State of India’s Livelihoods Report 2010 ii St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010 State of India’s Livelihoods Report 2010 The 4P Report

Edited by Sankar Datta Vipin Sharma Copyright © ACCESS Development Services, 2010

All rights reserved. No part of this book may be reproduced or utilized in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher.

Jointly published in 2010 by

Sage Publications India Pvt Ltd ACCESS Development Services B1/I-1 Mohan Cooperative Industrial Area 28, Hauz Khas Village Mathura Road, New Delhi 110 044, India New Delhi 110 016 www.sagepub.in www.accessdev.org

Sage Publications Inc 2455 Teller Road Thousand Oaks, California 91320, USA

Sage Publications Ltd 1 Oliver’s Yard, 55 City Road London EC1Y 1SP, United Kingdom

Sage Publications Asia-Pacific Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763

Published by Vivek Mehra for Sage Publications India Pvt Ltd, typeset in 10/13 pt Minion by Star Compugraphics Private Limited, Delhi and printed at Rajkamal Electric Press, Kundli, Haryana.

Library of Congress Cataloging-in-Publication Data Available

ISBN: 978-81-321-0587-9 (PB)

The Sage Team: Rekha Natarajan, Aniruddha De, Sanjeev Kumar Sharma and Umesh Kashyap Contents

List of Tables vii List of Figures ix List of Boxes xi List of Abbreviations xiii Preface xix Acknowledgements xxi

1. Overview of Livelihoods Situation 1 Sankar Datta and Vipin Sharma

2. Livelihoods in Agriculture—Status, Policies and Prospects 15 Trilok Singh Papola

3. greening India through MGNREGA—Convergent Action for Benefits beyond Employment Generation 33 Suryamani Roul

4. New Generation Initiatives in Agri-based Livelihoods—Five Successful Private Sector Initiatives 51 Pradeep Kumar Mishra

5. Financing Agriculture—Emerging Scenario 63 Biswa Bandhu Mohanty

6. Agriculture Marketing—From Livelihoods to Enterprise 87 Reshma Anand

7. Climate Change and Agriculture—Challenges and Opportunities in India 105 Shailesh Nagar and Jayesh Bhatia

About the Editors and Contributors 125 vi St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010 List of Tables

1.1 Top nine commodities produced in India and its world ranking 2 1.2 Normal (average of 2003–04 to 2007–08) area, production and yield of major crops in India 3 1.3 Top 10 exports from India 3 1.4 Share of population engaged in agriculture and agriculture’s contribution to GDP in India and the United States (n.d.) 3 1.5 Growth rate of output of different sub-sectors of agriculture: 1993/94 prices 3 1.6 Contributions of various sectors in the Indian GDP (percentage) 4 1.7 growth rate of Indian GDP and agriculture 4 1.8 Profitability of crops in Orissa over the years 4 1.9 Per capita net availability of food grains (grams per day) in India 6 1.10 Land holdings in India 7 1.11 Land use classifications in India (thousand hectares) 7 1.12 growth in Indian microfinance sector 8

2.1 Incidence of poverty among agricultural workers and rural population: 2004–05 16 2.2 Average monthly income and consumption expenditure (`) per farmer household (2002–03) 17 2.3 Loans by source and purpose (%) 17 2.4 Distribution of agricultural households by main activity and size of operational holdings—2004–05 (%) 22 2.5 Changes in size distribution of operational holdings (%) 22

3.1 An overview of performance of MGNREGA 38 3.2 Areas of convergence and activities in four select districts of AP 47 3.3 Main benefits for small and marginal farmers from MGNREGA 50

5.1 Debt from institutional sources as per land holding classes 66

6.1 Agriculture sector: Key indicators at constant prices (2004–05) (%) 88 6.2 Status of implementation of APMC Act in India 93 6.3 Public and private investment in agriculture and allied sector at 2004–05 prices 94 6.4 Agri-produce sourcing operations of key companies (contract farming, direct purchase and PPP models) 99 6.5 Indian food industry: Key statistics 101

7.1 Share of drylands in All-India cropped area, 1989–90 106 7.2 Share of dryland main workers in total workforce, All-India, 1991 106 7.3 Climate change and agriculture in India: Findings from various studies 108 7.4 Climate change hazards, impacts, micro-level strategies, and actions for adaptation to climate change 117 viii St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

7.5 Benefits of MGNREGS with respect to climate change adaptation and mitigation in India 118 7.6 Programme outputs and their potential for climate change 119 7.7 Changes in land use and its impact 119 7.8 Positive impacts of NRM interventions on agriculture-based livelihoods 120 7.9 Key successes in WORLP related to climate change adaptation in agriculture 121 List of Figures

1.1 grain orientation in irrigated and rainfed areas from 1960 onwards 6

7.1 Distribution of GHG emissions from India in 2007 110 7.2 Sources of GHGs within agriculture sector 111 7.3 Number of papers on climate change published in peer reviewed journals 115 x St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010 List of Boxes

3.1 Salient features of MGNREGA 35 3.2 Are benefits of MGNREGA reaching people? 39 3.3 Findings of the planning commission’s mid-term appraisal report on rural development programmes 40 3.4 Empowerment of women workers through MGNREGS: A study in four states 40

4.1 The SRI concept 55 4.2 The PTD process 58

5.1 Reforms in short term cooperative credit structures (STCCS) New hope for agri-finance 66 5.2 Operation Barga: Share croppers empowerment in West Bengal through participatory land reforms strategy 71 5.3 Bhoomi in Karnataka: Bringing sea-change in land records management system 72 5.4 Soil health card: A pioneering initiative of the Gujarat government 72 5.5 Samanwita: Commercial banks collaborate with community-based organizations for community development 72 5.6 Branding products of Farmers/SHGs—marketing perspectives 76 5.7 Vegetable and fruit promotion council, Kerala (VFPCK): Price discovery for SHGs through a farmers’ market model 76 5.8 Financial assistance for strengthening supply chain system: Fruit and vegetable auction market (SFVAM), Bangalore 77 5.9 Supply chain integration in horticulture 79 5.10 ICICI Bank’s warehouse receipt-based financing 79 5.11 ITC’s E-Choupal: Linking business with societal purpose 80 5.12 Mobile vans for knowledge management (KM) of farmers 81

6.1 Interstate barriers to trade 91 6.2 Cultivating communities 96 6.3 Suminter Organics: A case study of contract farming 97 6.4 Prominent private equity in agribusinesses 100 6.5 Cooperative paddy cultivation in Thrissur, Kerala 101 6.6 Dharmapuri Precision Farmers Agro Services: A local farmer enterprise model 102

7.1 Innovation in Micro-insurance 116 xii St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010 List of Abbreviations

ABC Agri Business Centre AC Agri Clinics ACI Agri Credit Intensive Branches ADWDRS Agriculture Debt Waiver and Debt Relief Scheme AEZ Agri Export Zones AFCB Adat Farmers Cooperative Bank AFP Agro Food Park AIFOF All India Federation of Organic Farming AIM Alternate Implementation Model AME Agriculture Man Ecology Foundation ANBC Adjusted Net Bank Credit AP Andhra Pradesh APC Agricultural Prices Commission APEDA Agricultural and Processed Food Products Export Development Authority APMC Agricultural Produce Market Committee APMIP AP Micro Irrigation Project APPS Ananthapur Paryavarana Parirakshana Samithis ARF Automatic Refinance Facility ASCI Administrative Staff College of India, Hyderabad ATM Automated Teller Machine ATMA Agricultural Technology Management Agency BAIF Bharatiya Agro Industries Foundation BC Business Correspondent BDS Business Development Services BF Business Facilitator BIPCL Banana India Producer Company Ltd BNRGSK Bharat Nirman Rajiv Gandhi Sewa Kendra BOOT Build Own Operate Transfer BOP Bottom of the Pyramid BOT Build Operate Transfer BPL Below Poverty Line BRGF Backward Region Grant Fund CACP Commission on Agricultural Costs and Prices CAGP IV Carlyle Asia Growth Partners IV CB Commercial Banks CBO Community Based Organizations CCI Cotton Corporation India CCS Cooperative Credit Structure CDS Current Daily Status CEGC Central Employment Guarantee Council xiv St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

CH4 Methane CIBIL Credit Information Bureau (India) Limited CIIFAD Cornell International Institute for Food, Agriculture and Development CLDP Comprehensive Land Development Project CMP Common Minimum Programme CMSA Community Managed Sustained Agriculture

CO2 Carbon Dioxide CPR Common Property Resources CRD Commissioner Rural Development CSA Community Supported Agriculture CSC Common Service Centres CSIR Council for Scientific and Industrial Research CSO Civil Society Organization CSP Customer Service Point D&B Dun and Bradstreet Information Services India Pvt. Ltd DCCB District Central Cooperative Banks DDP Desert Development Programme DfID Department for International Development DMI Directorate of Marketing and Inspection DPAP Drought Prone Area Programme DPFAS Dharmapuri Precision Farmers Agro Services DPIP District Poverty Initiatives Programme DRDA District Rural Development Agency EAS Employment Assurance Scheme EXIM Bank Export Import Bank of India FA Farmers Associations FAO Food and Agriculture Organization FC Farmers Clubs FCI Food Corporation of India FDI Foreign Direct Investment FFS Farmer Field Schools FIEC Farm Information Exchange Clubs FIF Financial Inclusion Fund FIP Financial Inclusion Plan FIPF Farm Innovation and Promotion Fund FITF Financial Inclusion Technology Fund FMCG Fast Moving Consumer Goods GAP Good Agricultural Practices GBP Pound Sterling GCA Gross Cultivated Area GCF Gross Capital Formation GDP Gross Domestic Product GHG Green House Gas GIS Geographical Information Systems GLC Ground Level Credit GoI Government of India GORUS gomukh Centre for Rural Sustainability GSM Global System for Mobile Communications GTZ Deutsche Gesellschaft für Technische Zusammenarbeit List of Abbreviations xv

HDFC Housing Development Finance Corporation HDP High Density Polyethylene HYV High Yielding Varieties IAAP Intensive Agricultural Area Programme IADP Intensive Agricultural Development Programme IAY Indira Awas Yojana ICAR Indian Council for Agriculture Research ICQS Internal Control System for Quality Management ICRISAT International Crops Research Institute for Semi-Arid Tropics ICT Information and Communication Technology IDE International Development Enterprise IFOAM International Federation of Organic Agriculture Movements IGA Income Generation Activities IIFM Indian Institute of Forest Management IIM Indian Institute of Management IIPA Indian Institute of Public Administration, New Delhi IIT Indian Institute of Technology INRM Integrated Natural Resource Management IPCC Inter-governmental Panel on Climate Change IPM Integrated Pest Management IRDP Integrated Rural Development Programme IT Information Technology ITC Indian Tobacco Company ITDA Integrated Tribal Development Agencies IWDP Integrated Watershed Development Programme IWMP Integrated Watershed Management Programme JCI Jute Corporation of India JLG Joint Liability Groups JRY Jawahar Rojgar Yojana KCC Kisan Credit Card KfW Kreditanstalt für Wiederaufbau KHDP Kerala Horticulture Development Project KM Knowledge Management KVK Krishi Vigyan Kendra LT Long Term MANREGA Mahatma Gandhi National Rural Employment Guarantee Scheme MART Marketing and Research Team MCK Micro Credit Kendra MCX Multi Commodity Exchange Limited MEGS Maharashtra Employment Guarantee Scheme MEPA Micro Enterprise Promotion Agency MF Microfinance MFALDA Marginal Farmers and Agricultural Labour Development Agency MFI Microfinance Institution MFIN Microfinance Institutions Network MFO Microfinance Organizations MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act MGNREGP Mahatma Gandhi National Rural Employment Guarantee Programme MGNREGS Mahatma Gandhi National Rural Employment Guarantee Scheme xvi St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

MI Tanks Micro Irrigation Tanks MIP Micro Irrigation Projects MMAS Macro-Management of Agriculture Scheme MNC Multi National Company MoEF Ministry of Environment and Forests MoRD Ministry of Rural Development MoU Memorandum of Understanding MP Madhya Pradesh MPEDA Marine Products Export Development Agency MPRLP Madhya Pradesh Rural Livelihoods Project MRP Maximum Retail Price MSP Minimum Support Price MSSRF M S Swaminathan Research Foundation MT Medium Term MTA Midterm Appraisal

N2O Nitrous Oxide NABARD National Bank for Agriculture and Rural Development NADP National Agricultural Development Programme NAFED National Agricultural Cooperative Marketing Federation NAIS National Agricultural Insurance Scheme NAPCC National Action Plan on Climate Change NBFC Non-Banking Financial Companies NCAER National Council of Applied Economic Research NCDEX National Commodity and Derivative Exchange NCEUS National Commission for Enterprises in the Unorganized Sector NCF National Commission on Farmers NDC National Development Council NDDB National Dairy Development Board NFFWP National Food for Work Programme NGO Non-Governmental Organization NHM National Horticulture Mission NIC National Informatics Centre NOVOD National Oilseeds and Vegetable Oils Development NPA Non-Performing Asset NREGA National Rural Employment Guarantee Act NREGP National Rural Employment Guarantee Programme NREGS National Rural Employment Guarantee Scheme NREP National Rural Employment Programme NRLM National Rural Livelihood Mission NRM Natural Resource Management NSDM National Skill Development Mission NSS National Sample Survey NSSO National Sample Survey Organization NTFP Non-Timber Forest Produce NWDPRA National Watershed Development Project for Rainfed Areas OBC Other Backward Classes OMFED Orissa State Cooperative Milk Producers Federation ORMAS Orissa Rural Development and Marketing Society OTS One Time Settlement List of Abbreviations xvii

PDS Public Distribution System PIF Public Interest Foundation PIN Professional Institutional Network PLP Potential Linked Credit Plan PNB Punjab National Bank PoS Point of Sale PPCP Public Private Community Partnership PPP Public Private Partnership PPS Paryavarana Parirakshana Samithis PRA Participatory Rural Appraisal PRADAN Professional Assistance for Development Action PRI Panchayat Raj Institution PTD Participatory Technology Development R&D Research and Development RAAKS Rapid Assessment of Agricultural Knowledge Systems RBI Reserve Bank of India RIDF Rural Infrastructure Development Fund RKVY Rashtriya Krishi Vikas Yojana RLEGP Rural Labour Employment Guarantee Programme RMG Rithu Mithra Groups RP Resource Person RRB Regional Rural Banks RSETI Rural Self Employment Training Institutes RTC Rural Transformation Centres RUDSETI Rural Development and Self-Employment Training Institutes SAA Service Area Approach SAF Syndicate Agricultural Foundation SAS Situation Assessment Survey SAU State Agriculture University SBI State Bank of India SC Scheduled Caste SCARDB State Cooperative Agriculture and Rural Development Banks SEWA Self Employed Women’s Association SF Small Farmers SFDA Small Farmers Development Agency SFVAM Fruit and Vegetable Auction Market SGRY Sampoorna Grameen Rozgar Yojana SGSY Swarnajayanti Gram Swarozgar Yojana SHG Self Help Group SHG-BLP Self Help Group-Bank Linkage Programme SHM State Horticulture Mission SHPI Self Help Promoting Institution SKDRDP Shri Kshetra Dharmasthala Rural Development Project SKS Swasraya Karashaka Samithis SLA Sustainable Livelihoods Approach SME Small and Medium Entrepreneurs SOIL State of India’s Livelihood SRI System of Rice Intensification ST Scheduled Tribe xviii St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

STCCS Short Term Cooperative Credit Structures T&V Training and Visit TDF Tribal Development Fund TERI The Energy Research Institute TN Tamil Nadu TNAU Tamil Nadu Agricultural University UID Unique Identification Number UIDA Unique Identification Development Authority of India UNDP United Nations Development Programme UP Uttar Pradesh UPA United Progressive Alliance UPS Uninterruptible Power Supply US United States UT Union Territory V&MC Vigilance and Monitoring Committee VAT Value Added Tax VC Vaidyanathan Committee VFPCK Vegetable and Fruit Promotion Council, Kerala VSAT Very Small Aperture Terminal VVV Vikash Volunteer Vahini WB West Bengal WDF Watershed Development Fund WGCB Working Group on Capacity Building WGPE Working Group on Planning and Execution WGTA Working Group on Transparency and Accountability WORLP Western Orissa Rural Livelihood Project WR Warehousing Receipt WTO World Trade Organization WWF World Wildlife Fund for Nature Preface

Responding to the increasing attention on livelihoods of disadvantaged people by govern- ment and by non-government agencies, the Livelihood School, an institution engaged in building and disseminating knowledge required for supporting large number of livelihoods, and ACCESS Development Services, an agency engaged in a variety of technical assistance and support services to those engaged in livelihood promotion, made the first joint effort to take a close look at the status of livelihoods in India in 2008. Looking at the overwhelming response and paying attention to some of the feedback on this report, we decided to bring out an improved edition in 2009. But both these reports tried to present a general overview of the livelihood situation in India. The first volume presented a picture of the situation of livelihoods in the country, while the second volume looked at some of the major events that had happened in the year, such as the global financial crisis, change in the government, setting up of the skill missions, and examined the impact they had on the livelihoods of people, especially the poor. But both these reports looked at the impact on livelihoods across the sectors. However, we recognized that the implications on livelihoods in different sectors were significantly dif- ferent and needed to be examined carefully. Therefore, this year we have focused the State of India’s Livelihoods: The 4P Report on agriculture, which supports the livelihoods of more than 50 per cent of the country’s population and contributes less than 17 per cent of the GDP and feeds 100 per cent of the country. In this year’s report, in the ‘Overview’ chapter, Sankar Datta and Vipin Sharma present a comprehensive picture of livelihoods in agriculture. While on many fronts of production India today has acquired a significant position in the world’s production (for example, in commodities like milk, paddy, wheat and groundnut), in terms of productivity it is still lagging behind. Growth in production has also stagnated, with decreasing proportion of the national income being shared by these farmers, who feed us. In the subsequent chapter on ‘Livelihoods in Agriculture—Status, Policies and Prospects’, T.S. Papola explores how the agricultural policies of the state over the years have affected the livelihoods of people engaged in agricul- ture and how some of the other employment generation policies have affected agriculture. However, this period has also witnessed variety of new initiatives to support the livelihoods of the people, especially in rural areas. These initiatives have also had their implication on the labour engaged in agriculture, and thereby affecting its costs and its profitability. In Chapter 3, ‘Greening India through MGNREGA—Convergent Action for Benefits beyond Employment Generation’, Suryamani Roul has examined the effect of this large government programme in greater details. And in the subsequent chapter, Pradeep Kumar Mishra has presented the experience of ‘New Generation Interventions in Agri-based Livelihoods’, some of the private sector initiatives. This period has also witnessed several new initiatives in making financial services available for new initiatives in agriculture. These have been elaborated in details by Bishwabandhu Mohanty in the subsequent chapter, ‘Financing Agriculture—Emerging Scenario’. The other set of new initiatives we have talked about in this report is a variety of new market linkage efforts. Reshma Anand in the chapter on ‘Agriculture Marketing—From Livelihoods to Enterprise’ has presented several of these interventions. xx St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

Another phenomenon which has affected agriculture and thereby livelihoods of people engaged in it we could not ignore was climate change. In Chapter 7, ‘Climate Change and Agriculture—Challenges and Opportunities in India’, Shailesh Nagar and Jayesh Bhatia have eloquently presented both the positive and negative dimensions of such changes. By placing these different dimensions of Policy and Practice together and what it is doing to the People whose livelihoods are dependant on agriculture and what are some of the emerging Possibilities, we have tried to present a comprehensive picture of livelihoods in agriculture in this year’s State of India’s Livelihoods: The 4P Report. Enjoy reading. Sankar Datta Acknowledgements

The report owes its gratitude to the enormous effort, cooperation and support of all the contributors, who took out precious time for writing various chapters, despite their personal and professional preoccupations. The report would not have been possible without the valuable contributions of Professor Trilok Singh Papola for analyzing agri-policies in India over the years, Mr Biswa Bandhu Mohanty for his elucidation of the emerging scenario in agriculture financing, Pradeep Mishra for presenting examples of successful private sector agri-initiatives, Reshma Anand for shedding light on agri-marketing, Sailesh Nagar and Jayesh Bhatia for crystallizing the relationship between climate change and agriculture in India, and Suryamani Roul for exploring the potential of MGNREGA’s convergence with agri-schemes. Archana Sharma of ARANYA deserves special mention and appreciation for her tremendous effort in coordinating with all the authors and content editing a rather diverse report. The report is also grateful to Dr Sankar Datta and Vipin Sharma for co-writing the ‘Overview’ chapter, as well as their overall vision and guidance. A special thank you is due to The Livelihood School for their unwavering support and direction. Finally, the report could never have beenbrought out on time had it not been for the background support of the ACCESS team. xxii St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010 Overview of Livelihoods Situation

