World Development Report 2008 from the World Bank found that poverty reduction through agricultural growth is at least twice as effective in comparison to growth emanating through non-agricultural sectors. This holds true for India, also, where 80 per cent of the population formally counted as poor came from rural sector in 2011– 2012. The report indicates that poverty reduction is possible only by causing the rural incomes to grow at a faster rate. Over the years, the gap between consumption levels of urban and rural sectors has widened. Studies undertaken recently have shown that even though there has been growth in rural incomes between 2005 and 2012 due to increase in commodity prices and terms of trade favourable for agriculture, the increase registered in the level of non-farm incomes is at least three times that of farm incomes even in present times.
The rural economy in the present context depends a lot less on agriculture than it used to be in past. As the average size of landholding has decreased, the numbers of farmers who fall in the small and marginal category have now grown over 90 per cent and over 50 per cent of the cropped area is being cultivated by them. Smallholder farmers facing unfavourable circumstances are increasingly compelled to combine non-farm work with work on their own land. A report based on the data collected from the 68th round of the National Sample Survey (2011–2012) found that there has been a shift of around 36 million workers from agriculture to non-agricultural sectors between 2004–2005 and 2011–2012, which implies that a major share of their income is generated from work other than agriculture. Owing to this inter-sectoral shift, the agriculture share in the total manpower has dropped below the 50 per cent mark for the first time post-Independence. While there is some dispute about the veracity of this number, it is the fact that substantial numbers of workers are now being employed in sectors like rural construction. The working conditions in these sectors being poor and the quality of employment in the economy undergoing comprehensive decline, many observers consider this to be the result of an exchange of low-income farm work for low-quality non-farm work.
Therefore, there is a growing need to tackle the huge challenge of employment generation. According to the Economic Survey 2014–2015, regardless of the data source used, employment growth, which is 1.40 per cent, has fallen behind labour force growth, which is 2.23 per cent, between 2001 and 2011. It is obvious that employment elasticity of growth, which shows the effectiveness of the economic system in generating employment, appears to haveundergone a decline over time. Over the last decade, around 5 crore rural households have been provided relief employment every year by the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA). Unfortunately, the number of person days of employment generated and the number of households covered under MGNREGA as a whole since 2012 in the country has undergone a sharp decline.
The Importance of Public Investment
For the vivaciousness of rural India, the future initiatives require addressing the twin challenges of reviving the dynamism of the farm sector by strengthening its climate resilience and generating quality employment in non-farm sectors of the rural economy at the same time.
Public investment could provide the solution to address the long-term structural constraints of the rural economy. Official land use statistics show that irrigation facilities are not yet made available to 55 per cent of cultivated area. This rainfed segment of Indian agriculture is extremely vulnerable to variations in the pattern of seasonal rainfall. As experienced in the case of watershed projects over the past three decades, local harvesting of monsoon run-off which provides supplemental irrigation to crops at crucial periods of plant growth could be a good measure for drought mitigation in the near future. There is a need to converge the investments under MGNREGA and watershed programmes in this entire framework of droughtproofing rainfed agriculture. Taking into account the food security, there is an urgent requirement to make investments in rainfed agriculture because it contributes about 40 per cent of our foodgrain and a major share of pulses, millets and oilseeds.
Another critical area that requires immediate attention is soil where investments are needed to improve the soil composition. The quantity of organic carbon in soil is not up to the required level in most parts of India due to poor organic matter incorporation. Soil health is further deteriorated with the careless use of chemical fertilisers. Various methods of soil enrichment have been evaluated by scientists as well as farmers that include conversion of ‘waste to wealth’ and recycling of organic matter. There is a great need to speed up these measures for greater farmer uptake. The present fertiliser subsidy regime, which is highly partial in favour of synthetic chemical fertilisers, needs to be reframed. Even though the public awareness about the harmful effects of chemical pesticides on environment and human beings is growing, yet the use of chemical pesticide has been escalating over the years. The pesticides are causing more harmful effects in India than in many other regions across the world. Immediate steps need to be taken to eliminate the use of synthetic pesticides in agriculture and make it chemical-free by developing alternative ways of pest management, such as nonpesticidal management (NPM) practices.
Promotion of Crop Diversification
Another big challenge that need immediate attention is crop diversification. Though there is consistent change in consumption patterns in the country, pulses are still the major source of protein for the poor. They play a crucial role in the food security framework of the country. Millets are known to contribute higher resilience to the cropping systems against climate risk in conventional millet-growing areas. Most of the farmers growing pulses or millets are unable to meet even the Minimum Support Prices (MSPs) and there is no proper mechanism in place to procure these crops to the public. Taking a cue from the recent experience of States like Madhya Pradesh, decentralised procurement of pulses and millets could be made possible in those rainfed states where they constitute a major part of the cropped area. The growing malnutrition among children, adolescent girls and pregnant women in India could be effectively cut down by the procurement of local foodgrain, supplementary nutrition such as Integrated Child Development Services Scheme and the Mid-Day Meal Scheme.
The role of agricultural research is very crucial in the promotion of diversified cropping systems. There is an urgent need to raise the public expenditure on agricultural research by at least three to four times the present expenditure of a meagre 0.7 per cent of the agricultural GDP. At the same time adequate attention must be given to include crops like pulses and millets and measure should also be taken to develop climate-resilient cropping systems. The agricultural transformation in the country has been made possible by the huge contribution of scientists and extension workers of the public-funded agricultural extension system. Unfortunately, in many regions of the country, in particular, in the rainfed tracts, this system is virtually not in operation. Hence, a focused action-oriented approach should be taken to revive the agricultural extension system in these parts and effective utilisation of human resource and technical know-how to build its capacities. There is an urgent need to invigorate and empower organisations like the Krishi Vigyan Kendras and the Agricultural Technology Management Agency to become active agents of change in rural India.
Creation of employment opportunities is another major challenge that need to be tackled. Projections based on current trends of employment growth indicate that it will require creation of at least thrice the number of non-farm jobs than those at the present growth rate of 5–6 million jobs per year to meet the requirement of unemployment in future. A great number of these jobs need to be generated in the rural non-farm sector. Therefore, the sectors within the rural economy which provide potential for high growth and employment generation need to be identified and well supported through the implementation of a carefully worked out policy package. The chances for local employment control of the local producers over the value chain could be significantly increased by involving sectors like agro-processing and through value addition to agricultural produce. Public investment in rural infrastructure could help in leveraging substantial private investment in this sector and significant local employment multipliers could be generated. Available evidence shows that though there has been a decline in the overall rate of women’s labour force participating in agricultural-related work, but participation of women from poorer households has been high in the labour force, particularly, in times of increasing agrarian distress. The importance of MGNREGA in providing relief employment to a large number of rural women cannot be underestimated and there is an urgent need to revive it.