Tackling Indian agriculture’s water woes
Shock-proofing the farm sector from poor monsoons should not be delayed
After witnessing bountiful rains last summer, India appears to be on the verge of a water crisis once again this year, with most forecasts predicting a below-normal monsoon. The estimated gross domestic product (GDP) growth in fiscal year 2013-14 at 4.9% was 40 basis points higher than the previous fiscal year, partly because of robust agricultural growth, which added 80 basis points to the overall growth figure, according to Central Statistical Organization (CSO) estimates. One basis point is one-hundredth of a percentage point.
Deficient rainfall can shave off 80 to 100 basis points of GDP growth this financial year, and raise inflation levels by a similar amount, worsening the stagflationary environment in which the Indian economy finds itself. Adequate buffer stocks of cereals could partly help tame prices but there will be little respite from rise in prices of vegetables, pulses and edible oils in case the rains fail. The global commodity cycle too seems to be firming up, partly on expectations of unfavourable weather in key agricultural hotspots. Wheat, soya and sugar futures have risen by 23%, 19%, and 15%, respectively, in the past three months.
The El Nino impact is likely to be felt across Asia but it is the Indian economy that will be hit the hardest because of its sensitivity to weather-related disruptions, a 28 April report by Credit Suisse says. The vulnerability of India’s food sector to bad weather is the result of a legacy of bad choices in India’s farm policies, which have failed to insulate farmers from the impact of deficient rain. Given that farm income is the lifeline for a majority of people living below the poverty line, it is this section that bears the brunt each time rain plays truant.
The first major push to boost domestic farm produce came in the sixties during the so-called green revolution phase when the use of high-yielding variety seeds, along with more intensive use of inputs and fertilizers led to a spurt in the production of cereals.
The strategy was geared toward boosting output from the irrigated belt of northern India. As a short-term strategy, it was highly effective. But over the long-term, such a strategy has only served to increase the vulnerabilities of farming, and led to severe distortions in the food and natural resource economy. On the one hand, the untrammelled extraction of groundwater resources, aided by generous power subsidies to farmers, has depleted levels in most of India’s granaries and damaged soil health. On the other hand, the advent of a more industrial version of farming even in India’s non-irrigated, and rain-fed belt has raised risk levels of farming in these regions. It is not a coincidence that farmer suicides are largely concentrated in non-irrigated and indebted regions of the countryside. The advent of industrial farming practices in these regions without first ensuring regular water supply has proved fatal.
The way out of this mess involves a three-pronged strategy to tide over the water crisis and make Indian agriculture more resilient. The first step out of this mess involves better water management practices. Andhra Pradesh and Gujarat have shown how active state governments can work with local communities to revive and build water reservoirs, and insulate against weather shocks. This must be combined with more realistic power pricing and incentives for farmers to use micro-irrigation rather than flood irrigation. The second step will be providing incentives to move farmers away from water-guzzlers such as paddy and sugarcane to more appropriate crops in dry regions. In some states such as Jammu and Kashmir, this has happened naturally, with many paddy growers turning fruit cultivators. In other regions such as Western Maharashtra, a more aggressive approach may be needed to wean farmers away from sugarcane. As long as scarce resources such as water and power are priced absurdly, their usage will be absurd. The third step involves the use of new technologies such as drought-resistant genetically modified crops to drought-proof farming in dry regions.
India’s next government needs to show both courage and imagination to address the looming water crisis, and turn it into an opportunity for reform.