Sa n k a r Dat t a a n d Vipin Sh a r m a*

1.1. Introduction in India, the 2010 SOIL Report has focused on livelihoods in agriculture. Even today, livelihoods of 50 per cent of the Even today, despite significant growth in Chapter people in our country depend on agricul- the manufacturing and the service sectors, ture and related activities. But agriculture 1 agriculture remains the mainstay source of and related activities put together share only livelihoods in India. Though the percentage 17 per cent of the nation’s income. Produc- of people engaged in agriculture has come tion as well as productivity is stagnant. Most down below the historic mark of 50 per cent of the resource endowed land is producing of the population of the country, in terms of to their maximum capacities. To improve number, even today, more than 566 million productivity by harnessing potential of the people’s livelihoods primarily depend on poorer quality land, that too with smaller land agriculture. Not only does agriculture holders, is a challenge. Especially with tech- engage the largest number of people, the nology development still revolving around sector also feeds the entire country. The food management of intensive crop production. security of 100 per cent of the people in the To ameliorate the situation, we are left nation depends on agriculture. with no way other than (a) to facilitate Recognizing that agriculture forms the large numbers of people moving away from basis of livelihoods of such a large number agriculture to non-farm sector; (b) invest of people, the Government of India has into improving other resources, especially also, in recent years, stepped up its efforts land and water; and (c) focus on developing to strengthen Indian agriculture. In an un- technologies for non-irrigated areas which precedented manner, it has brought in can be adopted by the small farmers. National Policy for Farmers, which focuses on the interest of the farmers and not farm 1.1.1. Scope of SOIL 2010 production and a new Special Policy on Since 2008, the State of India’s Livelihood: Food Security, which focuses on the people People, Policies, Possibilities and Pro- who need the food. Breakthrough in bio- moters (the SOIL: 4P Report) has gained technology is opening up new horizons popularity amongst livelihood interven- for agriculture. There have also been a lot tionists, policy-makers and academics of new investments coming in for agricul- alike as a report that benchmarks current ture and related industries. Many civil trends that impact the livelihoods of the society organizations have also started con- poor. While the last two reports have traced centrating their action on agriculture. broad trends, factors and conditions that Therefore, this year’s State of India’s have influenced the situation of livelihoods Livelihood Report focuses on ‘who are these 566 million people’ (may be more than 600 *Done with research support from Ms K Padmaja, by the time this report is being read), and a freelance development consultant. ‘what do they do to seek out a livelihood’. 2 Sa n k a r Da t t a a n d Vipin Sh a r m a

1.1.2 Agriculture includes… Table 1.1: Top nine commodities produced in Agriculture is a complex sector with no India and its world ranking universally accepted definition. By some World Value of production definition it includes: crop production, Commodity rank (in ` ’000 crores) horticulture and allied activities like dairy, 1. Paddy (Rice) 2 13,750 piggery, poultry, goat rearing, fisheries, 2. Buffalo milk 1 1,260 3. Wheat 2 545 logging, non-timber forest produce (NTFP) 4. Cow milk 2 500 collection, agricultural inputs and agricul- 5. Fresh vegetables 2 330 tural processing sub-sectors. 6. Sugarcane 3 260 A large proportion of the farming 7. Potato 2 180 8. Groundnut 1 170 households, especially the poor, earn their 9. Pimento 1 170 livelihoods from a mix of subsistence ac- (red chillies) tivities. Most small and marginal farmers Source: Global Economy Research Group (2010). who own on an average less than an acre of land cannot produce enough to sustain Our country is no longer reeling under a family of 5.5 (NSSO, 2003) at the present the pressure of shortage of foods. Produc- level of productivity (e.g., paddy 2,203 tion and areas under them is summarized kg/ha or sorghum 2,337 kg/ha in 2009–08) in Table 1.2. (http://dacnet.nic.in). Therefore, most of Having reached a comfortable level of them engage in multiple sets of activities food sufficiency, India has also started ex- to augment their income and manage their porting some of its agricultural products cash flows. These include wage labour; (Table 1.3). animal husbandry, especially of small ruminants; forestry; horticulture; planta- 1.2.2. But not a great livelihood tion; logging; etc. opportunity This year’s SOIL Report, while look- While on one hand, India is shining with ing at agriculture from the perspective of an 8 per cent growth of Gross Domestic people whose livelihoods depend on it, will Product (GDP), 50 per cent of the people also include animal husbandry, fisheries, who feed us only share 17 per cent of the horticulture, some of the important plan- GDP. Agriculture is growing at a rate far tation crops and necessary support services, slower than the rest of the economy. Its as its part. growth is not proportionate to meet the requirements of our growing popula- 1.2. Overview of situation tion. This may have serious implications of agriculture for the people engaged in agriculture for their livelihoods: the shining India may 1.2.1. At the top of the world, take away the food from the hungry mouths for several commodities of people who produce it. India leads the world in production of a few It has been argued that with the devel- agriculture commodities. It is the largest opment of an economy, the contribution producer in the world of milk, cashew nuts, of agriculture to the overall economy comes coconut, tea, ginger, turmeric and black down. In developed economies like in the pepper (Table 1.1). It also has the world’s United States, the contribution of agri- largest cattle population (281 million). It is culture to the economy is only 1.2 per cent the second largest producer of wheat, rice, of the GDP with only 0.6 per cent popula- sugar, groundnut and inland fish. It is the tion being engaged in the sector (Table 1.4). third largest producer of tobacco. India As Indian economy is growing, contribu- accounts for 10 per cent of the world fruit tion of agriculture has also started to come production, ranking first in production of down, but still a very large percentage of the banana and sapota. population depends on it. Overview of Livelihoods Situation 3

Table 1.2: Normal (average of 2003–04 to 2007–08) area, production and yield of major crops in India

Area under production Total production (Million hectares) (Million tonnes) Yield(Kg/ha) Food grains Total coarse cereals 29.2 36.0 1,231 Total pulses 23.1 14.1 610 Total food grains 122.6 213.6 1,743 Oilseeds All nine oilseeds 26.4 26.3 995 Other cash crops Sugarcane 4.4 291.2 66,151 Cotton 8.7 19.4 379 Jute 0.9 11.0 2,093 Potato 1.4 24.3 17,207 Onion 0.6 7.8 12,520 Source: Ministry of Agriculture (2009).

Table 1.3: Top 10 exports from India increased to reach only 220 million tons by 2009. Similarly, all food grain produc- Value Products (` ’000 crores) tion has marginally increased by 1.9 per 1. Rice parboiled 36,520 cent per annum to 234 million tons in 2009 2. Bovine cuts boneless, frozen 33,781 from 197 in 2001. (Source: compiled from 3. Basmati rice 30,976 the statistics released by Ministry of Agricul- 4. Onions, fresh/chilled 12,903 ture as cited in www.indiaagristat.com). 5. Guargum treated and pulverized 10,334 6. Other rice 7,517 Not only the total production but even 7. Other cane jaggery 7,206 productivity per unit of land has not im- 8. Mango pulp 5,611 proved in the several years after the Green 9. Groundnuts HPS kernels 5,359 10. Maize (corn), other than seed 4,895 Revolution. In spite of having some of the most fertile soil, average yield in India is Source: APEDA (n.d.). about 30 per cent to 50 per cent of the aver- age yield in the world (Wikipedia, 2010). 1.2.3. Nearly stagnant production There is a silver lining though. Table 1.5 and productivity shows that while overall rate of growth of Exploring why it is so we find that the agriculture has been coming down, livestock production of cereals, which had reached production, fisheries and horticulture have 184 million tons in 2001, revolve around grown at higher rates than crop production 200 million tons, and have marginally itself. As these often fetch higher return, this

Table 1.4: Share of population engaged in agriculture and agriculture’s contribution to GDP in India and the United States (n.d.)

Share of population engaged Share of agriculture Ratio of share of GDP to in agriculture in GDP percentage of people engaged India 52% 17.2% 0.33 US 0.6% 1.2% 2.00 Source: Wikipedia (2010a, 2010b).

Table 1.5: Growth rate of output of different sub-sectors of agriculture: 1993/94 prices

Period Crop sector (%) Livestock (%) Fisheries (%) Horticulture (%) 1980/81 to 1989/90 2.71 4.84 5.93 2.42 1990/91 to 1996/97 3.22 4.12 7.41 5.92 1997/98 to 2003/04 0.61 3.76 4.28 3.66 Source: Planning Commission (2007). 4 Sa n k a r Da t t a a n d Vipin Sh a r m a

indicates larger number of people deriving annually in the last few decades, growth rate their livelihoods from some of these sources of agriculture has come down from about rather than from staple crops. 4 per cent to 2 per cent during the same period (Table 1.7). 1.2.4. As a result, contribution of agriculture to the GDP has 1.2.5. Agriculture is becoming declined non-viable business The contribution of agriculture to GDP is With increasing costs of cultivation, in- steadily coming down as compared to other cluding increased costs of seed, fertilizer, sectors. The contribution of agriculture to electricity and water, increasing cost of GDP has come down to only 17 per cent in labour (see Chapter 2), farming, especially 2007–08, from 32 per cent in 1990–91. On for food crops, is becoming a loss making the other hand the service sector has gone business. It is no more remunerative if one up from 41 per cent to 54 per cent for the has to pay for their own time. In other same period (Table 1.6). This implies that words, return on one’s own labour is com- 50 per cent of the population today earns ing down day by day. less than a quarter of the nation’s income. A study by Administrative Staff College Even the growth rate of agriculture has of India (ASCI) in Orissa has shown that the been coming down steadily. While India’s profitability of some of the crops is coming GDP has been growing around 5–6 per cent down (Table 1.8).

Table 1.6: Contributions of various sectors in the Indian GDP (percentage)

Sector 1990–91 2005–06 2007–08 Agriculture 32 20 17 Industry 27 26 29 Service sector 41 54 54 Source: Trade Chakra (2008).

Table 1.7: Growth rates of Indian GDP and agriculture

Year 1980–85 1985–90 1992–97 1997–2002 2000–09 GDP 5.1 6.0 6.9 5.4 6.4 Agriculture 3.8 4.0 3.8 2.5 2.0* Source: Reserve Bank of India (2009). Note: *Estimated.

Table 1.8: Profitability of crops in Orissa over the years

Gross return Cost Profit Margin Cost `/q Profit `/q Crop Year `/ha `/ha `/ha % of output of output Paddy 1974–80 1,745.0 1,426.9 319.0 22.4 70.4 15.7 1981–90 4,086.6 3,393.9 692.7 20.4 126.8 25.9 1991–00 11,704.4 10,448.8 1,255.6 12.0 330.0 39.7 2001–03 15,385.5 15,300.0 85.5 0.6 440.6 2.5 Growth (%) 9.4 10.3 –0.9 –3.3 8.6 –0.5 Arhar/Tuar 1994–2000 5,698.8 5,181.3 517.5 10.0 1,211.8 121.0 2001–03 6,406.1 6,400.0 6.1 0.1 1,473.3 1.4 Growth (%) 2.4 4.8 –2.3 –3.9 4.0 –1.3 Groundnut 1975–80 2,199.1 1,771.1 428.0 24.2 204.0 49.3 1981–90 6,010.6 4,165.1 1,845.5 44.3 358.9 159.0 1991–98 13,700.6 10,694.5 3,006.1 28.1 881.9 247.9 Growth (%) 10.4 10.4 10.3 –0.1 8.7 8.5 Source: ASCI (n.d.). Overview of Livelihoods Situation 5

The study showed that profitability of which are very short-term measures and of the crops grown is decreasing due to quite often people have misutilized such increase in the labour cost, cost of power schemes to get rid of some of the burdens and irrigation, and the farm gate prices the from their families. farmers receive is less in spite of the recent price rise of various commodities. Thus the 1.2.7. To import or produce at home: A tough choice ability of agriculture to sustain large num- Agriculture feeds the world. In order to ber of livelihoods is coming down. keep the price under control, government 1.2.6. Distress at farmer household has started importing many commodities. Stagnating productivity of agriculture, Hence agricultural imports have started increasing cost of production and near going up. It increased from ` 627 million stagnant prices for majority of the crops, in 2003–04 to ` 5,831 million in 2008–09 coupled with increasing cost of living for in case of sugar and from ` 22.9 billion to the farming households and changing as- ` 58.7 billion for pulses in the same period. pirations of the community with the advent While the proportion of agricultural import of the information and telecommunica- to the total import of the country has tion technologies, has made the lives of the come down from 5.29 per cent in 2000–01 people whose livelihoods depend primar- to 2.74 per cent in 2008–09, in terms of ily on agriculture more difficult. With the real value and volume it has been growing spread of the Management Intensive Crop (Ministry of Agriculture, n.d.). Production systems, the dependence of the While imports may contribute towards farmers on the markets, both for their in- making food available to the consumers, it is puts and outputs have gone up. So has the exerting pressure on the farmers as the price risks arising from dependence on nature they realize at farm gate gets affected. This affected by climate change, frequent natural affects millions of farm livelihoods. disasters, uncertainties in yields and prices, 1.2.8. Shift towards cash crops weak rural infrastructure and imperfect has started affecting food markets. production On one hand this has made agriculture With reducing margins from food crops, not only non-viable but also risky, on the many farmers are looking for alternatives. other hand the finance industry has also Wherever resources permit, they shift to made its inroads in the rural areas. Market non-food crops. This is further facilitated by dependence, coupled with availability of technological developments in agriculture finance, without appropriate increase in and rising demand for non-food crops. the net revenue is a recipe for disaster. This Traditional farming is changing into mod- has led to a serious distress at the farm- ern commercial farming. ing household level. The National Crime Grain orientation1 of agriculture during Records Bureau data show us that nearly the last decade has decreased from 71 per 200,000 farmers have killed themselves cent to 67 per cent. Most of the change in between 1997 and 2008. Maharashtra’s grain orientation, however, is taking place numbers are the worst in the country. This under rainfed conditions to reduce the risk state has seen 41,404 farmers’ suicides since factor of crop failures due to drought or less 1997. Of these, 12,493 have occurred in rain, although comparative advantage, yield 2006–08. difference and crop rotation considerations The government has taken several steps to address this issue. But most of them have 1 Grain orientation of agriculture is defined as a revolved around loan waivers and cash ratio of gross cropped area for food grain to total compensations to affected families, both cropped area. 6 Sa n k a r Da t t a a n d Vipin Sh a r m a

often favour diversification in irrigated 1.2.10. Land fragmentation areas (Figure 1.1). With increasing population pressure, Among the food grain crops, the area agriculture land is getting more and more under superior cereals, that is, rice and fragmented. National Sample Survey Or- wheat, is increasing; while that of coarse ganization (NSSO) data shows that in 1961 cereals (millets) is on the decline. While average land holding size was 2.63 hectares, cereals and pulses have lost area, major which has come down to 1.06 hectares by gainers of this area shift are the non-food 2003. While in 1960s when Green Revo- grain crops, especially oilseeds. lution was taking place 61.7 per cent of farmers were small and marginal, this 1.2.9. Reducing per capita availability of food proportion had reached 86.1 per cent in Due to the increase in population, stagnant 2003 (Table 1.10). production and decrease in the area under The task of enhancing productivity of production of food crops (between 1990–91 agriculture in the country, which could not and 2000–01, around 4 per cent of the be achieved by the large landholders in the gross cultivated area [GCA]—representing last 50 years since the Green Revolution, approximately about 6.7 million hectares— therefore now lies on the shoulders of mil- has shifted from food grain crops to non- lions of small farmers. However, most of food grain crops), farmers have started shift- the agricultural research has concentrated ing to non-food crops with higher returns. As on management intensive crop produc- a result the net per capita availability of the tion technologies. These are more resource food grains has started declining Table 1.9). consuming and therefore more easily This trend is fuelling concerns for food adoptable by large farmers, especially in security! irrigated areas.

Figure 1.1: Grain orientation in irrigated and rainfed areas from 1960 onwards

Source: Bhaduri (2007).

Table 1.9: Per capita net availability of food grains (grams per day) in India

Year Rice Wheat Other cereals Cereals Gram Pulses Food grains 2000 203.7 160.0 59.0 422.7 10.8 31.8 454.4 2008 (P) 175.4 145.1 54.1 374.6 10.6 41.8 436.0 Difference –28.3 –14.9 –4.9 –48.1 –0.2 10.0 –18.4 Source: Ministry of Agriculture. Available online at http://www.indiaagristat.com/table/percapitaavailability/ 24fooditems/103/6367/data.aspx (accessed in 2010). Overview of Livelihoods Situation 7

Table 1.10: Land holdings in India

1960–61 1970–71 1980–81 1991–92 2003 NSSO Round 17th 26th 37th 48th 59th 1. No of operational holdings (millions) 50.77 57.07 71.04 93.45 101.27 2. Average area operated (hectares) 2.63 2.2 1.6 1.34 1.06 3. Category of land holding (percentage of land held) a. Marginal 39.1 45.8 56.0 62.8 70.5 b. Small 22.6 22.4 19.3 17.8 15.6 c. Semi-medium 19.8 17.7 14.2 12.0 9.2 d. Medium 14.0 11.1 8.6 6.1 4.3 e. Large 4.5 3.1 1.9 1.3 0.8 Source: NSSO (2006).

1.2.11. Poorer quality land left out, infrastructure development, housing and mostly rainfed industry. With increasing intensity of agriculture, all the high quality, especially irrigated, land 1.3. People: What’s has already been utilized. These areas often show very high productivity, at par with happening to people global levels of productivity. Table 1.11 whose livelihoods are reveals that most of the cultivable areas based on agriculture (85 per cent) have been already brought 1.3.1. Situation of employment under cultivation. The balance land, still According to Census of India (2001), there available for cultivation, is in resource poor are nearly areas. Often disadvantaged with respect to physical, social and economic infrastruc- l 127 million cultivators and their families, ture, these areas have very little or no l 107.5 million agricultural labourers services available. Poor capital formation and in agriculture has also limited possibility l 6 million other farm workers engaged in of investments in land over years, leaving livestock, forestry and plantations. land almost at a stage of becoming un- Of the total agricultural labourers, cultivable. What is disturbing (Table 1.11) is that there is a gradual increase in land l 38 per cent were female and 61.9 per cent classified as uncultivable. Though increasing were male, urbanization is one of the reasons for such l 21.7 per cent were female and 78.3 per increase, under-investment in land is also cent were male workers amongst live- contributing towards it. stock, forestry and plantation workers Though productivity of land has not and been going up, parts of cultivable land are l About 99.2 per cent of agricultural work- getting converted into uncultivable land, ers were reported to be unorganized and with farm land getting infringed upon for unprotected.

