A recent study led by renowned agricultural economist Ashok Gulati, in collaboration with three other researchers, has shed light on significant opportunities for enhancing farmers' incomes in India. Titled "New Deal for Agriculture for Viksit Bharat@2047," the study, published by the Indian Council for Research on International Economic Relations (ICRIER), offers valuable insights and recommendations aimed at benefiting farmers while minimizing costs to the economy at large.
The research paper authored by Dr. Ashok Gulati, Dr. Ranjana Roy, Manish Kumar Prasad, and Ritika Juneja of the Indian Council for Research on International Economic Relations (ICRIER) advocates for a strategic shift towards diversification away from traditional crops towards high-value commodities such as the livestock sector and fisheries. These sectors have experienced significant growth in recent years. The study puts forth five policy options aimed at benefiting farmers while minimizing adverse effects on the broader economy.
Diversification towards High-Value Commodities
The study highlights the increasing contribution of the livestock sector to agricultural household incomes, which has surged from 4% to 16% between 2002-03 and 2018-19. Notably, the poultry sector has undergone a remarkable transformation, evolving from a backyard activity to a fully integrated commercial industry, largely led by private players. The introduction of innovations such as contract farming and vertical integration has propelled the poultry industry's growth. Similarly, the fisheries sector has emerged as a significant contributor to agricultural exports, accounting for approximately 15.2% in 2022-23. This trend underscores the potential for elevating farmers' incomes primarily through animal husbandry and pisciculture.
Enhancing Market Access
Addressing the challenges faced by small producers, who constitute a significant portion of agricultural households, the study emphasizes the importance of enhancing market access. Contract farming arrangements offer a promising avenue for smallholders to establish direct links with markets, mitigating price and production risks. Additionally, Farmers' Producers Organizations (FPOs) play a crucial role in enhancing members' bargaining power and market access. The Open Network for Digital Commerce (ONDC) initiative seeks to revolutionize agricultural marketing by providing farmers with direct access to digital marketplaces, thereby promoting inclusivity and fair competition. Reviving futures trading in agricultural commodities is also recommended to enable farmers to make informed decisions and manage market uncertainties effectively.
Liberalizing Trade Policies
Revitalizing futures trading in agricultural commodities and liberalizing trade policies are crucial steps towards ensuring fair prices for farmers. The study underscores the importance of removing curbs on farm produce exports to enable Indian farmers to capitalize on lucrative international markets. It criticizes ad hoc measures such as export bans and restrictions, which undermine farmers' earnings and perpetuate market uncertainties. Instead, the study advocates for transparent mechanisms like minimum export prices to safeguard consumer interests while facilitating farmers' access to global markets.
Incentivizing Workforce Transition
Agricultural transformation necessitates a shift of labor away from subsistence farming towards more remunerative sectors. The study proposes linking the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) with developmental schemes to create alternative employment opportunities outside agriculture. By investing in rural infrastructure and environmentally sustainable activities, such as water conservation and skill development, India can incentivize workforce transition and foster inclusive growth.
Boosting Total Factor Productivity (TFP)
Efforts to enhance Total Factor Productivity (TFP) in agriculture are crucial for sustainable sectoral growth. Investments in infrastructure, research and development, and extension services are essential for improving efficiency and fostering technological innovation. The study highlights the need for rationalizing subsidies and directing resources towards targeted welfare schemes to optimize agricultural investments effectively. By prioritizing sustainable growth strategies, India can chart a transformative path towards Viksit Bharat@2047, a vision of a prosperous and resilient agricultural sector.
The study's findings underscore the immense potential for increasing farmers' incomes by prioritizing animal husbandry and pisciculture, enhancing market access, liberalizing trade policies, incentivizing workforce transition, and augmenting Total Factor Productivity in agriculture. It is hoped that policymakers will consider these recommendations to formulate a comprehensive strategy for the agricultural sector's development as India advances towards Viksit Bharat@2047.
