India’s rural areas are the battleground in the fight against poverty - they are home to nearly three-quarters of the country’s poor. Rising farmers’ suicides, the slowdown in agricultural growth, the apparent fall in rural nutrition and calorie-intake, and the slowing of the decline in poverty all trigger the need for introspection.

 

Based on the Bank’s various analytical work and project interventions, and taking stock of the Government’s recent initiatives in the sector, the World Bank's Martien van Nieuwkoop, Lead Rural Development Specialist, and Dipak Dasgupta, Lead Economist, spell out a few pointers as to what can be done differently to reinvigorate Indian agriculture:

 

1. Switch Government expenditures away from large and often unproductive subsidies that do not often benefit farmers, into more productive investments.   One area, for example, is fertilizer subsidies, another is public food subsidies, and yet another is power subsidies (for groundwater pumping).  In addition to being bad for the environment, as well as a potential source for the leakage of funds, these subsidies absorb increasingly larger shares of agricultural spending. This agricultural spending could instead be used to transform the rural areas with roads, water supply, electrification, research and extension, market support and others.  The transition will, however, not be easy because of the long years of reliance on the system, the modest gains that farmers currently receive, and the lack of confidence in taking bold measures.  The way out may well be a negotiated rationalization of the system---explaining the transition and the gains that it will bring, with farmers in the front-seat.

 

2. Remove the regulatory barriers to domestic marketing and trade.  Most states are already in the process of amending the Agricultural Produce Marketing acts that will allow much more competition and greater participation of the private sector in the marketing of agricultural produce---thereby raising the prices that farmers receive and making the sector more dynamic.  This will entail a very different role for the state, including the need for organizing farmers so that they are better positioned to capture economies of scale in agricultural marketing and value addition. Again, implementation will be the key.

 

3. Manage water, technology and land better.  Water reforms will be crucial to provide much greater farmer-centered operations, better maintenance of irrigation systems, and cost-recovery. The strong interests that operate against such reform will need to be carefully managed.  Unlocking the potential of rain-fed areas will be even more critical. This will need to emphasize soil and water conservation, or drought-proofing and risk-coping mechanisms such as crop insurance, while exploring opportunities in bio-fuels and carbon financing.   A strong push from a specific mission agency may be needed.  A related issue is facilitating agricultural diversification, together with an integrated extension and research system that emphasizes on-farm practices.  The ATMA model has already been rolled out in 200 districts; the main issue is of ensuring the ownership of the model at the grassroots level and the extension of marketing support. More secure land rights, especially for the poor, is the other key area. While the computerization of land records is progressing, a comprehensive effort is needed to improve land administration.

 

4. Re-examine forest dependent peoples’ transformation. Put forest dependent people in the driver’s seat and provide them with much stronger land and resource rights, along with support structures.  Joint forestry management is improving and producing better results.  The recent Tribal Rights Bill has opened the door to better community forestry management.  Implementation, learning, and community involvement is now the key.  In the same vein, empowering the poor by scaling-up and replicating rural livelihood development models (e.g., self-help groups) have the potential to bring about very large impacts on poor rural households.  In this, non-farm activities may become increasingly important.

 

5. Strengthen the monitoring and evaluation system. Reliable learning of what works and what doesn’t will allow cutting out the duplication and fragmentation of many existing schemes. Improve the system so that it starts at the ground-level with users being empowered to generate local solutions rather than through top-down designs that are imposed upon them from outside.