Table 1.11: Land use classifications in India (thousand hectares)

Cultivable Cultivated Uncultivable Uncultivated Percentage of cultivated Year land land land land land to cultivable land 2000–01 183,506 156,142 121,674 149,038 85% 2004–05 183,007 155,649 122,571 149,929 85% 2007–08 182,442 155,671 123,232 150,003 85% Source: Ministry of Agriculture, ‘State-wise Land Use Classification and Irrigated Area in India (1995–1996 to 2007–2008)—Part I’. Available online at http://www.indiastat.com/table/agriculture/2/landuse/448932/7201/data. aspx (accessed in 2010). 8 Sa n k a r Da t t a a n d Vipin Sh a r m a

1.3.2. Feminization and aging of agricultural operations, substantial parts agriculture of microfinance get invested in agriculture. With the reducing returns from farming Anecdotal evidence shows that growth of activity discussed in Sections 1.2.2, 1.2.3 microfinance has not only reduced pressures and 1.2.4, people have started looking on farmers for farm credit but has also out for alternate opportunities for aug- broken some of the traditional credit linked menting their income. This has led to marketing linkages. male members from the villages, especially peri-urban villages, migrating (even if it 1. Enhanced engagement of women: One is only daily migration) to neighbouring of the effects of growth of the micro- towns and cities and even to distant big finance industry has been on the em- cities where there is increased demand for powerment of women. As most micro- labour, leaving the agricultural operations finance organization (MFO) models to be managed by women. Though this largely involve women in their activ- phenomenon has started increasing the in- ities, women have got access to finance. volvement of women in agriculture, it has They have also started engaging in also started increasing workload on already their own group meetings or activities over-burdened women. which are beyond their regular house- Similarly, younger people moving out hold chore. This has enhanced their in search of jobs has also left the elderly position within the family and also to manage the farms which are no longer within the community. This, coupled remunerative. with the feminization phenomenon dis- cussed earlier, has increased their role 1.3.3. Growth of microfinance in agriculture. Studies have shown that has shown rural people are bankable women are now more actively engaged One phenomenon that cannot be ignored (or wilfully disengaged) from various in rural India today is the growth of the farm operations like procurement of microfinance industry. inputs and marketing of their products. As of March 2009, the MFIs in India 2. Consumer products being routed reported a client base of 22.6 million with through microfinance (MF) channel: an outstanding portfolio of more than In the recent years, many industries have ` 100 billion. been trying to capture the ‘market at the Though microfinance is not directed bottom of the pyramid’. This includes towards agriculture specifically, and ex- many consumer goods companies. With cept BASIX not many other Microfinance the growth of the microfinance industry, Institutions (MFIs) have any specific prod- many of them have started utilizing the uct designed to cater to the needs of the new social infrastructure to penetrate farming activities, it does have a significant deeper in the villages. Though this has implication. As money is easily disposable had both positive and negative impacts, and during the cropping seasons, sig- from the perspective of agriculture we nificant amount of funds are required for see many improved technologies such

Table 1.12: Growth in Indian microfinance sector

Year ending 31 March 2004 2005 2006 2007 2008 2009 Outstanding Portfolio (in ` million) 4,000 12,600 24,800 42,100 76,750 117,300 Growth Rate 215% 97% 66% 86% 53% Borrowers (million) 1.0 2.3 4.9 7.9 14.2 22.6 Growth Rate 130% 113% 61% 80% 59% Source: Srinivasan (2009). Overview of Livelihoods Situation 9

as solar powered equipments being and development of major irrigation pro- propagated through this channel. jects. Intermediary landlordism was abol- This has been further facilitated ished. Land ceiling acts were passed by all with the spread of the information and the states to eliminate large sized holdings communication technology (ICT) and and cooperative credit institutions were intrusion of television and multimedia. strengthened to minimize exploitation of However, this has also led to a change cultivators by private money lenders and in the aspirations of the people. More traders. Expansion of area was the main focus is on the utilization of fast mov- source of growth in the pre-green revolu- ing consumer goods (FMCG) products tion period. However, the focus of these resulting in the increase of household policies was enhancing production and expenditure, thus in the long term re- they did not pay any special attention to sulting in the decrease in the allocation livelihoods of people who depended on of investments in agriculture. agriculture. 3. Booming grassroots financial sector— The country faced severe food shortage agricultural credit: The target for the and crisis in early 1960s, which prompted agriculture credit flow for the year the policy-makers to adopt spread of new 2009–10 is being set at ` 3,250 billion seeds of high yielding varieties (HYV) of as against that of ` 2,870 billion just a wheat and rice, which involved heavy use year back, a 13 per cent increase. The of fertilizers and irrigation. This marked flow of credit to the farm sector has the second phase of agriculture policy in the increased to ` 2,644 billion during country. The strategy produced quick re- the last fiscal from ` 2,546 billion in sults. Between 1965–66 and 1971–72, wheat 2007–08. and paddy witnessed an increase of 30 mil- lion tons, which was 168 per cent higher than the achievement of 15 years follow- 1.4. Policy Environment ing 1950–51. This policy made a concerted 1.4.1. Four distinct eras of effort of technology development coupled agricultural policy with institutional development. Two very Though the first ever National Agriculture important institutions, namely Food Cor- Policy was announced on 28 July 2000, poration of India and Agricultural Prices India has made diverse policy interven- Commission, were created in this period. tions to strengthen its agriculture for quite The focus of this policy regime shifted from some time. It has had policies related to production to productivity, and no specific marketing of agricultural commodities, attention was given to livelihoods. introduction of new technologies, and The next phase in Indian agriculture management of the gene pool, wages began in the early 1980s. While there was and benefits to agricultural labour, agri- clear change in economic policy towards cultural credit, warehousing, and import delicensing and deregulation in industry and export of food grains among others. sector, agriculture policy lacked direction In terms of the agricultural policy regime, and was marked by confusion. Though we can divide the period since independ- on one hand India was moving towards a ence into four distinct periods. As has been market-based economy, which was clear discussed extensively by Ramesh Chand in the industrial policies, there was no such (n.d.) in his article ‘India’s National Agri- clear directive for agriculture. While some cultural Policy: A Critique’, the period from agro-processing industries were getting 1950–51 to mid-1960s, also called pre-green deregulated, the concerns for food security revolution period, witnessed tremendous did not permit such a move on the input agrarian reforms, institutional changes side, sending a mixed message. 10 Sa n k a r Da t t a a n d Vipin Sh a r m a

A new phase in India’s economic policy, horticulture, floriculture, roots and tubers, initiated in 1991, marked significant depar- plantation crops, aromatic and medicinal ture from the past. Government initiated plants, bee-keeping and sericulture for process of economic reforms, which in- augmenting food supply, promoting exports volved deregulation, reduced govern- and generating employment in the rural ment participation in economic activities areas. It also places special attention on and liberalization. Though much of the development of animal husbandry, poultry, reforms were not initiated to directly affect dairy and aqua-culture for diversify-ing agriculture sector, the sector was affected agriculture, increasing animal protein indirectly by devaluation of exchange availability in the food basket and for gen- rate, liberalization and opening of agri- erating exportable surpluses. culture land to industries. This was further encouraged by new international trade 1.4.3. Farmer-centric policy accord and World Trade Organization For the first time a National Commission on (WTO), requiring opening up of domestic Farmers (NCF) under the chairmanship market. But the government did not seem of Professor M.S. Swaminathan was set up to have a clear stand in agriculture like it in 2006. Based on their recommendation, had for industry. Government of India approved the National Policy for Farmers, 2007 (Ministry of Agri- 1.4.2. Present policy focus culture, 2007). In response to the mounting pressure to The primary focus of this policy is on articulate its stand on agriculture, the Gov- ‘farmer’, defined holistically and not merely ernment of India announced its first ever on agriculture. In that sense, it is much more Agricultural Policy in July 2000. The pre- comprehensive than an Agriculture Policy. sent policy proposes to intervene in mul- The objective is to improve the economic tiple dimensions that affect agriculture, viability of farming through substantially including technology; import–export; price improving net income of farmers. There is management and warehousing, and allied emphasis on increased productivity, pro- and related sectors. Over the next two de- fitability and institutional support and on cades, it aims to attain: improvement of land, water and support services apart from provisions of appropri- l a growth rate in excess of 4 per cent per ate price policy, risk mitigation measures annum in the agriculture sector; and so on. l growth that is based on efficient use of Inspite of these major policy changes, the resources and conserves soil, water and Government of India continues to strug- biodiversity; gle with many issues of agricultural policy. l growth with equity, that is, growth Some of these have been discussed in the which is widespread across regions and following sections. farmers; l growth that is demand driven and caters 1.4.4. New environment of good to domestic markets and maximizes governance benefits from exports of agricultural The country today has an environment products in the face of the challenges of Good Governance. An enabling envir- arising from economic liberalization onment and supportive framework are and globalization; and created, schemes to secure and enhance in- l growth that is sustainable technologic- come opportunities have been introduced, ally, environmentally and economically. additional income sources are being intro- duced and people’s involvement is being This policy provides a major thrust encouraged. Some of initiatives have been to development of rainfed and irrigated discussed in this section. However, we need Overview of Livelihoods Situation 11 to keep in mind that the policy environ- processes, Panchayati Raj system has ment of the country is changing rapidly been strengthened. As there were several and these would also affect the policy envir- deficiencies in the earlier delivery sys- onment of agriculture. tem through the District Magistrate’s office, alternate delivery mechanisms 1. Policy-makers today are becoming are being developed. sensitive to the reality on the ground. 5. In recent years, there has been Special Although several supportive govern- Policy Attention on Food Security: a ment policies and programmes have specially deployed group is working on been initiated in the country, there is a a new Food Security Act. There has been large scope for improvement in the im- high focus on Financial Inclusion and plementation of these programmes. Inclusive Growth. 2. Though earlier the focus of agricul- 6. There has been a recognition at the tural policy was on production and policy-makers’ level that loan waiver has productivity, since the beginning of not yielded the desired results. But there the Tenth Five Year plan attention has is a serious debate on ‘What should be been given to employment generation the Package for Supporting the Poor in as well. New programmes like Mahatma Distress’. Gandhi National Rural Employment 7. Increased frequency of draoghts and Generation Scheme (MGNREGS) have floods—change in cropping pattern— been started, which has had an impact and its effect on labour demand has on the prevailing agricultural wage rates increased concerns about Climate- and also the profitability of agricul- Induced Vulnerability. High policy at- ture. Responding to the reality on the tention is being given on climate change. ground, this scheme has been modified There are several impacts of climate in 2009 to draw attention to non-land change on the poor households which based activities as well. With intro- duction of MGNREGS in rural areas, are quite visible. Most of the practices additional money is being pumped adopted by Indian farmers conserve in, which has increased buying powers. the ecological balance; they do not find But, it has also affected availability space in international negotiations. of labour for various agricultural op- An umbrella Programme on Natural erations. This has been discussed in Resource Management (NABARD- detail in a subsequent chapter of this GTZ) has been initiated to find better report. ways of managing them. 3. There has also been enhanced focus 1.4.5. Some of the important policy on Convergence. In an unprecedented debates move, a Convergence Agreement has In spite of having made a comprehensive been signed between Ministry of Agricul- and farmer-focused policy on agriculture, ture and Ministry of Rural Development the policy-makers are struggling with in October 2007. New model guidelines some of the dilemmas, which have both have been developed for convergence of positive and negative consequences for various programmes. A special task force livelihoods in agriculture. Some of these has been set up to look at the long list are: of more than 400 centrally sponsored schemes and rationalize them. 1. Management of food-related inflation, 4. Recognizing the need for involve- while farmers are dissatisfied with the ment of the people in management of present pricing policies. development programmes, and role of 2. Import of food grains and edible oil to decentralized and democratic planning stabilize domestic prices. 12 Sa n k a r Da t t a a n d Vipin Sh a r m a

3. Import of wheat, violating local pro- agriculture and related sectors. Foreign curement norms. investments in many relevant sectors 4. Introduction of Bt crops. have been allowed and are coming in. 5. Distress at farmer level causing increas- 3. Several private investments are com- ing number of suicides. ing up, which can have positive influ- 6. Management of increasing risks in ence on the livelihoods of people who agriculture. depend on agriculture. 7. Diverting agricultural land for devel- 4. Intra-value chain collaborations have opment of infrastructure and industry, started. including agro-processing industries. 5. Many corporates are looking at the market at the bottom of the pyramid. 1.4.6. Regionalized agricultural 6. Markets are making efforts of coming policy closer to producers, cutting down the It needs to be recognized that agriculture long supply chains. is diverse and the support that it requires 7. Innovations in market linkage (ITC in different parts of the country also differs e-Chowpal III, Reliance) are taking significantly from region to region. The place. policies which may be relevant in Punjab 8. India has the fastest growing retail may have no relevance in neighbouring industry. It faced serious oppositions Rajasthan. Our Constitution too enables from multiple quarters initially, but region-based agriculture policies by put- there has been a rebirth of retail. ting agriculture under State as well as 9. Blurring of boundaries between the Central subject. In this current environ- public and private sector goods and ment of good governance, it is time for us services has taken place. Many private, to come up with regional policies for dif- often foreign, agencies are getting en- ferent regions of the country. gaged in delivery of services, such as development of infrastructure, which 1.5. Promoters were earlier limited to the public do- India has also witnessed significant change main. New forms of revenue models in the nature of players who influence are being developed. Alternate Imple- livelihoods in agriculture. The new pro- mentation Model (AIM), where the gov- moters in this field are: ernment governs and other agencies get engaged in delivery of different com- 1. Many large multilateral programmes ponents of the package of services in which encourage multi-sector collab- Public-Private-Community Partnership oration are operational in India. There (PPCP) is becoming popular. are several programmes that are being 10. Private investments in Infrastructure implemented focusing on crops, tech- have started coming in. Roads and nology missions on oilseeds and pulses, other infrastructure have improved, horticulture, seeds, fertilizers, plant providing better access to market and protection, machinery, rainfed farming, information. Investments are also being natural resource management, credit, done in establishing agri-processing cooperation, agriculture marketing, in- industries. formation technology, policy and plan, 11. There are also emerging markets for trade and natural disaster management social services. Many enterprises in (Source: http://www.agriculture- training and other support services are industry-india.com/agro-programme- drawing private investments, though schemes/, accessed in 2010). small. 2. India has also created a different in- 12. Market-led interventions for livelihood vestment environment, especially for support/promotion is popularized in Overview of Livelihoods Situation 13

development sector. Donors focus on parts of India are forced to not adopt sustainability, also pushing market-led HYV cultivation technology. Can intervention. they be aggregated to a new market opportunity? 1.6. Possibilities 8. With MGNREGS enhancing pur- chase power demand for food items There are several new possibilities arising which are mostly agricultural, demand in the field of agriculture. These are arising is likely to be growing in a positive out of many changes in the market and the cycle. environment. Therefore, as promoters of 9. Basmati rice, select pulses, spices, tea, livelihoods in agriculture, we need to take coffee, cotton and fruits are some po- note of: tential sub-sectors of agriculture that are growing. 1. Big explosion in ICT, which is opening 10. There have been new efforts in pro- new possibilities for farmers. ductivity enhancement. System of Rice 2. Deep penetration of television: Aspir- Intensification (SRI), organic farming, ation levels have gone up with adver- Participatory Technology Develop- tisements and with new TV serials. This ment and drip irrigation are some of has prompted high levels of cynicism the new efforts in improving agricul- among youth and some aversion towards tural technology dissemination. agriculture as a basis of livelihood. 3. There is increased emphasis for capacity building. There are higher investments 1.7. Structure of the Report in capacity building. Failure of agricul- The 2010 SOIL Report, focused on liveli- tural extension mechanism has also hoods in agriculture, has six chapters other reshaped the form of farm training. than the current one. These are: 4. In the recent years there have been nu- merous experimentations on design- 1. Livelihoods in Agriculture: Status, ing appropriate forms of institutions Policies and Prospects. for farming, which included Producer 2. Government of India’s Convergence Companies, Commodity Cooperatives, Approach with a Focus on MGNREGA Contract Farming and Contact Farm- and Agriculture. ing among others. See further discus- 3. New Generation Initiatives in Agri- sion in Seminar on ‘Future Options Based Livelihoods: Five Successful of Agriculture—Corporate, Contract Private Sector Initiatives. or Cooperative Farming?’ which was 4. Financing Agriculture: Emerging conducted in collaboration with Insti- Scenario. tution of Agricultural Technologists 5. Agriculture Marketing: From Liveli- (IAT) on 27 June 2009 in Bangalore hoods to Enterprise. (IAT, 2009). 6. Climate Change and Agriculture: Chal- 5. There has been a boom in grassroots lenges and Opportunities in India. financial sector. More than 50 million women are organized in Self Help Groups (SHGs). However, exploration References of this for use by other products and APEDA (Agriculture and Processed Food Products services is not very encouraging. Export Development Authority). (n.d.). Available 6. Unique identity of people being online at http://apeda.com/apedawebsite/ established. HelpNews/APEDA_Products_Exports.htm. Accessed on 29 July 2010. 7. Growing demand for environment ASCI (Administrative Staff College of India). (n.d.). friendly products by the Haves. Many Research Report on Factor Productivity and 14 Sa n k a r Da t t a a n d Vipin Sh a r m a

Marketed surplus of Major Crops in India. Available New Delhi, National Sample Survey Organization. online at http://planningcommission.nic.in/ New Delhi: GoI. reports/sereport/ser/ser_fpm.pdf. Accessed on NSSO. (2006). Some Aspects of Operational Land 26 May 2009. Holdings in India, 2002–03. Report No. 492. New Bhaduri, Anik. (2007). Future of Foodgrain Production, Delhi, National Sample Survey Organization. Grain Orientation in Irrigated and Rainfed Area New Delhi: GoI. from 1960 Onwards. New Delhi: Ministry of Planning Commission. (2007). Report of the Steering Agriculture, Government of India. Committee on Agriculture and Allied Sectors for Chand, Ramesh. (n.d.). India’s National Agricultural Formulation of the 11th Five Year Plan. New Delhi: Policy: A Critique. Available online at http:// Planning Commission, GoI. www.iegindia.org/dis_rc_85.pdf. Accessed on Reserve Bank of India (2009). Growth Rates and 14 July 2010. Sectoral Composition of Real Gross Domestic Global Economy Research Group. (2010). The Product (GDP) in India—Part I (At 1999–2000 Economic Report: Emerging India 2010. Penang: Prices) (2002–2003 to 2008–2009). RBI Annual Global Economy Research Group. Report 2009. Mumbai: Reserve Bank of India. IAT. (2009). Discussion in Seminar on ‘Future Available online at http://www.indiastat.com/ Options of Agriculture—Corporate, Contract or table/economy/8/grossdomesticproductgdpnet Cooperative Farming?’. Bangalore, 27 June 2009, domesticproductndp/449275/411029/data.aspx Institution of Agricultural Technologists. (accessed in 2010). Ministry of Agriculture. (n.d.). ‘India’s Imports and Srinivasan, N. (2009). Microfinance India State of Exports of Agricultural Commodities vis-à-vis the Sector Report 2009. New Delhi: ACCESS Total National Imports/Exports’. Available Development Services. online at http://dacnet.nic.in/eands/pdf%20files/ Trade Chakra (2008). ‘GDP of India’. Available online tb13.1FU.pdf. Accessed on 26 July 2010. at http://www.tradechakra.com/indian-economy/ ——— (2007). National Policy for Farmers 2007. gdp.html. Accessed on 26 July 2010. Available online at http://agricoop.nic.in/NPF/ Wikipedia. (2010a). ‘Economy of India’. Available npff2007.pdf. Accessed in 2010. online at URL:http://en.wikipedia.org/wiki/ ——— (2009). Agricultural Statistics at a Glance. Economy_of_India. Accessed on 7 July 2010. New Delhi: Department of Agriculture and ——— (2010b). ‘Economy of the United States’. Cooperation, Ministry of Agriculture, GoI. Available online at URL:http://en.wikipedia.org/ NSSO. (2003). Press Note on Consumption Expenditure wiki/economy_of_the_united_states. Accessed of Farmer Households (January–December 2003). on 6 July 2010. Livelihoods in Agriculture—Status, Policies and Prospects

