Fourth Industrial Revolution) need to focus on improving
productivity rather than just redistributive policies.
Policies on Inclusiveness in Agriculture

1.​ Challenges Faced by Small Farmers​

○​ Small farmers face higher risks (weather, price, market, policy, and credit risks).
○​ Their income is only one-tenth of large farmers’ income.
○​ Many small farmers must take up non-farm activities to survive.
2.​ Solutions for Small Farmers​

○​ Improve access to land, water, credit, technology, and markets.

○​ Promote farmer collectives, cooperatives, and women’s self-help groups.
○​ Invest in value chains, market linkages, and climate-resilient farming
techniques.
3.​ Challenges in Agricultural Credit​

○​ Small farmers still struggle to get loans despite increased farm credit.
○​ There are regional inequalities and most loans go to large farms.
○​ Small farmers face high debt burdens, which need to be addressed.
4.​ Different Types of Small Farmers​

○​ Commercial farmers (successful, market-oriented).

○​ Diversified farmers (engage in both farming and non-farm work).
○​ Subsistence farmers (struggling, need the most support).

Agriculture in the Eastern Region

1.​ Potential for Growth​

○​ Eastern India has high poverty rates, but also good soil and water resources.
○​ There is scope for a second Green Revolution with better infrastructure and
policies.
2.​ Challenges in Eastern Agriculture​

○​ Low crop yields, high risk, small land holdings, poor infrastructure.
○​ Lack of irrigation and drainage facilities.
3.​ Opportunities for Growth​

○​ Focus on high-value crops like dairy, poultry, horticulture, and fisheries.

○​ Develop short-duration crop varieties and better marketing systems.
Women in Agriculture

1.​ Women’s Role in Farming​

○​ 75% of rural women work in agriculture, but their contributions are often
unrecognized.
○​ Women perform key farming tasks like sowing, weeding, transplanting, and
harvesting.
2.​ Challenges for Women Farmers​

○​ Lack of land rights and access to credit and inputs.

○​ Women are not officially recognized as cultivators in revenue records.
3.​ Solutions for Women Farmers​

○​ Secure property rights and legal protections for women.

○​ Promote women’s cooperatives and self-help groups.
○​ Studies show women’s group farms in Kerala (Kudumbashree) perform
better than male-managed farms.

Youth in Agriculture

1.​ Declining Interest in Farming​

○​ Young people are leaving agriculture due to low profitability and income
uncertainty.
○​ Around 56.6% of rural youth (15–29 years) still depend on farming, but prefer
non-agriculture jobs.
2.​ Solutions to Attract Youth​

○​ Encourage mechanization, high-yield crops, horticulture, and animal

husbandry.
○​ Support agri-startups, IT in agriculture, and value-added processing.
○​ Address caste, gender, and land access issues to create better opportunities.

Equity and Sustainability in Agriculture

1.​ Small and Marginal Farmers Need More Support​

○​ 86% of farms are small or marginal, making sustainability a key concern.

○​ Policies should focus on improving productivity, income diversification, and
risk management.
 2.​ Future of Indian Agriculture​

○​ The focus should be on inclusive growth, rural infrastructure, technology

adoption, and youth participation.
○​ Strengthening institutions, credit access, and market linkages will ensure
long-term sustainability.

Breakdown of Institutions and Governance in Agriculture

1.​ Importance of Institutions and Governance in Agriculture​

○​ Effective institutions and governance are essential for agricultural growth,

equality, and sustainability.
○​ Rigid institutions and inefficient governance hinder the implementation of
government programs.
○​ Poor governance increases reliance on subsidies, making agricultural growth
unsustainable.
○​ Institutional reforms are needed across agricultural value chains and food
systems for better governance and reduced inequality.
2.​ Need for Institutional Reforms in Public Systems​

○​ Institutional reforms are required in key areas like:

■​ Input and output markets: Ensuring fair pricing and accessibility.
■​ Land and water management: Promoting sustainable resource use.
■​ Sustainable agriculture: Encouraging eco-friendly farming practices.
○​ Strengthening institutions will enhance efficiency and equity in agriculture.
3.​ Role of Farmer Producer Organizations (FPOs)​

○​ FPOs help small farmers achieve economies of scale in input and output
marketing.
○​ Some FPOs are successful, but many exist only on paper due to lack of financial
support and capacity building.
○​ Strengthening and financially supporting FPOs can improve small farmers’
participation in the value chain.
4.​ Challenges in Agricultural Input Delivery​

○​ Rising costs of inputs and substandard seeds and pesticides contribute to crop
failures.
○​ Small farmers face challenges in accessing quality inputs, credit, and extension
services.
○​ Strengthening institutions for input delivery is essential for preventing distress
among farmers.
5.​ Critique of Government Policies​
 ○​ Vaidyanathan (2010): Agricultural policies have remained unchanged despite
economic reforms.
○​ Government strategies continue to focus on large-scale investments and
subsidies rather than improving efficiency.
○​ Institutional reforms are needed to improve investment efficiency rather than just
increasing funds.
6.​ Institutional Reforms in Canal Irrigation​

○​ Current Issues:
■​ Inefficient management of irrigation systems.
■​ Increasing water prices without proper institutions to recover charges.
○​ Proposed Solutions:
■​ Participatory Irrigation Management (PIM) and Water User Associations
(WUAs) can improve water distribution efficiency.
■​ There are 56,539 WUAs managing 13.16 million hectares of irrigated
land, but success is limited to a few states.
■​ Strengthening WUAs through awareness-building and participatory
monitoring is essential.
7.​ Institutions for Natural Resource Management​

○​ Successful institutional models for natural resource management include:

■​ Common land resources: Tree Growers’ Cooperatives, Joint Forest
Management, Van Panchayats.
■​ Watershed development: Ralegaon Siddhi (Maharashtra) under Anna
Hazare.
■​ Canal water management: Water User Associations.
■​ Groundwater management: Pani Panchayats.
○​ Scaling up these successful institutions can enhance sustainability.
8.​ Collective Action for Climate Change Adaptation​

○​ Collective action institutions play a crucial role in:

■​ Technology transfer in agriculture.
■​ Sustainable natural resource management.
○​ Smallholders and resource-dependent communities benefit from collective
approaches to climate resilience.
9.​ Government Agricultural Programs and Institutional Approaches​

○​ Many government programs lack proper institutional frameworks.

○​ Four-pronged institutional approach for improvement (Raturi, 2011):
■​ Local institutional platforms: Linking farmers with government
agencies.
■​ Improved agricultural technology and rural infrastructure.
■​ Watershed programs: Addressing upland, degraded, and desertified
areas.
 ■​ Public-private partnerships at the state level.
10.​Decentralization for Better Governance​

○​ Social mobilization, community participation, and a decentralized approach

improve governance.
○​ Challenges in Indian decentralization:
■​ Most state governments focus on transferring power from the center to
states rather than local bodies.
■​ Panchayati Raj Institutions (PRIs) lack financial and functional autonomy.
○​ Strengthening PRIs is crucial for achieving agricultural growth with equity and
sustainability.
11.​Farmer-Centric Policy Formulation​

○​ Policies should be designed based on farmers' needs rather than being dictated
by experts.
○​ Deshpande (2016): Policy documents and five-year plans often ignore farmers'
viewpoints.
○​ A decentralized, stakeholder-driven approach will make policies more effective.

Conclusion

Institutional reforms are critical for achieving agricultural sustainability, efficiency, and equity.
Strengthening governance structures, decentralizing decision-making, and ensuring farmer
participation will improve policy effectiveness.