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Agriculture is the largest source of livelihood in India. Around 58 percent of those in agriculture depend on marginal and small farms of less than two hectares each. They account for the largest segment of India’s agriculture economy. Currently, the agriculture ecosystem has structural, policy and field-level policy intervention constraints for India to evolve into a globally competitive, commercially compliant and large-scale farming economy.
Agriculture also has a critical role in contributing to India achieving many of the 17 Sustainable Development Goals set by the United Nations. Currently, the farmers themselves are drawing opportunities to enhance their livelihoods through aggregating themselves into farmer networks, undertaking cultivation, and adopting good agricultural practices in partnership with the private sector. This is also done by turning to the higher value and income-earning horticulture sector.
Today, growth in Gross Value Added in FY20 in agriculture and allied sectors stand at an impressive 4 percent, at Rs 19.48 lakh-crore. Over the last decade, the area under horticulture grew by 2.6 percent per annum, while annual production increased by 4.8 percent. That said, there is a critical concern of finding a market for surpluses stock. The Budget could focus on policies that will help encourage identifying such domestic and/or international markets.
India is the leading producer in banana, mango, papaya and guava, and stands next only to China in tomato, onion and potato. India has also the largest livestock population (~535.78 million), and leads in milk production across the world. Even with such high production, India’s share in world exports of these commodities or of value-added products is very low.
India is today a food surplus economy but is unfortunately not able to efficiently market frequent surpluses in global markets, nor in deficient areas in domestic markets. Hence, apt policy such as diversified marketing platforms at the domestic market level, as well as appropriate intervention to penetrate global markets is required. It is expected that the Budget will focus on these gaps.
To make the agriculture sector globally competitive, the ongoing policy and field level initiatives need to achieve scale and be coupled with interventions to optimise input cost, together with land and crop management at the farm level. Plus, post-harvest, logistics infrastructure and supporting credit instruments in this stage of all agri value-chains are required to work in tandem.
While relevant policies are being evolved, apt implementation remains a concern. Adequate resource allocation for implementation is critical and the Budget needs to factor this. Also, support for development of farmer networks is critical to ensure that poor farmers are benefited through elimination of rent-seeking middlemen.
Some laudable schemes have been launched by the government; and while such support is available, these transformations need to be made scalable and sustainable. A large untapped opportunity is in evolving globally-competitive clusters or geographical concentrations of farming communities focusing on a particular agri produce, offering scope for scale and specialisation in production, post-harvest management, processing, marketing, and exports. Such clusters provide ideal scale for effective implementation of development interventions and critical mass to attract private sector innovation.
Agri clusters consisting of farmers, agri-businesses and support institutions working together could build lasting and scalable value networks. Latin America has successfully leveraged the cluster approach for fruit clusters making them global leaders in exports. Over the years, several clusters have emerged organically in India; such as the potato seeds cluster in Punjab, the grapes cluster in Nashik region, the chilli cluster in Guntur, and the gherkin clusters in Karnataka.
Another opportunity to achieve integrated social development in rural India is by making the most of the reverse migration that took place due to COVID-19. India has one of the largest number of emigrants and the government has facilitated the return of more than 2.1 million emigrants from around the world. These returning emigrants have brought with them invaluable skills and expertise which can be leveraged to improve livelihoods and economy in rural areas.
Farmers have returned from Israel, technicians from West Asia and thousands of skilled workers from industrial cities such as Surat or Noida to their homes in rural areas. The Union Budget 2021 can address this specific category of population and provide them support under the Atmanirbhar initiative for acquiring productive assets, arranging working capital and establishing common facilities for sustainable social development in India.
Kunal Sood and V Padmanand are partners at Grant Thornton Bharat. Views are personal.
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