Tr i l o k Si n g h Pa p o l a *

2.1. Introduction to the varying and generally only moder- ate extent of success. Focus on ‘inclusive’ Agriculture has always been and still con- growth in recent years has led to reorien- Chapter tinues to be the main source of livelihood tation of approach to a certain extent to for the majority of Indian population. No 2 bring about an acceleration in the growth doubt the percentage of people depend- of agriculture, on one hand, and to make ent on agriculture for employment and it more diversified and region- and group- livelihood has declined over the years, but specific with a more decentralized approach the decline in its share in Gross Domestic to focus on livelihoods of the disadvantaged, Product (GDP) has been much faster. on the other. Results of this reorientation Agriculture now contributes only about are yet to be seen, as measures to operation- 17 per cent to GDP while employing about alize it have been on the ground only for 55 per cent of the workforce. This imbalance, a short period of time. At the same time, which has taken place partly due to slower it is also important to recognize that the growth of agriculture and mainly on ac- solution to the livelihood problems of all count of the failure of the non-agricultural those presently engaged in agriculture is sectors to generate enough jobs so as to not possible within agriculture and meas- shift the workforce away from agricul- ures to enable them to shift to other more ture, is a major source of concern for income remunerative vocations are necessary. growth and livelihoods of those engaged The present chapter attempts to analyse in agriculture in general. Within the agri- these and related aspects of livelihoods in cultural workforce, there are groups which agriculture. It starts with highlighting the are specially disadvantaged in terms of main features of the nature and extent of the ownership of productive assets and access problem, for the agricultural population as to inputs, technology and markets that a whole and, in particular, for its relatively limit their capability to benefit from growth disadvantaged segments. That is followed and thus face more acute problems of by an attempt to critically examine the livelihood. Strategies and policies relating past strategies, policies and programmes to agriculture have focused on both the in terms of their relative focus on different aspects—growth and special benefits to objectives of agricultural development and disadvantaged groups—to varying extent their effectiveness. Here both the general at different periods of time and, of course, strategies and policies for agricultural growth and special programmes for selected groups of population are covered. Recent *Thanks are due to Ms Smriti Walia for her assistance in preparing this chapter. reorientation towards inclusive growth and 16 Tr i l o k Si n g h Pa p o l a

measures for its operationalization in agri- Table 2.1: Incidence of poverty among agricul- culture sector are described in the next tural workers and rural population: 2004–05 section. And, finally, an assessment of how Below far the ongoing and proposed measures poverty can be effective and an outline of what Household category line (%) more needs to be done to address the liveli- Agricultural Labourers 46.4 Cultivators (including landless) 21.5 hood issues of agricultural population are Farmers with land: all sizes 15.2 attempted. Landless (with land <0.01 ha) 22.0 Sub-marginal (with land 0.01–0.4 ha) 20.2 Marginal (with land 0.4–1.0 ha) 18.1 2.2. Nature and magnitude of Small (with land 1.0–2.0 ha) 14.8 Medium and large (with land >2.0 ha) 9.8 livelihood deficit All agricultural workers 31.1 2.2.1. Levels of income, expenditure All rural population 28.3 and poverty Source: NSSO Surveys on Consumer Expenditure, as Even though the rate of growth of agricul- estimated by Chadha (2008) and NCEUS (2009). ture has always been understandably lower than among agricultural labourers. Among than the aggregate growth of the econ- the latter who constitute 36 per cent of omy, GDP from agriculture has more than agricultural workers, 46 per cent were poor. quadrupled during 1950–51/2006–07. But Their average daily wages were about ` 40 increase in per worker GDP in agriculture and they got work for only 209 days in a year, has risen only by 75 per cent as compared in 2004–05. Among farmers there was a large to a fourfold increase in overall real per difference in the incidence of poverty, across capita GDP during this period. Per worker different landholding size groups. Among GDP in agriculture was estimated to all farmers possessing lands of various sizes, be around ` 2,000 per month during poverty ratio in 2004–05 was estimated to be 2006–07 (Planning Commission, 2008b, 15.2 per cent (NCEUS, 2008a, 2008b). But p. 3), compared to about ` 9,000 for the for the landless, it was high at 22 per cent, economy as a whole (computed on the slightly lower at 20 per cent among sub- basis of figures in MoF, 2010). With a much marginal, 18.1 per cent among marginal, slower decline in the share of workers than 14.8 per cent among small and 9.8 per cent of GDP in agriculture, the gap between among medium and large farmers. agricultural and non-agricultural income Poverty estimates are based on private per worker has doubled from around 1:3 household consumption expenditure in 1951–52 to about 1:6 in 2006–07. NSSO which may or may not be met by house- survey on Situation Assessment of Farmers hold incomes. To the extent a household (2003) estimated that a farmer household, experiences deficit in its budget which may on an average, has a total monthly income be met by incurring debt, it is vulnerable of ` 2,115 from all sources (Bhalla, 2008, even if not poor. The Situation Assessment p. 68). These figures not only indicate the Survey (SAS) of farmers carried out during relatively poorer condition of those en- 2003 provides some interesting estimates gaged in agriculture, but also reflect the poor in this regard about the farmer house- state of their livelihoods in absolute terms. holds with different sizes of landholdings Incidence of poverty is higher among possessed. It was observed that farm house- rural population. It was 28.3 per cent in holds on an average were in deficit, the aver- rural and 25.7 per cent in urban areas in age monthly expenditure being ` 2,770 and 2004–05. Among rural households engaged average income from all sources (not only in agriculture, poverty ratio was higher at farming) ` 2,115 (Table 2.2). An average 31 per cent (Table 2.1). Poverty, no doubt, household in the landless, sub-marginal, is lower among cultivators (21.5 per cent) marginal and small categories incurred Livelihoods in Agriculture 17

Table 2.2: Average monthly income and consumption expenditure (`) per farmer household (2002–03)

Landholding category Income from Total of household Wages Cultivation Livestock Non-farm business income Total consumption expenditure Landless 1,075 11 64 230 1,380 2,297 Sub-marginal 973 296 94 270 1,633 2,390 Marginal 720 784 112 193 1,809 2,672 Small 635 1,578 102 178 2,493 3,148 Semi-medium 637 2,685 57 210 3,598 3,685 Medium 486 4,676 12 507 5,681 4,626 Large 557 8,321 113 676 9,667 6,418 All sizes 819 969 91 236 2,115 2,770 Source: NSS 59th Round, Situation Assessment Survey of Farmers, as computed by Bhalla (2008). expenditure in excess of its income, the 58 per cent had taken loans. A major dif- deficit ranging from about 40 per cent in ference, however, lay in the source and the case of landless to 20 per cent in the the purpose of loans (Table 2.3). Medium case of marginal and about 3 per cent in and large farmers availed loan facility from the case of small farmers (Bhalla, 2008, institutional sources in 67 per cent of cases. p. 68). Judged on the criterion of household But 58 per cent of loans by sub-marginal and income required to meet the poverty line 47 per cent by marginal landholders were expenditure (which was around ` 1,800 per taken from non-institutional sources. Banks month in 2002–03), it was only the groups contributed 24 and 32 per cent of loans of farmer households possessing more than for these two categories; they accounted one hectare of land which, on an average, for 43 per cent of loans of the farmers in were able to be above poverty line. In terms the medium and large categories together. of expenditure, however, average for farmer Moneylenders accounted for 32 and 31 per households in each category exceeded the cent in case of sub-marginal and marginal poverty line estimate. farmers, but only 20 per cent of loans of medium and large farmers. 2.2.2. Indebtedness Purpose wise, overall, 31 per cent of all The deficit in income was obviously met by loans by farmers were for capital expend- incurring debt. Farmers in all size groups iture and 35 per cent each for current pro- of holding were indebted. Those in larger ductive expenditure and consumption land-size groups, in fact, were indebted expenditure. Consumption expenditure, more often than the landless, marginal and however, accounted for 61 per cent of loans small holders. According to SAS, 49 per of sub-marginal and 43 per cent of loans of cent of farmers were indebted in 2003; marginal farmers. Even in the case of the among those with no land or with up to one small farmers, 29 per cent of loans were hectare of land, 45–46 per cent was indebted; taken for meeting current consumption among those with more than 2 hectares, requirements; such percentage among

Table 2.3: Loans by source and purpose (%)

Source Purpose

Farmer Institutional Non-institutional Current category All Banks All Money lenders Capital productive Consumption Sub-marginal 42.6 24.4 57.6 32.4 14.0 24.0 61.0 Marginal 52.8 32.0 47.2 30.8 24.0 33.0 43.0 Small 57.36 35.4 42.4 25.9 34.0 37.0 29.0 Medium and large 66.8 42.6 33.2 20.0 41.0 40.0 20.0 Source: NSSO 59th Round on Situation Assessment Survey of Farmers, as Computed by NCEUS (2008b). 18 Tr i l o k Si n g h Pa p o l a

medium and large farmers was 20. Loans groups of population. Poverty in rural areas for capital expenditure formed a small declined from 46 per cent in 1983 to 28 per percentage—14 and 24—in the case of cent in 2004–05. Poverty among agricul- sub-marginal and marginal farmers. Tak- tural workers (both farmers and labourers ing indebtedness for meeting current con- together) declined from 45.5 to 31 per cent, sumption requirements as a criterion, more among cultivators from 37 to 22 per cent than one-third of the farming households and among agricultural labourers from suffered from vulnerability of livelihoods. 60 to 46 per cent (Chadha, 2008). Real wages But the incidence of vulnerability was, of of agricultural labourers have increased course, much higher among the sub mar- significantly. They rose by 2.50 per cent per ginal (61 per cent) and marginal (43 per annum during 1983–94 and 2.07 per cent cent) households. per annum during 1994–2005 (Karan and It is obvious from the above descrip- Sakthivel, 2008). tion that sustenance and improvement in Yet livelihood deficit as indicated by stat- agriculture livelihoods are issues of pri- istics on incomes, expenditure, indebted- mary importance for a large proportion ness and poverty described earlier continues of farmers. This was very clearly reflected to be large, particularly among the marg- by the response of farmers to the question inal holders, the landless and agricultural whether they liked farming and would like labourers. There is also a very clear regional to pursue it as their vocation asked in the dimension of the livelihood problem, based Situation Assessment Survey in 2003. Forty on agro-climatic characteristics of states and per cent of the farmers are reported to have areas. In general, states with dominance of said that they did not like farming, mainly rainfed farming have much poorer, more for the reason that it is not profitable (Bhalla, vulnerable livelihoods among their farmers 2008, pp. 4–5). than those with major part of their farming receiving assured irrigation. There are, of 2.2.3. Agricultural growth, course, special factors in hilly and tribal livelihoods and emerging areas which restrict improvements in the concerns incomes and livelihoods of their farmers. Several indicators of the economic health That the farm sector needs special atten- of farming and farmers have significantly tion not only in terms of growth in out- improved over the years. Besides quad- put but also for ensuring sustenance and rupling of agricultural GDP since 1950–51, improvement in the livelihoods of those as mentioned earlier, food grains produc- engaged in agriculture has always been tion increased from 51 million tonnes in recognized, but it seems to have been taken 1950–51 to 217 million tonnes in 2006–07, up as a special challenge by the government which mainly resulted from a tripling of in recent years. Thus the first United Pro- food grains yield per unit of cropped area. gressive Alliance (UPA) government in- Similarly, production of oilseeds, cotton cluded ‘welfare and well-being of farmers, and sugarcane has also increased more farm labourers and workers’ as a prominent than fourfold (Planning Commission, item in its Common Minimum Programme 2008b, p. 3). Productivity per worker has (CMP) in 2004 and the Eleventh Five Year increased, but rather slowly due to growth Plan (2007–12) not only finds a high (4 per of population in farming households and cent) growth of agriculture ‘critical for inability of other sectors to productively achieving greater inclusiveness’ (Planning employ surplus labour from agriculture. Commission, 2008a, p. 6) but also lays Yet, there has been a significant reduction down measures in the areas of research, ex- in poverty among farmers as among other tension, diversified allied activities, credit, Livelihoods in Agriculture 19 and, specially, rainfed agriculture with a and outcomes. Abolition of intermediaries focus on improving livelihoods and welfare was reasonably successful; about 20 million of farmers in different landholding size tenants were freed from the clutches of groups and in different agro-climatic and zamindars and raitwars (Dandekar and geographical conditions. Rath, 1971). Implementation of tenancy reforms, aiming at security of tenure to the 2.3. Agricultural policy and tenants, was not very successful, except in some later cases such as Operation Barga livelihoods: Earlier efforts in West Bengal and tenancy reforms in and outcomes Karnataka and Kerala. Ceiling on land- 2.3.1. Land reforms holdings was least successful; the quantum It was not as if agriculture as a sector and of land declared surplus so far has been farmers as a population group were not only 7.35 million hectares, far short of given due importance in planning and what was estimated and expected, of which policy making in the earlier years. A faster 5.39 million hectares has been redistri- growth of agriculture has been part of the buted, rest being subject to litigation, and growth perspective of all Five Years Plans. even the land allotted to the landless often But relative priority given to it, the dom- is not actually in their possession (Planning inant objective and strategy, policies and Commission, 2008b, pp. 29–30). Thus, the programmes have varied from time to time. land reform measures which could be seen Broadly speaking, agricultural development as direct method of improving livelihoods policy in the post-Independence period of the poor farmers and agricultural labour- could be divided into three distinctive phases ers had only a limited success. (Venkateswarulu, 2008): (a) Independence Plan priority and allocation to agricul- to mid-1960s, (b) Green Revolution period ture were on top in the First Five Year (1966–91) and (c) post-reform (1991) period. Plan after which they saw a relative decline The first phase was characterized by efforts and so did the growth of agriculture and to increase agricultural output through production of food grains, so much so that institutional reforms mainly consisting the situation had to be described as ‘food of land reforms and extension services crisis’ by the Ford Foundation Team invited through Community Development Pro- to study the situation in 1959. The US gramme. Land reforms measures consisted aided Intensive Agricultural Development of (a) abolition of intermediaries, (b) tenancy Programme (IADP) was introduced in 1960 reforms and (c) ceiling on landholdings. providing for strengthening the supply of Primary objective of these reforms was inputs and credit, training and extension. to promote social and distributive justice Shortfalls in agriculture, however, continued propounded by the Congress Party and as production stagnated. A new policy other progressive elements in the Inde- package concentrating on application of pendence movement and subsequently technology inputs in the selected 20 to enshrined in the Constitution of India, 25 per cent of cultivated area with assured but they were also seen as instruments of water, and, therefore, with relatively better raising agricultural production through prospects of rapid increase in production, incentives provided by ensuring land to called Intensive Agricultural Area Pro- the tillers and improving viability of small gramme (IAAP) was introduced in 1965 and marginal farms and providing owner- in 114 selected districts. As can be seen ship to the landless. from its title itself, the obvious objective Different land reform measures have had of the programme was to quickly increase varying effectiveness in implementation agricultural production, particularly of 20 Tr i l o k Si n g h Pa p o l a

food grains, in order to reduce increasing ‘unreformed’, import liberalization in respect dependence on imports and attain self- of certain commodities and encourage- sufficiency in food production. ment of export-orientation started from 1994. More important, however, was the 2.3.2. Green revolution decline in the ‘developmentist’ role of the As import of food grains increased to state that accompanied adoption of neo- above 10 million tons in 1966, the need liberal policies, resulting in the decline of for increasing food production became public investment in agriculture. It con- more urgent and policy initiatives had to stituted 5 per cent of agriculture GDP during concentrate on this objective. Thus the the first half and 3.5 per cent during the use of biochemical and mechanical tech- second half of 1980s, but only 2.4 per cent nology, which signified what came to be during the first half and 2 per cent during known as Green Revolution, became im- the second half of 1990s, and stagnated perative even if it meant very little benefit to around that level till 2004–05 (Planning the small and marginal farmers, or for rain- Commission, 2008b, p. 8). Partly on fed areas and most crops other than wheat account of the tapering off of the impact and rice, for which high yielding varieties of Green Revolution technology and partly (HYV) were not available. Growth of agri- due to the new policy regime, the period cultural output accelerated particularly from 1997–98 to 2004–05 recorded a signifi- during the period of wider dissemination cant deceleration in the rate of agricultural of technology, 1980–81 to 1990–91, to over growth (ibid., p. 4). Slowdown in the growth 3.5 per cent per annum. Most important, of output reduced per capita net per day India achieved self-sufficiency in food availability of food grains from the peaks grains production. Obviously, such an out- of 510 gms in 1991 and 503 in 1997 to standing performance of Indian agricul- 422 gms in 2005. Growth of employment in ture did have a positive impact on the levels agriculture declined from an average of living of farmers, but the benefits were annual rate of 1.38 during 1983 to 1993–94, highly uneven among farmers with different to 0.84 during 1993–94 to 2004–05. Real sizes of holdings—the larger gaining much daily wages of casual agricultural workers more than the small and the marginal farm- rose at the rate of around 2.5 per cent per ers and agricultural labourers gaining very annum during 1983–93/94, but only at a rate little (Bhalla and Chadha, 1983). And across of around 2 per cent per annum during regions and areas—irrigated areas gain- 1994–2005. Even in periods of relatively ing most and rainfed very little. In other good performance of agriculture, liveli- words, the Green Revolution technology had hoods of a large proportion of farming ‘region-specificity’, ‘crop-specificity’ and population have remained precarious ‘class-specificity’ (Venkateswarulu, 2008) and vulnerable. It can, therefore, be easily and did not contribute much to reducing surmised that the poor performance of the livelihood deficit of the vast number of agricultural sector during this period must marginal farmers, cultivators and labour- have had significant adverse effect in their ers in rainfed areas, and of those cultivating economic situation. The trend, however, crops other than those for which HYV seeds has been reversed since 2004–05 with public were available. investment and agricultural growth rate During the period following economic significantly increasing since 2005–06. reforms, while the technological processes in Indian agriculture continued as in the 2.3.3. Minimum support prices Green Revolution, certain basic changes Besides policies supporting deepening and took place in trade and investment policy widening of Green Revolution, through regime. While agriculture was initially left easier and, often, subsidized availability and Livelihoods in Agriculture 21 access to inputs and credit, the other major and 48 per cent in Tamil Nadu were aware plank of agricultural policy in India relates of MSP, only 11 per cent in Rajasthan, to the provision of Minimum Support 12 per cent in Orissa and Jharkhand and Price (MSP) and public procurement of 19 per cent in Bihar knew about it (NCEUS, agricultural output, especially food grains. 2008b, Table A-6). It is also found that the These measures aim at providing incen- relative price parity resulting from MSPs tives to farmers and protecting them from fixed for different crops from time to time market fluctuations and exploitation on has resulted in a raw deal for the resource one hand, and protecting consumers from poor farmers and underdeveloped regions price rise by distributing procured food (Deshpande, 2008, p. 139). grains at fixed prices through a public From the above capsule account of the distribution system (PDS) on the other. central planks of policy approach to agri- MSP was thus an instrument of raising cultural development in India, it is clear production, but to the extent farmers were that improvement in livelihoods of farm- assured of remunerative minimum prices ing population was taken for granted as an of their produce, it also contributed to en- inevitable outcome, but was not explicitly suring livelihoods for them. Introduced considered to form a central objective, of in 1965, with the appointment of the first agricultural growth. It is interesting to note Agricultural Prices Commission (APC), that the same was true of the employment now known as Commission on Agricultural and poverty reduction which are, of course, Costs and Prices (CACP), MSP policy has directly related to livelihoods. Logically, undergone intense debate and significant the proposition that growth of agriculture changes, particularly with the initiation would lead to improvements in the liveli- of economic liberalization where the price hoods of the people engaged in agriculture policy has also to keep in view the global cannot be questioned. Whether it holds in price trends and foreign trade in agricul- reality, however, depends on the rate, nature tural products. The discussion here is con- and structure of growth on one hand, and fined only to the implications and impact endowment of the different strata of farm- of MSP on livelihoods of farmers. ing people to be able to participate in growth In general, MSP policy does not seem on the other. To the extent livelihoods in the to have made any significant positive im- absolute sense are a matter of concern for pact on the economic status of the farming majority of population, the rate at which groups for which livelihoods are a concern. In the first instance, only a small proportion growth takes place itself is vitally import- of farmers seem to know about it: accord- ant. From that viewpoint, if livelihoods ing to the National Sample Survey Or- of all agricultural labourers, marginal and ganization (NSSO) Situation Assessment small farmers, together constituting above Survey (2003), only 29 per cent of farmers 90 per cent, are precarious and vulnerable, were aware of MSP, and only 19 per cent a relatively slow growth (about 2.5 per cent knew about procurement agencies. Among per annum) that Indian agriculture has marginal and small farmers only 26 per recorded during the last over five decades cent were aware of MSP, while 41 per cent since 1951–52 in itself is the major reason of medium and large farmers knew about for the continuing livelihood deficit of it. Among different states, farmers in those Indian farming population. But given the with higher agricultural yield and surplus fact that about 36 per cent of agricultural production show greater awareness about workers are agricultural labourers primarily MSP than those in agriculturally less- depending on wages, and among farmers an developed states. Thus, while 63 per cent of overwhelming majority consist of marginal farmers in Punjab, 62 per cent in Haryana and small holders (Table 2.4) and given the 22 Tr i l o k Si n g h Pa p o l a

Table 2.4: Distribution of agricultural households by main activity and size of operational holdings— 2004–05 (%)

Landholding category Agricultural labour households Farmers’ households All agricultural households Landless 19.7 0.6 13.1 Sub-marginal 62.3 14.6 44.8 Marginal 12.9 30.7 18.7 Small 4.1 26.5 12.2 Medium and large 1.0 27.5 11.2 All 100 100 100 Source: NSSO, 61st Round, as computed by NCEUS (2008a), Table 7.4.

low level of wages and land yields, a 2–3 per recognized by as early as the middle of cent agricultural growth even if equitably 1960s that small and marginal farmers distributed is highly unlikely to meet the and agricultural labourers would require livelihood deficit of a large proportion special support to be able to participate in of farming population. To make matters and benefit from the process of agricul- worse, with rapidly rising population tural growth. Two programmes, the Small the landholdings have got increasingly Farmers Development Agency (SFDA) and fragmented and proportion of marginal Marginal Farmers and Agricultural Labour in total holdings has been increasing. It Development Agency (MFALDA) were was 39 per cent in 1960–61 and became launched during the Fourth Five Year Plan 70 per cent by 2003 (Table 2.5). The (1969–74). These agencies set up at the ranks of agricultural labourers have also district level were to help small and marg- been swelling, thus raising the proportion inal farmers and the landless labourers of farming population with precarious through subsidization (25 per cent of the livelihoods. cost to small farmers and 33.3 per cent to the marginal farmers and agricultural labour- 2.4. Special programmes on ers) of investment cost of small irrigation agricultural and rural means, land development and soil con- livelihoods servation and acquisition of animals, etc. 2.4.1. Farming oriented Eight million persons were helped under programmes: SFDA and MFAL these programmes till March 1980 when The mainstream agricultural policy, of which they were merged into the new programme, support for adoption of Green Revolution Integrated Rural Development Programme Technology along with Minimum Support (IRDP). Prices constituted the central element, has primarily focused on increasing agricultural 2.4.2. Self-employment production with a view to achieving food programmes: IRDP and SGSY self-sufficiency, providing raw material and IRDP assisted poor households in rural areas creating demand for industrial production to acquire productive (non-land) assets and promoting exports. It was, however, through a scheme of bank loan and subsidy.

