Chapter-6: Climate, Climate Change, and Agriculture

In this chapter, the economic survey points out that climate change can lower the famers’ income up to 25% and there is a need for dramatic improvement in irrigation, use of new technologies and better targeting of power and fertilizer subsidies. Key points from this chapter are as follows:

What is the extent of problem?

Agriculture accounts for 16% of gross domestic product and 49% of employment in India, making it crucial in the overall economy.

• Shortages of water and land, deterioration in soil quality, climate change-induced temperature increases and rainfall variability, these are some of the main issues with agriculture leading to farmers’ distress.
• The impact of climate change is already visible and in medium term, agriculture income may fall by 25% because climate change will hit the crop yields.
• Poor agricultural performance can lead to inflation, farmer distress and unrest, and larger political and social disaffection — all of which can hold back the economy.
• The farmers are suffering because of erratic monsoons, unseasonal showers, volatile prices, which sometimes dip below support prices.
• At times, agriculture faces problem of plenty while at other times, there is much less harvest. Lower yields because of high temperature and low rainfall due to climate change will add to farmers’ distress.

What is the solution?

The government’s lofty objectives of addressing agricultural stress and doubling farmer’s income need radical follow-up action, including decisive efforts to bring science and technology to farmers, replacing untargeted subsidies (power and fertilizer) by direct income support, and dramatically extending irrigation but via efficient drip and sprinkler technologies.

We note that Government had launched Direct Benefit Transfer for Fertilizer subsidy on pilot basis in October, 2016. Under this scheme, the entire subsidy on various fertilizer grades was released to the fertilizer companies on the basis of actual sales done by the retailers to beneficiary farmers.

Economic development demands that more and more people should move out of agriculture. Why problem of agriculture matters then?

This is because agriculture cannot be the dominant, permanent source of livelihood because of its productivity level. The living standards sustained by farming with its low productivity can’t match those offered by manufacturing and services. Thus, concern about farmers and agriculture today is to ensure that tomorrow there are fewer farmers and farms but more productive ones.

The economic survey cites learning from Dr. Ambedkar here who had warned on dangers of romanticizing rural India. He had famously called village as “a sink of localism, a den of ignorance, narrow mindedness and communalism,” thereby expressing a deeper truth—an Indian social complement to the Lewisian economic insight—that in the long run people need to move and be moved out of agriculture for non-economic reasons.

What are other survey findings?

Using various statistical analyses the survey notes in this chapter that:

• Impact of temperature and rainfall is felt only in the extreme; that is, when temperatures are much higher, rainfall significantly lower, and the number of “dry days” greater, than normal.
• These impacts are significantly more adverse in unirrigated areas (and hence rainfed crops such as pulses) compared to irrigated areas (and hence crops such as cereals).
• On these basis, if there is no policy response, there can be farm income losses of 15 percent to 18 percent on average, rising to 20 percent-25 percent for unirrigated areas.
• Thus, the policy implications are stark. India needs to spread irrigation – and do so against a backdrop of rising water scarcity and depleting groundwater resources especially in North India.
• In the 1960s, less than 20 percent of agriculture was irrigated; today this number is in the mid-40s. The Indo-Gangetic plain, and parts of Gujarat and Madhya Pradesh are well irrigated. But parts of Karnataka, Maharashtra, Madhya Pradesh, Rajasthan, Chattisgarh and Jharkhand are still extremely vulnerable to climate change on account of not being well irrigated. India pumps more than twice as much groundwater as China or United States. There is 13 percent decline in the water table over the past 30 years.

What are main recommendations?

The recommendations can be divided into technology, research and insurance.

Technology

Technologies of drip irrigation, sprinklers, and water management—captured in the “more crop for every drop” campaign—may well hold the key to future Indian agriculture and hence should be accorded greater priority in resource allocation. The power subsidy needs to be replaced by direct benefit transfers.

Agricultural research

There is need to embrace agricultural science and technology with renewed vigor. Anticipatory research be undertaken to preempt the adverse impact of a rise in mean temperature. Agricultural research will be vital in increasing yields but also in increasing reliance to all the pathologies that climate change threatens to bring in its wake: extreme heat and precipitation, pests, and crop disease.

Insurance

Climate change will increase farmer uncertainty, necessitating effective insurance. Building on the current crop insurance program (Pradhan Mantri Fasal Bima Yojana), weather-based models and technology (drones for example) need to be used to determine losses and compensate farmers within weeks (Kenya does it in a few days).

Why the survey says that while making any police decisions, the government needs to take into account the two agricultures in India?

In India, there are two kinds of agriculture and this fact must be taken care of while designing and implementing policies. First, there is agriculture—the well-irrigated, input-addled, and price-and-procurement-supported cereals grown in Northern India—where the challenge is for policy to change the form of the very generous support from prices and subsidies to less damaging support in the form of direct benefit transfers. Second, there is another agriculture (broadly, non-cereals in central, western and southern India) where the problems are very different including inadequate irrigation, continued rain dependence, ineffective procurement, insufficient investments in research and technology (non-cereals such as pulses, soybeans, and cotton), high market barriers, weak post-harvest infrastructure (fruits and vegetables), challenging non-economic policy (livestock). The problem gets aggravated because agriculture is a state subject and the farm policy remains an open political economy question.