Table 2.5: Changes in size distribution of operational holdings (%)

Category of holdings 1960–61 1970–71 1980–81 1990–91 2002–03 Marginal 39.1 45.8 56.0 62.8 69.8 Small 22.6 22.4 17.8 16.3 16.1 Medium 33.8 28.8 21.8 18.1 13.0 Large 4.5 3.1 1.9 1.3 0.8 All 100 100 100 100 100 Source: NSSO Report No. 492, Some Aspects of Operational Holdings in India, 2002–03. Livelihoods in Agriculture 23

During its life, that is, 1978–79/1998–99, over supplementary measures such as planning 54 million households were assisted under of activity clusters, infrastructure build up, the programme, about ` 230 billion of credit technology support and market linkages was mobilized and another ` 110 billion was that were found lacking in IRDP. Till provided as subsidy (Planning Commis- 2009–10, 3.67 million SHGs were formed, sion, 2001). IRDP has been extensively over 10 million SHG swarozgaris and about evaluated. Its contribution to income sup- 4 million individual swarozgaris were plementation of assisted households has assisted with about ` 101 billion subsidy and been significant though not many (only ` 208 billion bank credit. Average invest- about 15 per cent) have had an increase in ment (credit plus subsidy) per swarozgari income sufficient to cross the poverty line worked out to ` 32,008 in 2009–10 (MoRD, (Papola, 2008). Those closer to ‘poverty line’ 2010a). have obviously crossed it more often than Significant progress was achieved in those far below it. According to a study in the formation of SHGs but only about 23 Andhra Pradesh, where the programmes per cent of them were able to take up eco- seems to have done much better than aver- nomic activities. The Committee on Credit age for the country as a whole, 88 per cent of Related Issues under SGSY (Radhakrishna the ‘moderately poor’, but less than 50 per Committee) appointed by the Ministry of cent of the ‘very poor’, crossed poverty line Rural Development found that the pro- after receiving IRDP assistance. But there gramme has fallen short in meeting its was significant upward mobility among credit targets, and utilization of govern- the poor: 75 per cent of the ‘very poor’ went ment funds has fallen short of their avail- up to the category of ‘moderately poor’; ability. Part of the reason may lie in the 17 per cent of the ‘very very poor’ also rose limited capacity of the poor to take up to the status of ‘moderately poor’ (Dev and self-employment activities. The Committee Rao, 2002). IRDP could, on the whole, be found very little was done towards strength- regarded as a reasonably successful liveli- ening their capacity, though the programme hood programme based on the subsidized had provision for training and capacity promotion of self-employment among the building. Similar observation was made poor households. But, even though it was by the Mid-Term Appraisal of the Tenth titled as ‘Integrated’, it was, in fact, not at Five Year Plan. Cluster approach was also all integrated with the programmes for pro- a non-starter and line departments of state motion of services and infrastructure essen- governments mostly failed in providing tial for sustaining production and carrying non-credit inputs to the swarozgaris. The out remunerative sale of the produce of the performance of the programme was par- assisted households. The scale of assistance ticularly unsatisfactory in states with higher per household was rather too small to incidence of poverty, due to the poor deli- start and sustain a business enterprise. very system (MoRD, 2007). The average investment—bank loan plus The most intractable problem in a self- subsidy—per assisted household was employment programme like SGSY is that around ` 9,000 during 1992–95 (Papola of identifying and supporting economic and Sharma, 2003). activities that can be viably run by the poor IRDP was replaced in 1999 by in underdeveloped rural areas. Collective Swarnajayanti Gram Swarozgar Yojana action through SHGs was expected to be of (SGSY), integrating all self-employment help in establishing linkages and develop- programmes and focusing on microenter- ing common facilities. But as Radhakrishna prise development with emphasis on social Committee observed, the poor performance mobilization through formation of Self of SGSY is due to poor quality of SHGs. As in Help Groups (SHGs). It also incorporated the case of IRDP, investment per swarozgari 24 Tr i l o k Si n g h Pa p o l a

continues to be low, even though it is much have a multipronged approach to strengthen improved at ` 32,000 in 2009–10 (MoRD, livelihoods of the rural poor by promoting 2010a). It still compares unfavourably, SHGs, improving existing occupations, for example, with the figure of ` 100,000 providing skill development and place- adjudged to be the minimum investment ment’ (MoRD, 2010b [press release, 25 July required in self-employment enterprise of 2010]). Targets have been set for ‘outputs’, a household in Andhra Pradesh to generate ‘outcomes’ concerning formation and sup- an above poverty line income (Planning port to SHGs, SHG initiated enterprises, Commission, 2006). Finding productive training of BPL youth, placement sup- activities with prospects of viability that can port, etc. for the remaining period of the absorb larger amount of investment itself Eleventh Plan and for the XII Plan (2012–17). is a difficult task in backward rural areas. Mission activities are to be implemented More important, however, is the need to on a decentralized basis through District integrate the economy of the poor with Rural Development Agencies (DRDAs) to the mainstream economy so as to lend it whom funds will be directly transferred sustained viability and upward mobility. to meet expenditure on subsidy to SHGs, Even with the best of efforts, however, it infrastructure and marketing, corpus for would not be practical to project the self- federations of SHGs, interest subsidy, train- employment enterprise supported under ing and capacity building and engagement SGSY alone as the activity to sustain the of Non Government Organization (NGO) livelihood of a rural household. With the best facilitators. performance of the programme in Andhra NRLM is seen as an important initiative Pradesh and Kerala, average monthly income towards an integrated approach to directly per swarozgari from the assisted activity is tackle the livelihood problem of the rural found to be as low as ` 2,000 (MoRD, 2007). poor. It recognizes that the promotion of Households need to and actually derive self-employment alone cannot be the solu- income from multiple sources including tion for all households and all persons. While from wage labour. Self-employment under the capacity of households to undertake SGSY alone cannot, therefore, be treated self-employment–based enterprises has to as the means of poverty alleviation. The be improved through training and infra- Committee on Credit Related Issues of structure development, workers belonging SGSY, therefore, recommended restructur- to these households also need to be equipped ing of the programme and combining it with skills to take up wage and salary- with skill-based wage employment. based employment. For this purpose, the NRLM is proposed to be linked with 2.4.3. National Rural Livelihood the National Skill Development Mission Mission: A new initiative (NSDM). Thus, while it envisages setting Accepting the recommendation of the up of the Rural Self Employment Train- above Committee, the Ministry of Rural ing Institutes (RSETI) on the one hand, Development has decided to redesign and training in employable skills by utilizing restructure the SGSY into National Rural existing training infrastructure and master Livelihood Mission (NRLM). The Mis- craftsmen forms another important com- sion envisages promotion of ‘diversified ponent of the skill development initiative and gainful self-employment and wage under the Mission. It is also hoped that employment opportunities’ with the ob- with steps to improve access to credit from jective of reducing poverty among the rural organized banking system and enhance- Below Poverty Line (BPL) households. ment of capital subsidy limit to individual Already under operationalization after a swarozgaris to ` 15,000 (general) and cabinet decision in June 2010, the mission ‘will ` 20,000 (SC/ST) and to ` 2.5 lakh for Livelihoods in Agriculture 25

SHG for promoting employment-oriented also have similar programmes, the most income generating activities will not only notable among them being the Maharashtra motivate more BPL households to take up Employment Guarantee Scheme (MEGS) self-employment ventures but also lead started in mid-1970s, guaranteeing manual to the upscaling of investment size per work on demand on a statutory basis. enterprise to a viable and sustainable level. All these programmes had building of rural infrastructure as one of their object- 2.4.4. Wage employment ives, along with the provision of income to programmes: rural poor through wages in employment Supplementation for current in public works. Sometimes the former livelihood sustenance was listed as ‘secondary’ and the latter as By the middle of 1970s, when detailed ‘primary’ objective. In practice also, these information regarding consumption programmes did not contribute much to expenditure and employment started the creation of durable infrastructure or becoming available from the regular com- productive assets. But they were certainly prehensive surveys conducted by NSSO, effective in providing supplementary in- it became possible to gauge poverty and come to the rural poor and thus helping unemployment among rural households. them in sustaining their livelihoods. For It was observed that a large proportion example, JRY and EAS together generated of poor households engaged in farming on small and marginal holdings and on equivalent of 4.4 million person years of farm and non-farm labour do not have employment during (1998–99) making gainful employment for a considerable time 1.5 per cent of total labour force per- in a year. Providing supplementary wage son years in that year. As a percentage of employment to the members of such labour force of the poor households only, households was, therefore, seen as a way it would make 4.5 per cent which is more of supplementing their livelihoods and than half of the rate of person days of reducing current poverty. Drawing upon unemployment estimated at 7 per cent in the long experience of labour-intensive that year (Radhakrishna and Ray, 2005). On public works for relief in natural calamities the whole, however, all these programmes, like famines, the government devised a including SGRY which integrated all wage- National Rural Employment Programme employment programmes in 2001, were (NREP) in 1980, as a poverty alleviation able to meet only a small part of the require- programme with the twin objective of pro- ment of supplementary employment, and viding wage income to the rural poor and were therefore able to make only a small creation of rural infrastructure. The pro- contribution to the household incomes of gramme was rechristened as Jawahar Rozgar rural households, in general. In the case Yojana (JRY) in 1989–90 when a separ- of MEGS which provided employment on ate concurrent programme called Rural demand on the basis of a statutory guarantee, Labour Employment Guarantee Programme however, it is observed that programmes (RLEGP) was also initiated specifically under it succeeded in mitigating hunger and targeted to the landless labour households, also preventing rural wages from falling to guaranteeing them 100 days of employment very low levels (Acharya, 1990). per year. Employment Assurance Scheme It is with the objective of making a sig- (EAS) introduced in 1983 aimed at similar nificant impact on the livelihoods of the rural guarantee in selected backward and poor poor by providing them wage employment areas. All wage-employment programmes to the maximum possible extent of their were integrated into Sampoorna Grameen requirements that the United Progres- Rozgar Yojana (SGRY) in 2001. Some states sive Alliance (UPA) government, assuming 26 Tr i l o k Si n g h Pa p o l a

power in 2004, enacted a National Rural 2.4.5 Area development Employment Guarantee Act (NREGA), now programmes rechristened as Mahatma Gandhi Rural Self-employment and wage-employment Employment Guarantee Act (MGNREGA), programmes both aim at livelihood promo- in 2005, providing for legally guaranteed tion but their suitability and effectiveness employment of 100 days to every house- vary among areas as well as households hold on demand in rural areas. Imple- with different resource endowments. There mented in phases, it now covers all rural have, therefore, been attempts from time to districts of the country. It is the largest liveli- time to develop programmes that are area hood protection programme anywhere in the specific and focused on specific farmer world. An amount of ` 380 billion of pub- groups. Mention has already been made lic funds were spent on this programme in earlier of the programmes in the latter 2009–10, of which about 68 per cent were category targeting small and marginal paid as wages to workers participating in farmers and agricultural labourers. In the the programme. Over 2.8 billion person former category, Drought Prone Area Pro- days of employment were provided to gramme (DPAP) has been the earliest area about 53 million households at an average development programme launched in of 54 person days per household (MoRD, 1973–74. The basic objective of the pro- 2010b). gramme was to minimize the adverse Taking ` 100 as the average daily wage effects of drought on the production of paid for work in the programmes under crops and livestock, and productivity of the Act (noting that average for the year land, water and human resources, ultim- 2006–07, 2007–08 and 2008–09 worked ately leading to ‘drought proofing’ of the out to be ` 54.00, ` 75.00 and ` 84.00, affected areas. Though focused on the man- respectively, [Tankha, 2009] and the aver- agement and augmentation of physical age of minimum wages fixed for unskilled resources, the programme aimed at overall workers in agriculture in different states for development and improving the liveli- the year 2007 worked out to ` 114 [Labour hoods of the poor and disadvantaged who Bureau, 2010]), a participating household inhabited these areas. earned an average of ` 5,400 from work in DPAP was found to have succeeded the projects under MGNREGA. It can mean in creating durable public assets, but its a substantial contribution to the house- overall impact in containing the adverse hold incomes, particularly of those with impact of drought was not found to be below poverty line income and, therefore, significant. Hanumantha Rao Committee can bring about a significant improve- appointed in 1993 to review the programme ment in the livelihoods of the rural poor. It attributed its poor performance, inter alia, is also observed that the average number of to its geographically and activity-wise highly person days of employment provided to a dispersed and unintegrated nature. Fol- household has been increasing. It was 42 in lowing recommendations of the Committee, 2007–08, 48 in 2008–09 and 54 in 2009–10, DPAP was restructured focusing on water- and percentage of households having com- shed approach. The three programmes, pleted 100 days of work also increased from DPAP, Watershed Development Programme 3.5 million in 2007–08, to 6.5 million in and Wasteland Development Programme 2008–09 and 7.1 million in 2009–10. With were made to operate on the same guide- continuation of this trend, contribution of lines, thus leading to a more integrated ap- MGNREGA to the livelihoods of the rural proach. The three programmes have now poor will gain increasing significance over been consolidated into a single programme, the years. namely, Integrated Watershed Management Livelihoods in Agriculture 27

Programme (IWMP) following the emphasis also identifies specific factors causing low laid in the Eleventh Plan on developing productivity by agro-climatic regions and concerted and integrated action plans for calls for regionally differentiated strategy, agricultural development in rainfed areas particularly in respect of rainfed areas. (MoRD, 2010a). The National Agricultural Development Programme (NADP) or Rashtriya Krishi 2.5. Eleventh plan and Vikas Yojana (RKVY), which was launched livelihoods in agriculture: on the recommendation of the National Some highlights of the Development Council (NDC) in 2007, is an important initiative towards decentraliza- new focus tion of planning of agricultural develop- Midterm Appraisal (MTA) of the Tenth Plan ment at the state and district levels keeping and the National Commission on Farmers in view the agro-climatic conditions, natural (NCF) had raised serious concerns on the resource endowments and local needs. It slowdown in agricultural growth, in gen- incentivizes the process of decentralized eral, and the distress experienced by small planning in the states by providing them and marginal farmers and those in rainfed central assistance to undertake a large num- areas, in particular. The National Policy ber of planning and development activ- for Farmers (2007) and the Eleventh Plan, ities in agriculture and allied sectors. This therefore, focused on both these aspects. scheme combined with another central As noted in the beginning of this chapter, assistance scheme, the Macro-Management Eleventh Five Year Plan for the first time of Agriculture Scheme (MMAS), with spe- brings livelihoods into focus in relation to cial focus on development of degraded the growth of agricultural sector. It notes land and soils offers considerable flexibility with concern some recent trends that have to states to take care of regional conditions adverse implications for food security and and priorities and, therefore, should provide farmers’ incomes and poverty. Besides a sufficient scope to states to promote faster slowdown in growth, the Plan mentions growth of agriculture in poorer areas, so as a number of other developments indicat- to make it more inclusive. ing inequities and distress and threats Within the national programmes for to livelihoods (Planning Commission, increasing production and productivity, 2008b, p. 4). As a first step towards restor- provisions are made to specially look after ing dynamism to agricultural sector, the the needs of small and marginal farmers plan asks for increase in public investment and poor and remote and inaccessible areas. in agriculture from 3 per cent of agricul- Subsidy rates in programmes like Agricul- tural GDP to 4 per cent. Along with several tural Technology Management Agency measures for raising productivity of re- (ATMA) or supply of agricultural equip- source use, it is expected to ensure a 4 per cent ment under MMAS are higher for small and GDP growth in agriculture. Such a growth marginal farmers. A separate Technology is considered necessary, but not sufficient Mission for Integrated Development of to bring about significant improvements in Horticulture has been launched for North the livelihoods of agricultural population. Eastern states, Sikkim, Jammu and Kashmir, For that, and ‘for growth to be at all inclusive, Himachal Pradesh and Uttarakhand. the agricultural strategy must focus on 85 per What is most significant in relation to cent of farmers who are small and marginal, aspects of equity, inclusiveness and liveli- increasingly female, and who find it diffi- hood security in the context of agricultural cult to access inputs, credit and extension or development in the Eleventh Plan is the to market their output’ (ibid., p. 8). The Plan inclusion of a special focus on the ‘social 28 Tr i l o k Si n g h Pa p o l a

context’ (ibid., p. 28), which brings on the ideas in the Plan document, the National agenda the issues of land reforms, protection Policy for Farmers (MoA, 2007) and a Special of rights in land of tribal people, security Programme for Marginal and Small Farm- of homestead rights and tenancy reforms, ers prepared by the National Commission which have been generally neglected in plan for Enterprises in the Unorganized Sector programmes for many years in the past. It (NCEUS, 2008b) and other studies and proposes modernization of management reports, an attempt is made here to outline of land records by initiating a central scheme, the major elements of a strategy for inclusive National Land Records Management growth of agriculture and augmentation Programme, in order to ensure security of of livelihood base of farming population, land rights which is of crucial importance specially of the small and marginal farmers particularly for the small and marginal and the landless. holders. Noting that area declared surplus First, a high rate of growth of agriculture under land ceiling legislations has been very is vital for any strategy for inclusive growth. small and land distributed still smaller and A rate of growth which does not signifi- often not in possession of the allottees, it cantly exceed the rate of population growth is proposed to expedite settlement of the in agriculture households is not likely disputes and problems that have held up to be able to bring in benefits to the poor distribution of the remaining surplus land among the farmers and the agricultural and to take up special measures to ensure that labourers. Therefore, achievement of the the distributed land is given to the allottees. growth rate of 4 per cent, as targeted in It is also noted that the Government land the Eleventh Plan, on a sustained basis would illegally encroached by private individuals be necessary and for that purpose invest- should be identified and distributed to the ment in agriculture needs to be increased, landless persons. Expeditious preparation specially public investment, which would and updating of land records and complete need to be significantly stepped up to about ban on all forms of transfers of tribal land are 5 per cent of the agricultural GDP. some of the measures suggested to prevent Second, agricultural growth would need land alienation of tribal people. Legalization to be diversified both geographically and of tenancy in a ‘limited’ manner is proposed crop-wise, in order that poorer regions and to provide security to the tenants for a states and crops and other activities on contractual period. Howsoever limited in which the poorer farmers mostly depend for terms of their potential impact, these ideas their livelihoods are significant contributors nevertheless reflect a point of departure to it. To a certain extent, this is happening from production-centred strategies to the in so far as the rates of agricultural growth neglect of equity, inclusiveness and liveli- of several agriculturally or otherwise poorer hood security followed most of the time in states and growth of output in activities recent decades. like horticulture and fishery have been significantly higher than the average in 2.6. Way ahead: Making recent years. Policy stimulants that have con- agricultural growth more tributed to these trends need to be further inclusive and looking strengthened. Smaller states, particularly those with remote and relatively inacces- beyond agriculture sible terrain, need to identify their niche The Eleventh Five Year Plan, no doubt, activities and products and concentrate lays emphasis on inclusive growth of on their specialised growth (e.g., large agriculture, but falls short of outlining a cardamom in Sikkim; Papola, 2005). comprehensive strategy and programme Third, the most important element of a for its operationalization. Drawing upon the strategy for inclusive and livelihood-centred Livelihoods in Agriculture 29 agricultural growth has to focus on the small of their labour force person days as against and marginal farmers. The Eleventh Plan 8 per cent of all rural workers in 2004–05. squarely recognizes this and also asks for Average days of employment of agricultural some special measures. To a certain extent, labourers were estimated to be 209 and aver- the need for special attention to those groups age daily wages ` 40. Though minimum of farmers can be taken care of by diversify- wages for agricultural labourers are fixed by ing agricultural growth as suggested earlier. state governments, most of them get much But much more, in the form of a specially less than the rate fixed for them. In 2004–05, targeted comprehensive programme, as 68 per cent of agricultural wage workers proposed by the NCEUS, is required to ef- received less than the statutorily fixed min- fectively tackle the problems of livelihoods imum wages. During 2006–07, average of of the small and marginal farmers. Such a the officially fixed minimum daily wages programme would have to adopt an area- for unskilled work in agriculture in different cum-farmers’ groups approach. Organizing states worked out to be ` 114, while actually them into farmers’ societies, cooperatives or paid wages averaged to ` 50. A faster and any other collective form to pool resources diversified agricultural growth is expected for production, to access common services to raise both employment and wages of and most importantly, to collectively mar- agricultural labourers. MGNREGA is also assessed to have a positive impact on wages ket their produce is likely to be highly in rural areas (Dreze and Khera, 2009). But beneficial as has been demonstrated in sev- a stricter compliance of minimum wage pro- eral instances such as under Rithu Mithra vision cannot also be ignored. Groups (RMGs) and Community Managed Fifth, it is important to recognize and Sustained Agriculture (CMSA) in Andhra facilitate increasing importance of the Pradesh, ‘Kudumbashree’ in Kerala and Self non-farm activities for raising incomes Employed Women’s Association (SEWA) in and livelihoods of the farmer households. Gujarat and the relatively better function- According to the Situation Assessment Sur- ing cooperative societies in different parts of vey, only half the income of farmer house- the country. These experiments need to be holds was derived from farming, including replicated elsewhere and new forms like the cultivation and animal husbandry, rest ‘producers’ companies adopted wherever came from non-farm business and wages feasible. Formation of organizations of small including that from non-farm labour. and marginal farmers should also facilitate Income from farming constituted only a their better access to credit, which has been much smaller part of total household in- found to be highly limited. It would also be come of marginal farmers (Table 2.2). Devel- necessary, as recommended by NCEUS, to opment of non-farm activities is important fix a 10 per cent quota, out of the presently on two counts; one, to augment incomes of assigned 18 per cent to agriculture, to ensure the farmer households through non-farm actual availability of credit to small and business and wages; and two, to provide marginal farmers as per requirements. alternative employment and income oppor- Fourth, a strategy for promotion of liveli- tunities to those not adequately productively hoods of farming population cannot be con- employed in farming. It must be recognized fined to measures to improve incomes of that the magnitude of the workers in the cultivators alone. Almost one-third of those latter category is large and needs to be trans- engaged in agriculture consist of agricultural ferred to non-farm activities. In fact, the labourers, deriving all or major part of their failure to shift labour force from agricul- income from wage labour. They do not get ture with its shrinking share in GDP is the work for all days round the year and get very main reason for the large and increasing low wages when employed. Agricultural livelihood deficit among agricultural house- labourers were unemployed for 16 per cent holds. Rapid growth of non-farm activities, 30 Tr i l o k Si n g h Pa p o l a

especially in rural areas, must, therefore, Bhalla, G.S. (2008). Condition of Indian Peasantry. form an important part of the strategy New Delhi: National Book Trust. Bhalla, G.S. and G.K. Chadha. (1983). Green Revolution for improving livelihoods of agricultural and the Small Peasant. New Delhi: Concept population. Rural non-farm activities have Publishing Company. shown good potential for growth in recent Chadha, G.K. (2008). ‘Employment and Poverty years and well-directed policy interven- in Rural India: Which Way to Go Now’, ILO tions in the spheres of land use, credit and Asia-Pacific Working Paper Series. New Delhi: ILO-SRO. marketing can make them grow much Dandekar, V.M. and Neelkantha Rath. (1971). ‘Poverty faster. in India’, Economic and Political Weekly, 6(1): Lastly, a word about the relevance of 25–48, 9 January. MGNREGA for livelihoods in agriculture Deshpande, R.S. (2008). ‘Price Policy and Minimum is in order. As already mentioned, employ- Support Price in Changing Agricultural Economy’, in Sankar Kumar Bhaumik (ed.), Reforming Indian ment in the programmes under the Act Agriculture Towards Employment Generation is making a significant contribution to and Poverty Reduction (Essays in Honour of G.K. the incomes of rural households. Though Chadha). New Delhi: Sage. the average days of work provided to a Dev, Mahendra and Padmanabha Rao. (2002). Pov- erty Alleviation Programmes in Andhra Pradesh. household fall much short of the ceiling Hyderabad: Centre for Economic and Social of 100 days in a year, removing this limit Studies. will prove beneficial to landless labourer Dreze, Jean and Reetika Khera. (2009). ‘The Battle and marginal farmer households, whose for Employment Guarantee’, Frontline, 6(1), requirements of employment are much January 2009. Karan, Anup K. and Selvaraj Sakthivel. (2008). ‘Trends larger than those of large, medium and in Wages and Earnings in India: Increasing Wage, even small farmers. But, it must, however, Differentials in a Segmented Labour Market’, be recognized that the programme aims ILO-Pacific Working Paper Series. New Delhi: at protection of current livelihoods and ILO-SRO. Labour Bureau. (2010). Report of the Working of the reducing current poverty, and not at build- Minimum Wages Act, 1948 (For the Year 2007). ing the capacity of households to sustain Shimla: Ministry of Labour, Government of India, and improve their livelihoods. Given the Labour Bureau. magnitude of livelihood deficit among the Ministry of Agriculture (MoA). (2007). National Policy rural households, it would need to con- for Farmers. New Delhi: Government of India. Ministry of Finance (MoF). (2010). Economic Survey, tinue perhaps on an increasing scale for 2009–10. New Delhi: Government of India, quite some time to come. But the possibility Department of Economic Affairs. of utilizing it for building capacity of areas Ministry of Rural Development (MoRD). (2007). and households to generate productive Report of the Committee on Credit Related Issues employment on a sustained basis by build- under SGSY (Radhakrishna Committee). New Delhi: Government of India. ing public assets and improving the pro- ——— (2010a). Annual Report, 2009–10. New Delhi: ductivity of private assets, particularly, land Government of India. of the poorer households, however, needs ——— (2010b). ‘Rural Employment Guarantee Act to be seriously and effectively explored. In (NREGA)—NAREGA (Outcomes) for the Financial year 2009–2010’. Available online order to attain this objective, it is necessary at http://nrega.nic.in-National. Accessed on to have convergence of other programmes 31 July 2010. of rural development with those under National Commission for Enterprises in the Un- MGNREGA, a subject that is dealt with in organised Sector (NCEUS), (Chairman: Arjun K. the next chapter. Sengupta). (2008a). Report on Conditions of Work and Promotion of Livelihoods in the Unorganised Sector. New Delhi: Academic Foundation. References ——— (2008b). A Special Programme for Marginal and Small Farmers. New Delhi: NCEUS. Acharya, Sarthi. (1990). Maharashtra Employment ——— (2009). The Challenge of Employment in India: Guarantee Scheme: A Study of Labour Market An Informal Economy Perspective. New Delhi: Intervention. New Delhi: ILO-ARTEP. NCEUS. Livelihoods in Agriculture 31

Papola, T.S. (2005). Development and Livelihood in Planning Commission. (2008a). Eleventh Five Year Sikkim: Towards a Comparative Advantage Based Plan 2007–2012. Volume I: Inclusive Growth. New Strategy. New Delhi: UNDP, HDRC. Delhi: Oxford University Press. ——— (2008). ‘Economic Growth, Poverty ——— (2008b). Eleventh Five Year Plan 2007–2012 Reduction and Role of Special Programmes’, in Volume III: Agriculture, Rural Development, N. Jayaram and R.S. Despande (eds), Footprints Industry, Services and Physical Infrastructure. New of Development and Change (Essays in Memory Delhi: Oxfrod University Press. of Professor V.K.R.V. Rao Commemorat- Radhakrishna, R. and Shovan Ray (eds). (2005). ing his birth centenary). New Delhi: Academic Handbook of Poverty in India. New Delhi: Oxford Foundation. University Press. Papola, T.S. and Alakh N. Sharma. (2003). ‘Globalisa- Tankha, Ajay. (2009). ‘NREGS and Livelihoods: A tion and Social Exclusion in India: Evolving an Review of Issues and Outcomes’, in Sankar Inclusionary Policy Framework’, paper prepared Datta and Vipin Sharma (eds), State of India’s for the World Commission on Social Dimension of Globalisation. Geneva: International Labour Livelihoods. New Delhi: Access Development Office. Services. Planning Commission. (2001). Report of the Working Venkateswarulu, A. (2008). ‘Agricultural Development Group on Poverty Alleviation Programmes for the in India Policies and Performance’, in Sankar Tenth Five Year Plan (2002–2007). New Delhi: Kumar Bhaumik (ed.), Reforming Indian Government of India. Agriculture Towards Employment Generation ——— (2006). Report of the Working Group on Poverty and Poverty Reduction (Essays in Honour of G.K. Alleviation Programmes for the Eleventh Five Year Chadha). New Delhi: Sage. Plan. New Delhi: Government of India. 32 Tr i l o k Si n g h Pa p o l a Greening India through Mgnrega—Convergent Action for Benefits beyond Employment Generation

Su r y a m a n i Ro u l

3.1. Introduction enhancing livelihoods security by providing at least 100 days of guaranteed wage employ- In recent years, Government of India (GoI) ment in a financial year to every household Chapter has made substantial public investments whose adult members volunteer to do for strengthening the rural economy and 3 unskilled manual work. livelihoods base of the poor, especially Implemented from February 2006, the marginalized groups like Scheduled Castes Act covered 200 most poor and backward (SCs)/Scheduled Tribes (STs) and women. districts in its first phase. It was implemented The Government has also accelerated the pace in an additional 130 districts in Phase II of poverty reduction strategies by allocating during 2007–08. As per the initial target, higher amount of resources, setting targets NREGA was planned to be expanded with quantifiable deliverables and putting countrywide in five years. To bring the whole systems in place for monitoring programmes nation under its safety net programme as for effective and efficient functioning. The early as possible and keeping in view the importance and seriousness of these pol- demand, the scheme was extended in Phase icies and resource commitments towards III, to the remaining 274 rural districts, from poverty reduction and inclusive growth pro- 1 April 2008. In these districts, preexisting cesses are best reflected in the enactment wage employment programmes, the Na- of a single legislation—the National Rural tional Food for Work Programme (NFFWP) Employment Guarantee Act (NREGA) and the Sampoorna Grameen Rozgar Yojana notified on 7 September 2005, renamed (SGRY) were merged with NREGA. as Mahatma Gandhi National Rural Em- MGNREGA, with its ‘rights based’ ployment Guarantee Act (MGNREGA)1 approach is a paradigm shift from most since October 2009. MGNREGA aims at other earlier Government programmes and schemes. The Act has become a signi- 1 In this paper; NREGA, MGNREGA, NREGP and ficant instrument for strengthening grass NREGS have been used interchangeably. The NREG root level community participation and Act was renamed as MGNREGA in 2009. The Act also decentralized governance system by giving makes it mandatory for states to formulate Schemes and Programmes, thus adding S and P for usage by a pivotal role to Panchayat Raj Institu- many. tions (PRI) in planning, monitoring and 34 Su r y a m a n i Ro u l

implementation, and towards regeneration The selected list of permissible works is: of natural resources. The Act includes a unique feature that guarantees time-bound l Water conservation and water harvesting employment and wage payment within l Drought proofing (including plantation 15 days, incentive–disincentive structure and afforestation) to the State Governments for providing l Irrigation canals including micro and employment, as 90 per cent of the cost minor irrigation works for employment provided is borne by the l Flood control and protection work Centre, whereas unemployment allowance l Minor irrigation, horticulture and land is borne by the state. It emphasises on development on lands of SC/ST/Below labour-intensive works prohibiting use Poverty Line (BPL)/Indira Awas Yojana of contractors and machinery. The Act (IAY) land reform beneficiaries also mandates 33 per cent participation l Renovation of traditional water bodies for women, which has a direct bearing on l Land development women’s socio-economic empowerment. l Rural connectivity The most significant feature of MGNREGA lies in making the Government legally 3.3. New initiatives under accountable for providing employment to MGNREGA those who ask. During the last one year, the following Ministry of Rural Development (MoRD), new initiatives have been introduced by GoI implements this flagship programme. the Government under the MGNREGA. The Act makes it mandatory for the states The new initiatives intend to ensure trans- to formulate State Schemes in conformity parency and accountability in the process to the legally non-negotiable parameters so that programme’s benefits reach millions laid down in Schedules I and II of the Act of rural poor across the country and con- and operational parameters delineated in tribute to poverty alleviation in turn (Press the MGNREGA Guidelines. Information Bureau, 2010). The initiatives are:

3.2. Objectives and salient 1. Dedicating NREGA to the Memory of the features of the Father of the Nation: The Act has been programme renamed as Mahatma Gandhi National Rural Employment Guarantee Act. MGNREGA is the first ever law internation- 2. Amending the Act to Enlarge the Scope ally that guarantees wage employment at of Work: Schedule I, paragraph 1, sub- such an unprecedented scale. The primary para iv of National Rural Employment objective of the Act is augmenting wage Guarantee Act 2005 was amended on employment. Its auxiliary objective is to 22 July 2009 to include: encourage sustainable development by strengthening natural resource manage- Provision of irrigation facility, horticulture ment through works that address causes of plantation and land development facilities chronic poverty like drought, deforestation to land owned by households belonging to and soil erosion. The process outcomes the Schedule Castes and Schedule Tribes or below poverty line families or to beneficiaries include strengthening grassroots processes of land reforms or to the beneficiaries under of democracy and infusing transparency the Indira Awas Yojana of GoI or that of the and accountability in governance. The small farmers or marginal farmers as defined salient features of the programme are given in the Agriculture Debt Waiver and Debt in Box 3.1. Relief Scheme, 2008. Greening India through MGNREGA 35

Box 3.1: Salient features of MGNREGA Objectives of MGNREGA Unique features of MGNREGA

l Augmenting wage employment. l Time-bound employment guarantee l Strengthening natural resources man- and wage payment within 15 days. agement through works that address l Incentive/disincentive to the State Gov- causes of chronic poverty like drought, ernments as 90 per cent of the cost for deforestation and soil erosion and thus employment provided is borne by the encouraging sustainable development. Centre, whereas the States have to pay l Strengthening grassroots processes of unemployment allowance at their own democracy by infusing transparency and cost. accountability in governance. l Emphasis on labour-intensive works; l Strengthening decentralization by giving prohibiting use of contractors and a pivotal role to the Panchayat Raj Insti- machinery. tutions in planning, monitoring and l The Act mandates 33 per cent par- implementation. ticipation for women.

Key processes of MGNREGA Critical aspects implementation l Job cards are issued upon through verification of reasonably reliable local l Cost sharing: Central Government three- data base. Job cards are made prior to em- fourths, State Government one-fourth. ployment demand and work allocation. l Adult members of rural households l Selection of works are mandated to be made submit their name, age and address with by Gram Sabha in villages and displayed photo to the Gram Panchayat. after approval of shelf of projects, to l The Gram Panchayat registers households ensure public choice, transparency and after making enquiry and issues a job accountability and prevent material- card. intensive, contractor-based works and l The job card contains the details of adult concocted work records. member enrolled and his/her photo. l Execution of works: At least half the works l Registered person can submit an ap- should be run by Gram Panchayats. plication for work in writing (for at least Muster roll must be maintained for the fourteen days of continuous work) either cardholders to be found at each work, to to Panchayat or to Programme Officer. prevent contractor led works. l The Panchayat/Programme Officer l Measurement of work to be made according will accept the valid application and to a schedule of rural rate followed by issue dated receipt of application; letter reading out muster rolls on work site providing work will be sent to the ap- during regular measurement time to plicant and also displayed at the Panchayat prevent bogus records and payment of office. wages below prescribed levels. l Employment will be provided within a l Payments of wage to be made through radius of 5 km; if above 5 km, extra wage banks and post offices to close avenues will be paid. for use of contractors, short payment and l If employment under the scheme is not corruption. provided within 15 days of receipt of the application, daily unemployment Source: Author. allowance will be paid to the applicant.

3. Entitlement of ` 100 as Real Wage under Gram Panchayats while approving MGNREGA: The Government has work plans have been asked under the revised the wage rate under Section Act, to ensure that works on lands of 6(1) of NREG Act subject to a ceiling of SC/ST and BPL receive first priority. ` 100. In respect of states with higher 36 Su r y a m a n i Ro u l

wages, amount exceeding ` 100 would 7. Social Audits: Recognizing Social Audits be paid by the State Governments as an important tool to enable the rural from their own resources. (e.g., Gov- communities to monitor and analyze ernment of Andhra Pradesh [AP] has the quality, durability and usefulness of increased the wage rate). Further, it MGNREGA works as well as mobilize has been made mandatory that wage to awareness and enforcement on their MGNREGA workers be paid through rights, the MoRD has accorded utmost banks/post office accounts. Emphasis is importance to the organization of Social laid on works on individual land of small Audits by the Gram Panchayats and and marginal farmers, particularly those issued instructions to the states to make belonging to SCs/STs and BPL. necessary arrangements. The Act was 4. Guidelines to States to Set Up amended to provide for procedures on Ombudsman at District Levels: GoI has conducting social audits. Till May–June issued Guidelines to states for appoint- 2010, social audits have been undertaken ment of Ombudsman at the district in 0.24 million Gram Panchayats of the level. The Ombudsmen will be well- country (Press Information Bureau, known persons from civil society who 2010). have experience in the field of public 8. Online Monitoring of Social Audits: The administration, law, academics, social monitoring of Social Audits is now work or management. The purpose made through a web site which places is to help receive complaints from all critical parameters such as job cards, MGNREGA workers and others, con- muster rolls, wage payments, num- sider such complaints and facilitate their ber of days of employment provided disposal in accordance with law. and works under execution online for 5. MGNREGA Partnership with Unique monitoring and easy public access for Identification Development Authority information. of India (UIDA): In order to eliminate 9. National Level Monitors’ Visit: Thirty- duplicate job cards and ghost bene- seven National level Monitors were ficiaries while facilitating easy bank deputed in 37 districts in 15 different account opening and tracking the mo- states for special monitoring of the bility of beneficiaries and ensuring a social audit campaign initiated by the better monitoring, use of Information Ministry. and Communication Technology 10. Monitoring of MGNREGA by Eminent (ICT) devices especially biometrics and Citizens: Sixty-one out of targeted 100 integration with Unique Identification eminent citizens have been identified Development Authority of India has so far as per Scheme Guidelines for been introduced. independent monitoring to report on 6. National Helpline Set Up for Receipt of the progress of the scheme. Complaints: The MoRD has set up a toll- 11. Vigilance and Monitoring committees at free National Helpline (1800110707) State and District Level: Vigilance and to enable the submission of complaints Monitoring Committees (V&MCs) and queries for the protection of workers have been reconstituted in all states/ entitlements and rights under the Union Territories (UTs) at state as well Act. This is being ICT-enabled and as district level for effective monitoring linked with the State and District Level of programme implementation Helplines to create a National Network MGNREGA. of MGNREGA Helpline. Helplines have 12. Strengthening Monitoring Mechanism: also been set up in states like Orissa, UP, A Professional Institutional Network Himachal Pradesh, West Bengal (WB) (PIN) has been constituted, including and Goa. Indian Institute of Technologies (IITs), Greening India through MGNREGA 37

Indian Institute of Managements (IIMs), assets in the villages. Gram Panchayat Administative Staff College of India Bhawans would be constructed in (ASCI), Indian Institute of Public each Gram Panchayat and Block. This Administration (IIPA), Indian Institute will act as a centre for dissemination of Forests Management (IIFM), agri- of knowledge and delivery of public culture universities and other pro- services to rural households. Six per fessional institutions, for supporting cent of the funds earmarked under MGNREGA through impact assess- the administrative head of the scheme ments and concurrent monitoring and is to be used to provide latest ICT appraisal. Some of the findings include facilities in Gram Panchayats within increase in agriculture minimum wages, the permissible norms. This is made wages earned per day, annual income, under the Schedule I, paragraph 1(g) of reduction in distress migration, effective National Rural Employment Guarantee targeting of marginalized groups Act 2005 by expanding its scope to (SC/ST/BPL) and use of MGNREGA include the construction of BNRGSK at as a supplementary income source the Gram Panchayat and Block level. during non-agricultural seasons. The 16. Convergence of the MGNREGA: MoRD productivity and multiplier effects of has developed and disseminated MGNREGA include improvement in Guidelines for convergence of the ground water, improved agricultural pro- MGNREGS with different schemes and ductivity and cropping intensity, and specific programmes. For this purpose, livelihood diversification in rural areas. 115 convergence pilot districts are iden- 13. Business Correspondent Model: To ensure tified in 23 states, and independent timely payment of wages to the workers, organizations have been instituted a Banking Correspondence Model was under the monitoring of National In- adopted in Rajasthan with the help of stitute of Rural Development and with Central Bank of India. MGNREGA has support from UNDP. resulted in major financial inclusion wherein bank/post office accounts have 3.4. Status of MGNREGA: been opened for the families getting Implementation and employment. The Rural Ministry has coverage advised all the states to ensure payment of wages through bank accounts. About GoI has allocated resources to the tune of 91.9 million bank accounts have been ` 401 billion for the MGNREGA for the opened so far. year 2010–11. Up to May–June 2010, the 14. MGNREGA in Naxal Affected States: programme has provided employment to The GoI has issued instructions to 52.5 million households across the country. all Naxal affected states (AP, Bihar, Average real wage rate has increased to Chhattisgarh, Jharkhand, Madhya ` 100 per day as compared to ` 65 in Pradesh [MP], Maharashtra, Orissa and 2006–07 and ` 91 in 2009–10. Of the UP) for implementation of MGNREGA 7.8 billion person days generated since 2006, to intensify awareness generation cam- women comprise of 50 per cent, SCs 21 per paign among rural households, issuance cent and STs 20 per cent. Households of job cards, implementing sufficient numbering 6.95 million (13.24 per cent) number of works and timely payment have completed 100 days of work. Over of wages. 91.9 million accounts have been opened (in 15. Construction of Bharat Nirman Rajiv banks/post offices). Rupees 216.25 billion Gandhi Sewa Kendra (BNRGSK): It is (84 per cent of wages) have been disbursed planned to construct Sewa Kendras as wages through the bank and post office under the scheme to create durable accounts. Over 4.7 million works have 38 Su r y a m a n i Ro u l

been taken up in 619 districts and Social rural connectivity works, supplementation Audits have been conducted in 76 per cent to household incomes, increase in women Panchayats. The following table summarises workforce participation ratios and regen- the achievements of MGNREGA. eration of natural resources. Several studies Initial evidences generated through in- and reports have evidenced the programme’s dependent studies indicate enhancement impact. A detailed study undertaken by of agricultural productivity (through water National Council of Applied Economic harvesting, check dams, groundwater Research (NCAER) and Public Interest recharging, improving moisture content, Foundation (PIF) has come out with a list check in soil erosion and micro-irrigation), of flaws and bottlenecks in implementation stemming of distress migration, increased of MGNREGA. This has been discussed in access to markets and services through Box 3.2.

Table 3.1: An overview of performance of MGNREGA

Features 2006–07 2007–08 2008–09 2009–10 2010–11* 1. No. of districts 200 330 615 619 619 2. Employment provided to households (` million) 21.0 33.9 45.1 52.5 17.9 3. Person days (in ` million) Total 905.0 1,435.9 2,163.2 2,825.7 439.1 SC 229.5 393.6 633.6 863 94.1 (25%) (27%) (29%) (29%) (20%) ST 329.8 420.7 550.2 587.4 87.4 (36%) (29%) (25%) (22%) (21%) Women 364 611.5 1,035.7 1374 217.7 (40%) (43%) (48%) (50%) (50%) Others 345.6 621.6 979.5 1,376.9 257.7 (38%) (43%) (45%) (49%) (59%) 4. Person days per household (no. of days) 43 42 48 47 24 5. Budget outlay (in ` billion) 113 120 300 391 401 6. Expenditure (in ` billion) (per cent against available funds) 88.23 15.86 27.25 37.39 56.28 (73%) (82%) (73%) (68%) 7. Expenditure on wages (in ` billion) 58.42 107.38 182.00 256.34 44.37 (66%) (68%) (67%) (69%) 8. Average wage per person days (`) 65 75 84 91 100 10. Total works taken up (in ` million) 0.83 1.79 2.78 4.60 5.30 11. Works completed (in ` million) 0.39 0.82 1.21 2.10 0.03 12. Works break up (in ` million) Water conservation 0.45 0.87 1.28 1.82 2.61 (54%) (49 %) (46%) (51%) (52%) Irrigation facility on lands of SC/ST/BPL/IAY 0.88 0.26 0.57 0.58 0.48 beneficiaries (10%) (15 %) (20%) (17%) (10%) Rural connectivity 0.18 0.31 0.50 0.58 1.06 (21%) (17 %) (18%) (16%) (21%) Land development 0.09 0.29 0.40 0.50 0.66 (11%) (16%) (15%) (14%) (13%) Any other activity 0.03 0.06 0.03 0.08 0.20 (4%) (3%) (1%) (2%) (4%) Source: Press Information Bureau (2010). Note: *Up to May–June 2010. Greening India through MGNREGA 39

Box 3.2: Are benefits of MGNREGA reaching people? A study undertaken by NCAER and PIF in execution, inflated estimates, inadequacies 2009 has found many flaws affecting the in measurement, cost overruns and delays implementation of MGNREGA. Funds not in release of funds by states. Quality of reaching its intended beneficiaries, significant assets created under the scheme is doubtful inflation in official numbers regarding creation is many places, thereby questioning long- of actual jobs and man-days as well as red- term usefulness of these assets. Some states tapism blocking proper implementation being like Assam, Orissa, Gujarat, Maharashtra, some of them. The study found that in a Karnataka and Kerala have evidenced reduction large number of districts in several states, the in employment generation under MGNREGA number of households that have been issued as compared to SGRY. Rajasthan, AP and job cards is more than the total number of Tamil Nadu (TN) were the top three states in households in these districts. In many places implementation of MGNREGA, while Punjab there were delays in providing job cards and was the worst in this category, followed by many households demanding employment Gujarat and WB. However, the share of ST did not get employment. The study revealed households in employment has improved that there are inordinate delays in payment to and outshined participation of women under workers, and implementation has suffered due MGNREGA. to anomalies in the selection of works, poor Source: NCAER and PIF (2009).

This programme, since its enactment, India, addressing a gathering of around has been a safety net and lifeline for many 1,200 participants from all over the country labourers and small and marginal farmers termed MGNREGA as a path-breaking who would otherwise have been adversely phenomenon with its pro-poor vision affected by jobs lost and reduced pay because and promise of right to work, inclusive of the economic crisis. The programme has growth and social security. While lauding had an important role to play in helping the success of the programmes, which has the poor to tide over the immediate impact provided livelihood opportunities for over of the global economic crisis. The fact that 170.4 million households till May–June MGNREGA has a predominant focus on 2010, he called for forging linkages of rural natural resource regeneration with public development programmes with MGNREGA works that are related to drought-proofing to augment functional capabilities of the and irrigation—like planting trees, building workers. Highlighting the role of PRIs in irrigation canals and watersheds and implementation of the Act and focusing on desilting ponds—thus boosting agriculture bringing better integration of MGNREGA and food security has been the other benefit with other grassroot level programmes, of MGNREGA. The findings of the Planning he underlined the need for convergence Commission’s mid-term appraisal report between the programmes having overlapping gives a critical view of MGNREGA. Box 3.3 objectives and scope. discusses this in brief. A recent study focus- In envisioning MGNREGA as a trans- ing on empowerment of women workers formative vehicle for empowering local through MGNREGA provides very positive communities to enhance their livelihood impact and in explained in Box 3.4. security, MoRD has taken several steps such as encouraging decentralized participatory 3.5. Governments’ management, improving delivery systems commitment towards and public accountability, to ensure effective strengthening MGNREGA implementation. On the occasion of the launch of the fifth In order to address major issues asso- year of MGNREGA on 2 February 2010, ciated with implementation of MGNREGA, Dr Manmohan Singh, Prime Minister of the MoRD, GoI during its 11th Central 40 Su r y a m a n i Ro u l

Box 3.3: Findings of the planning commission’s mid-term appraisal report on rural development programmes As per the findings of the mid-term appraisal and Kerala. In states such as Kerala (22) and of various rural development programmes, Punjab (31), low days of work were attributed despite making a significant overall impact, the to extension of the programme to the whole performance of MGNREGA remains patchy. state, resulting in inclusion of districts with Majority of states were under-performers and minimal demand for the scheme. But some of only 14 per cent worker households could the high-demand states such as Orissa, Bihar, get 100 days of work. On the positive side, Karnataka, WB and Uttarakhand too were MGNREGA had performed better than any among the non-performing. This appears to other anti-poverty initiatives undertaken in be a case of the states not having given due India. In the four years since its inception, attention to energise MGNREGA. MGNREGA has provided about 6 billion Another method of assessing relative person days of work at a total expenditure of performance of states was to compare the around ` 700 billion. The coverage of SCs/STs share of states in person days generated under and women under the scheme is remarkable. the programme with their share in rural BPL Another indicator used by the study was households in India. As per the report findings, intensity of work provided. Intensity of work UP and Bihar emerge as the worst performers was defined as the number of days of work as their share in rural BPL households is provided to those who got any work. The about 10 per cent higher than their share in national average intensity of work was 48 days employment generated under the scheme. and as many as 15 states’ average was below WB, Orissa, MP, Gujarat and Karnataka too this figure. These included Himachal Pradesh, were found to be lagging behind on this count, Maharashtra, Haryana, Assam, Meghalaya, while Rajasthan and AP were found to have TN, Jammu and Kashmir, Uttarakhand, performed very well. Orissa, Karnataka, Punjab, WB, Bihar, Gujarat Source: Kumar (2010).

Box 3.4: Empowerment of women workers through MGNREGS: A study in four states A field study undertaken to examine the gender discriminatory wages prevalent in empowerment effects of the National Rural the rural labour market. The Act has inbuilt Employment Guarantee Scheme on rural provisions like priority for women in the ratio women in four states—Bihar, Jharkhand, of one-third of total workers; equal wages and Rajasthan and Himachal Pradesh has found crèches for the children of women workers and that women workers have gained from the other provisions like work within a radius of scheme. The gain has been because of the paid 5 kilometres from home, absence of supervisor employment opportunity, and benefits have and contractor and flexi­bility in terms of been realized through income-consumption choosing period and months of employment. effects, intra-household effects and the These have been very conducive for rural enhancement of choice and capability. Other women. benefits include realization of equal wages Source: Pankaj and Tankha (2010). under the MGNREGA, thereby balancing

Employment Guarantee Council (CEGC) approvals of a shelf of projects as per the meeting in May 2010, has set up six working provisions of MGNREGA and formulation groups to look into matters relating to plan- and approval of the labour budget under ning and execution of the schemes, capacity the Act. It also looks into the development building of workers and functionaries, of perspective plans and the annual plan, transparency and accountability, etc. choice of works for sustainable and durable A seven-member Working Group on assets within permissible list, expansion of Planning and Execution (WGPE) is looking scope of works, convergence guidelines and to address issues relating to preparation and processes and developing guidelines for Greening India through MGNREGA 41 innovations. The WGPE is also examining Acting on the request of MoRD, the issues related to detailed estimates, timely Ministry of Statistics and Programme opening of works, selection of imple- Implementation, GoI has constituted a menting agencies for selected projects, role 10-member Committee in March 2010 to of line departments, material procurement, develop a mechanism to evolve a framework worksite management and facilities, to create a separate index for updation of inspection and monitoring of works and MGNREGA wages and related issues in operational modalities of convergence keeping with the local situations prevailing. projects. The Committee has recommended that the A seven-member Working Group on real wages provided under the MGNREGA Capacity Building (WGCB) looks into the be linked to the Consumer Price Index empowerment of MGNREGA workers so (The Economic Times, 2010). that they are able to assert and realize their Actions taken from to time indicate rights. It will also suggest measures for that the Government is fully committed strengthening of community participation to reform and innovations in execution of at all levels in administrative systems and MGNREGA. The programmes are backed strengthening of research and evaluation by a strong political will and necessary system. budgetary resources. Considered as the A nine-member Working Group world’s largest ‘cash for work’ scheme, on Transparency and Accountability MGNREGA is an ambitious social-protection (WGTA) has taken up issues associated with programme. The Act is a first of its kind enforcement of rights and entitlements of backed by national legislation to enhance MGNREGA workers and suggest suitable livelihood security by providing at least measures. This group is examining the 100 days of guaranteed wage employment issues related to the application process in a year to every household whose adult for issue of job cards, its authenticity and members volunteer to do unskilled manual updation systems, timely work allocation to work. beneficiaries, payment of unemployment The President of India, Smt. Pratibha allowance and all issues relating to internal Patil, in her address to the joint session and external monitoring and verification systems prescribed by the MoRD. of Parliament when the 15th Lok Sabha A seven-member Working Group on met for the first time on 4 June 2009, Specific Needs of Specific Category of emphasized on enlarging the scope of Workers is focusing on issues of gender works permitted under MGNREGA so that equity, needs of disabled persons, needs of more opportunities for land productivity old persons, special benefits to SC, ST and improvement are created and convergence families in left wing extremist areas and with other programmes of government is drought affected areas. undertaken to maximize impact. The Working Group on Works to be Expanding the scope of MGNREGA by taken up on Individual Land is examining including new types of work and widening the draft guidelines prepared periodically the scope of asset creation has witnessed and the practices in ‘major’ states and large support from representatives of state- shall make recommendations for improve- level political parties too. In an endeavour ment. This working group has been set to increase scope of asset creation under up to suggest measures for optimising the scheme, the GoI has come out with a the potential of MGNREGA in enhancing convergence plan of MGNREGA to other agricultural productivity and reducing Government schemes related to agriculture, economic vulnerability of the programme water resources, land resources, forests and beneficiaries. rural roads. 42 Su r y a m a n i Ro u l

3.6. MGNREGA and l To meet the large critical unmet demands programme convergence l To add variety into annual action plans l To add more implementing agencies for Convergence of other programmes with common purpose MGNREGA as against it being a stand l To raise income levels of needy families alone programme is accepted by almost l To achieve sustainable economic/social all stakeholders because convergent action returns between ongoing programmes with similar l To transfer new technologies to field or complimentary works and MGNREGA is faster felt necessary for creation of durable assets l To ensure better returns from other and strengthening livelihoods resource schemes base of rural poor. While extending the MGNREGA to all the districts in the country It is considered that the district is the best in 2008, the MoRD constituted a Task Force level for planning convergence and should on convergence of other programmes/ take a lead in identifying needs, resources, schemes with MGNREGA through an strengths and weaknesses of the imple- office memorandum dated 1 April 2008. menting agencies. This memorandum intended to examine MGNREGA, as entry point programme the modalities of convergence with other for convergence, has an advantage because: programmes in order to ensure planned l Covers a wide range of works (almost all and coordinated investments in rural areas works required for watershed develop- to create employment opportunities. This ment in rainfed area, for command area is a paradigm shift from the initial focus of development in irrigated areas and fair the Act. Creation of durable assets is an weather road for rural area connectivity) important component for the welfare of the l Provides space as united funds for local small and marginal farmers. area planning In order to optimize the multiplier effects l Provision of decentralized planning of MGNREGA, the Task Force looked at the which enables comprehensive need possibilities of convergence of programmes assessment at grassroots and greater like National Horticulture Mission, Rashtriya ownership of projects Krishi Vikas Yojana, Bharat Nirman and l Provides legal safeguards through Act Watershed Development. The MoRD has l Provides ample scope for natural re- come out with detailed guidelines on pro- source management facilitating sustain- gramme convergence based on mutual able development understanding with other departments l It helps in development of human capital at the Central Government level (www. and physical capital through institutional nrega.nic.in). linkages thereby facilitating effective Convergence intends to add value to targeting MGNREGA works by creating durable efforts and enabling planned and coord- Convergence of the MGNREGA funds inated public investments in rural areas. with funds from other sources can help Convergence assumes optimum usage in creation of durable assets. For instance, of MGNREGA funds for purposes and funds available with PRIs from other activities which are unmet by other pro- sources (such as the National Finance grammes without diluting MGNREGA Commission, State Finance Commission, objectives. It would involve identification State Departments) and other Central or and prioritization of needs and preparation Centrally Sponsored Schemes (such as of suitable shelf of projects involving im- Swarnajayanti Gram Swarozgar Yojana plementation agencies. The purpose of [SGSY] and Backward Region Grant programme convergences are: Fund [BRGF]) can be dovetailed with Greening India through MGNREGA 43

MGNREGA funds for the construction of monitoring systems and processes of con- durable community assets under the works vergence is various states. With technical sup- permissible. However, MGNREGA funds port from United Nations Development should not be used as substitute resources Programme (UNDP), pilot exercises are being by different departments and agencies for undertaken in 115 districts in 23 states by their own activities. independent organizations (UNDP, 2009b). Expected outputs of convergent action: Since the MGNREGA convergence mechanisms have been given a phillip only l Increase in Social Capital: Collective recently, an attempt has been made to planning and implementation among capture some early evidences particularly different stakeholders will enhance from MP, WB, Kerala and AP. UNDP social capital, thereby improving man- Solution Exchange—Work and Employ- agement and work output. ment Community through a discussion l Increase in Physical Capital: The process initiated by Seema Kakade, Prayas, Pune, will aid in creating durable assets and has captured some of the state-specific con- will also improve land productivity. vergence efforts with MGNREGA (Kakade, l Facilitation of Ecological Synergies: 2010). Natural resource regeneration through different activities such as afforestation, 3.7.1. Madhya Pradesh—Kapil drought proofing, flood proofing and Dhara sub-scheme changed watershed will add to environmentally the life of marginal farmers sustainable development. MP is the first state to introduce conver- l Mitigate Effect of Climate Change: gence of the different rural development Natural resource enhancement related programmes. It has also developed MGNREGA works help in addressing guidelines to implement Watershed De- issues such as CO2 emissions, industrial velopment activities under MGNREGS pollution and global warming. (www.watermissionmp.com). l Enhance Economic Opportunities: Income Implementing MGNREGS through opportunities, savings and investments sub-schemes has yielded positive results in may be generated through activities such MP. The Government of MP has introduced as pisciculture. 11 sub-schemes for creation of durable l Strengthen Democratic Processes: assets through MGNREGS, namely: Convergence awareness and planning at the grass root level will lead to greater l Kapil Dhara irrigation structures (dug ownership of projects. well, check dam, masonry dam, farm l Facilitate Sustainable Development: pond on private land) Convergence efforts through creation l Nandan Phalodyan (horticulture on of durable assets, rural connectivity, private land) productivity enhancement and cap- l Bhumi Shilp (farm bunding on private acity development lead to sustainable land) development. l Shail Pern (soil conservation and plan- tation in degraded hills) 3.7. Early evidences l Vanya (plantation in community waste of MGNREGA and land) l Resham (sericulture in community as programme convergence well as private land) The MoRD has developed and disse- l Nirmal Neer (well and tank construction minated guidelines for convergence of the for community drinking water) MGNREGA with different schemes and l Nirmal Vatika (construction of leaching specific programmes including piloting, pit and fruit tree plantation) 44 Su r y a m a n i Ro u l

l Meenakshi (pisciculture) timber plantation (to improve productivity l Sahasradhara (micro-irrigation structure of unused uplands). The initiative started with canals) in 2008 summer in Elora village using l Srunkhalabadh Jal Sanrachana (con- about ` 0.4 million for creating small struction of series of stop dams in rivers) water harvesting structures (5 per cent model/Hapa). About 30–40 models of in situ MGNREGA through Kapil Dhara wells rainwater conservation were demonstrated have improved the productivity, intensity in one patch of 20 ha of Arjuna plantation and diversity of the crops wherever water of the same Gram Panchayat. The impact is available. This scheme has added to was so significant that it impressed the livelihood security of the small and marginal local Panchayat leader, block officials and farmers. This programme has been con- district administration. The neighbouring verged with SGSY and diesel pump sets Panchayat leaders requested PRADAN to are provided to Kapil Dhara beneficiaries help them in preparing similar INRM plan for irrigation. In spite of certain reported for their villages. At the same time PRADAN irregularities, these irrigation structures helped the Gram Unnayan Samity and Gram have checked distress migration from Panchayat to set systems and processes so that villages. Through the Vanya sub-scheme they can quickly and effectively respond to under MGNREGS, plantation has been the villagers’ demands generated through the done in several villages with wire and stone planning process. The steps followed are: fencing to protect it.

The Madhya Pradesh Rural Livelihoods l Facilitating SHGs/Gram Samsad to select Programme’s (MPRLP) convergence with people to work as village level Resource MGNREGS, in the past four years, has an Persons (RPs) outreach of 26,867 households and has l Giving exposure and training to RPs generated more than 0.6 million person l Helping RPs in campaigning to build days of work. MPRLP has also planned awareness in the villages for 41,472 households and projects worth l Helping SHGs to organize village-level ` 2,249 have been sanctioned benefiting planning event involving all households 4,485 households. l Giving field inputs to ensure poorest biased livelihood centric plan 3.7.2. West Bengal—Successful collaboration models with l Each SHG is given responsibility to im- PRI in Bankura district has had plement work in a defined patch to avoid a snowball effect confusions Professional Assistance for Develop- l Payments through SHGs as they are the ment Action (PRADAN), a national level best pay masters livelihoods promotion organization, has l Extremely regular payments in a weekly trained 156 local PRI functionaries and cycle District Officials in Integrated Natural Resource Management (INRM) planning. A comprehensive plan for 2,000 ha area The trained youth are engaged in helping for INRM treatment is made for taking the villagers in planning and implementing it up on a priority basis to see the impact INRM activities. PRADAN worked very on the area. The plan includes a mango closely with the PRI system of Gopalpur plantation of 27 ha in two patches within the Panchayat and with support of women’s Self - area through convergence of MGNREGS, Help Groups (SHGs), MGNREGA activities National Horticulture Mission (NHM), were undertaken to create decentralized Zilla Parishad Schemes and Agriculture water bodies (as appropriate key component Department Schemes. Funds are being of INRM for the area), and orchard or mobilized from different agencies like Greening India through MGNREGA 45

National Bank for Agriculture and Rural women labourers is substantially increased Development (NABARD) and Panchayat and has in turn positively impacted women’s (MGNREGS) for rest of the activities. empowerment. The impact on agriculture Watershed development work for 557 ha too has been significant. The success of within this 2,000 ha is under progress with MGNREGS through Kudumbashree has led support from NABARD. PRADAN is now to their replication in few other states. working in five blocks of Bankura district. PRADAN has supported in mobilizing 3.7.4. Andhra Pradesh—Structured ` 55.79 million for MGNREGS alone for mechanism to involve the INRM work in these five blocks in the civil society helps in better last three years. About 2,500 families have planning and smoother created productive assets. PRADAN is now implementation of MGNREGS making efforts to extend to Purulia and Government of AP has developed a detailed Pashchim Medinipur districts of WB. The Operational Guidelines incorporating Government of WB has agreed to provide various management practices to ensure 60 per cent of PRADAN’s support cost better execution of the scheme. This for enhancing awareness within the com- document outlines procedures right from munity regarding MGNREGS, developing planning, registration of job seekers, village-based resource persons for planning work allocation and execution, including and implementing of INRM-based plan procedure for systematic payments and under MGNREGS, and installing process timely disbursement of unemployment and systems in five blocks for implementing allowance, wherever applicable. A web- INRM-based activities under MGNREGS. based software for tracking and updating PRADAN is following a watershed approach information which helps in monitoring for planning and implementing the INRM has been operationalized. activities. The activities under that could be taken up under MGNREGA are broadly under 3.7.3. Kerala—Involvement of PRIs eight categories and 85 kinds of sub-activities and SHGs gives good results have been listed under these eight categories. In Kerala, MGNREGS is implemented This exercise has clarified roles of different through Kudumbashree, a Government stakeholders and leads to execution of sponsored women’s network for poverty works without ambiguity. reduction. The scheme’s implementation The convergence efforts are primarily is totally controlled by local governments with the line departments such as Agri- with each Gram Panchayat having its own culture, AP Micro Irrigation Project (APMIP) model of convergence. While creation of and Horticulture, and other schemes like durable assets was avoided the initial phases, Comprehensive Land Development Project it is subsequently getting included in a (CLDP) and Watershed Programmes controlled manner. The Gram Panchayats wherever they are under implementation. in Kerala are successfully converging with The State Government has made special the Departments of Agriculture, Forest and provisions by issuing circulars for providing Irrigation. employment throughout the year in specific In Wadakkanchery Block, 2,500 workers areas that are drought stricken and/or worked for a period of three weeks to desilt migration prone. Mahboobnagar is one such an 47-km long irrigation canal. This canal district; advance wage payment have been brought assured irrigation to 3,000 hectares instructed for remote tribal areas to attract of paddy. There has been tremendous people to the scheme. Special provisions impact of the programme in Kerala, which have also been made for differently abled includes improvement in quality of work, persons. Continuous efforts are on to pro- level of transparency and reduction in vide facilities at work sites. Risk mitigation corrupt practices reduced. Participation of mechanism has been put in place by creating 46 Su r y a m a n i Ro u l

special provision for mishaps at work. For example, a CBO called Vedika, a Both Government and NGO stakeholders district level apex body is involved in took special initiatives to conduct work field-level monitoring and social audit motion studies that led to revision of cost processes in Ananthpur. This has ensured norms as appropriate. Social audit process that at least 70 per cent of the small holders is being improved with the stakeholders’ participating in MGNREGS work and are involvement to help in scheme execution. able to earn up to ` 10,000, which makes Grievance redressal systems are in place at their farming viable. Mandal, District and State levels and l At the district level, the District Collectors progress is reviewed periodically. Few have initiated a fortnightly Steering Com- initiatives related to new technology, such mittee Meeting to review and resolve dif- as smart card, finger print and smart ferent field level problems along with the NGOs and CBOs. biometric recognition are being piloted and is expected to come out with solutions to Early evidences of convergences are make the programme even more effective also captured through a study undertaken and efficient. by ACCESS Development Services with The office of Commissioner for Rural De- support from UNDP. It covered the four velopment has entered into a Memorandum districts of Karimnagar, Nalgonda, Chittoor of Understanding (MoU) with a network of and Medak. Findings of study give ample Non-Governmental Organizations (NGOs). evidences that convergence at the village- As a result of the coordinated efforts of level benefits the farmers significantly the NGOs, Community and the District (ACCESS, 2010). The main objective of Administration, 70 per cent of the poor were the study was to look into the convergence able to engage in MGNREGS works earning issues between MGNREGS and ongoing upto ` 10,000. Government of AP has taken schemes of different departments/ministries the following steps to ensure smoother and to ensure effective implementation of the effective implementation of NREGS: scheme. The study was to make recom- mendations for required corrections/ improvements in the implementation l Evolving a structured engagement pro-cess and assess whether guidelines mechanism with the civil society and issued on convergence are being followed community-based organizations (CBOs). in ex-ecution of works. Table 3.2 gives l MoU between Commissioner for Rural consolidated information on areas of con- Development (CRD) and a network of vergence and activities under MGNREGS NGOs. in these four districts. l Direction to districts towards appending In all the four districts, convergence need-based shelf of projects and allocating with MGNREGS is confined to five funds on that basis. schemes of the Government, namely l Micro-planning exercises are promoted CLDP, APMIP, Micro Irrigation Project in each village, focusing particularly on (MIP), Watershed Development and Common Property Resources (CPRs). Horticulture. The nature of works vary l Based on micro-planning, estimates are within and between the districts (sample is developed along with the MGNREGS team based on two Mandals which experienced and allocations are done by the district. significant positive impact of convergence For example, Ananthapur Paryavarana and two Mandals which experienced Parirakshana Samithis (APPS) has constraints in optimal performance of con- provided field facilitation support in vergence). There was variation in terms Ananthapur District. of inclusion of vulnerable communities, l Engagement of Field-level resource particularly the SC, ST and Other Backward agencies for monitoring of MGNREGA. Caste (OBC) communities. However, in all Greening India through MGNREGA 47

Table 3.2: Areas of convergence and activities in four select districts of AP

Convergence partners Activities under convergence Comprehensive Land Development Project (CLDP) Land development known as Indira Prabha Deep plunging Bore wells Bush clearance Boundary removals Stump removal Land preparation with machines Bush clearance with machines Andhra Pradesh Micro Irrigation Project (APMIP) Drip irrigation and State Horticulture Mission (SHM) New Horticulture Plantation SC/ST Corporation Land development Drilling of bore wells Watersheds Check dams Check walls Mini percolation tanks Fodder development MGNREGS Bush clearance Stone bonding Earthen bonding Horticulture plantation Farm ponds Trench cutting for drips Mini percolation tanks Horticulture Pit digging Staking with stick Compost pit Providing drip facility Providing pesticides Source: Study findings undertaken by ACCESS Development Services in January–April 2010. districts, studied women received priority terms of completion of the work reporting in work allocation. at 34.84 per cent. It was found that some of Chittor District: The number of total works the convergence works are dependent on the initiated and completed was the highest in completion of other works. For instance, Chittoor (51 per cent) as against the average the horticulture expansion is dependent on of 47.12 per cent for all four districts. In completion/sanction of minor irrigation Chowdapalli and Karvetinagar Mandals and micro-irrigation projects. Huge area is where convergence is considered good, 46.5 proposed under mango, pomegranate and per cent works were completed as against sweet orange plantation in the coming ten other Mandals experiencing constraints. years. Expansion is dependent on minor Comprehensive Land Development Project irrigation, land development and other (CLDP), Minor Irrigation (MI) Tanks and related activities. Horticulture works account for almost Medak District: About 49.23 per cent of 60 per cent of the works. initiated works were completed in Medak Karimnagar District: The thrust of con- District. Convergence with MGNREGA vergence in Karimnagar District is on MI is mostly confined to CLDP, APIMP and Tanks, CLDP and Horticulture. The district Horticulture. Under convergence, em- has ambitious convergence plan in water ployment was provided to nearly 60 per cent conservation, drought proofing, provision of the total work force in the villages. of irrigation facilities, rural connectivity and Nalgonda District: Nalgonda District has afforestation. Many of these works could the distinction of completing maximum not be initiated or are still in the formative work reporting at 50.18 per cent completion. stage. The district has achieved the lowest in Major works include CLDP, MI Tanks, 48 Su r y a m a n i Ro u l

Horticulture and Watershed management. activist groups, MGNREGA is proving to Maximum works are generated under CLDP be fruitful for small and marginal farmers. and irrigation. Men and women had equal AP is a case in point. Positive impacts have representation in execution of conver- been reported from Rajasthan, Orissa, gence works. Substantial individual assets MP, Uttarakhand and many other states. have been created under convergence with Many other departments are evincing horticultural activities. The convergence interest to dovetail their programmes with activities under forestry and agriculture are MGNREGA, based on the positive outcomes yet to take off in the district. of convergence efforts. The study also brings out the fact that Recently, a Working Group has been most of the farmers face water scarcity for formed to formulate models of convergent cultivation. They are therefore not able to action between MGNREGA and schemes achieve 75 per cent plant survival that makes of the Ministry of Tribal Affairs vide an them eligible for subsidy from APMIP and order of MoRD dated 9 July 2010. The SHM. This forces the farmers to approach main objective of such a move is to examine moneylenders for loans to buy inputs to the modalities of convergence towards save their crop. The farmers perceive assets furtherance of the common objectives of created under convergence as very useful and different programmes for generation of benefits from these assets have significantly sustainable livelihoods and income for the reduced migration from villages to cities tribal communities. Just like MGNREGA, across all four districts. Land development, there are several programmes run by the bush clearance, deep ploughing, stone Ministry of Tribal Affairs, which have a direct bunding, earthen bunding, compost pits bearing on generation of rural livelihoods. and feeder channels were commonly The Working Group’s suggestions will initiated with joint convergence of various help in rolling out model pilot projects departments. A major observation was that through which the productivity of the tribal line departments are lacking in ownership people can be enhanced. Some of these in MGNREGA convergence work, as programmes are special central assistance most of them do not consider these as for tribal development, development of their work. primitive tribal groups, and the scheme of AP Government has recently decided to market development of tribal products. At bring those working under the MGNREGA present, there is no coordination between under the jurisdiction of the Workers’ the implementing agencies at the field level Welfare Board to help them avail benefits to converge these schemes for maximising like insurance, medical and other facilities. benefits. The Working Group will deliberate About 0.8 million workers are registered on ways to converge these schemes with with the Welfare Board till May 2010. The MGNREGA and will submit its report to Government of Andhra Pradesh has also MoRD within two months. planned to set up a special Lok Adalat to redress grievances of MGNREGA workers. This is a reflection of AP Government’s 3.9. Greening India through commitment for welfare of workers employed MGNREGA convergent in unorganized sectors. action

3.8. Other departments MGNREGA is bringing about a silent revolution in rural areas. The civil society showing interest for actors have contributed significantly in the convergence under the efforts to shape and make this programme a MGNREGA role model for public service delivery in rural In spite of many reports on malpractices areas. In some states, the administrative in MGNREGA in media and by social machinery is responding very positively Greening India through MGNREGA 49 and proactively, whereas in some states linked small towns and also from crop the programme is experiencing limited production to value-added activities, em- support from the State Governments. Con- ployment growth in agriculture is expected vergent action agenda is moving faster in to be high. The success of Indian agricul- some states like AP, Orissa, Uttarakhand, ture largely depends on a new institutional Maharashtra, MP, Rajasthan and some parts structure that will provide technology, of Northeast. organizational, pricing and infrastructure The success of MGNREGA need not support. Indian agriculture is already be measured just in terms of employment increasingly demand driven. This is ex- generation, even though it has created a pected to further accelerate in the future. success record far better than other pro- MGNREGA has potential to contribute grammes. MGNREGA is a model for towards greening India by benefiting innovation in many areas of public service the small and marginal farmers directly delivery. Starting from providing land-based through convergent action. The main employment to the wage earner, MGNREGA benefits are illustrated in Table 3.3. has had innovative initiatives like financial For convergent action, the following inclusion, social security provisioning for action points are important: workers in the unorganized sector and identification of the poor. In the rural areas 1. Strengthening and endowing capacities 0.92 million zero balance bank/post office of the PRIs by providing them requisite accounts have been opened because of technical and social human resource so MGNREGA. Many households have been that they are empowered to formulate included in the financial network for the plans and implement accordingly. first time. This is an achievement considering 2. Social mobilization by a cadre of mob- that financial inclusion is not a stated ob- ilizers at the village level holds the key to jective of the programme. Similarly, as shape MGNREGA into a truly demand- against the stated objective of one-third driven programme. of women participation in total person 3. Improving the productivity of agriculture days generated, the actual numbers have and convergence with other allied pro- reached 50 per cent. An expected spillover grammes make a big change in ensuring has also been the rise in wages in almost all sustainable livelihoods to the rural poor. states since the initiation of the programme. 4. Asset creation for small and marginal Evidently, the self-targeting inherent in farmers on their land would greatly MGNREGA has had a better score in help these farmers to benefit out of targeting the poor than the officially listed MGNREGA. BPL households, thereby providing rural 5. Strengthening social audit process and poor an opportunity to stake claim to the grievance redressal system through fruits of growth. independent bodies. The two massive Government 6. Use of information technology (IT) programmes—National Rural Livelihoods can strengthen social audit processes Mission and National Food Security and reduce chances of leakages and Mission converged with MGNREGA can corruption. The IT system practiced in revolutionalize Indian agriculture. It is AP is a good example for providing full projected that in the next two decades, Indian proof tracking system. agriculture will meet the requirements of 7. Use of IT system to make payment of food security, will rapidly diversify and will wages easy, transparent and timely. function in a rural urban continuum. With Banking Correspondence model, rapid development of markets and shifting wherever banking/post office network of working populations from villages to is absent, can be an option. 50 Su r y a m a n i Ro u l

Table 3.3: Main benefits for small and marginal farmers from MGNREGA

Intervention Main benefit Labour intensive activities

Combating soil erosion (Land Maintained productivity of land Construction of earth structures, development, MGNREGA) planting of (native) vegetation Water harvesting (MGNREGA) Increased productivity of Construction of weirs and other (ground) water structures such as underground tanks, ponds, renovation of traditional water bodies, desilting of tanks Rehabilitation of degraded land Restores ability of the land to Planting native vegetation, removal (Working for Wetlands, provide ecosystem services such of alien vegetation and other man Working for Woodlands, as water harvesting, purification, introduced structures, restoring MGNREGA) carbon sequestration and providing streams and wetlands habitat to endangered species Source: UNDP (2009a).

8. Acting upon recommendation of the Kumar, Devesh. (2010). ‘NREGA Good but has Miles Working Group to introduce wage to Go, Says Plan Panel’, The Economic Times, system based on Consumer Price quoting a Planning Commission report. New Delhi: ET Bureau, 26 March. Index. NCAER and PIF. (2009). Evaluating Performance 9. The Civil Society has role to play in of NREGA. New Delhi: National Council of social mobilization, capacity building Applied Economic Research & Public Interest of the PRIs and Social audit. Foundation. 10. Payment of allowance to workers if Pankaj, Ashok and Rukmini Tankha. (2010). ‘Empowerment Effects of the NREGS on Women they were not given a job within 15 Workers: Study in Four States’, Economic & days of demand as per Section 7 of Political Weekly, 24 July 2010, Vol. XLV, No. 30. MGNREGA. Press Information Bureau (PIB). (2010). ‘Reaching 11. Coordination for convergence from Out to the Rural Poor Mahatma Gandhi NREGS State to Panchayat level can help in Shows the Way’ dated 13 August 2010. New Delhi: Press Information Bureau, GoI. achieving better result and optimizing Kakade, Seema. (2010). State Specific Convergence allocated resources. Efforts with MGNREGA. Available online at ftp://ftp.solutionexchange.net.in/public/emp/ Given the unprecedented scale of the comm_update/emp-update-46-250510.pdf. MGNREGA activities and vast potential The Economic Times. (2010). ‘UPA gearing up to roll out NREGA-II’, The Economic Times, for convergence under various schemes New Delhi Edition, 12 July. along with the enthusiasm in which it is UNDP. (2009a). ‘Green Jobs for the Poor—A public implemented, the programme offers a big Employment Approach’, Discussion Paper. platform for multiplier effects beyond wage New Delhi: UNDP. UNDP. (2009b). ‘List of Pilot Districts Identified employment. Scaling up of convergent for Convergence between NREGS and ongoing action will largely depend on how action Schemes of Other Ministries’. UNDP’s Terms points are factored in the pilot phase gradu- of Reference for Monitoring Convergence between ates to mega efforts across states. NREGS and ongoing Schemes of Other Ministries. New Delhi: UNDP.

References ACCESS. (2010). Unpublished Report. ‘Study on Con- vergence Monitoring’ (December 2009–April 2010). New Delhi: ACCESS Development Services. New Generation Initiatives in Agri-based Livelihoods—Five Successful Private Sector Initiatives

Pr a d e e p Ku m a r Mi s h r a

4.1. Introduction Parallel efforts by Civil Society Organiza- tions (CSOs) and corporate agencies on the Indian agriculture, in the last century, other hand have been dealing with various Chapter has passed through several phases and aspects of the sector. the Government has played an important 4 The parallel initiatives by private sector role in it. In 1951, the sector contributed (including Non-Governmental Organ- around 50 per cent to the Gross Domestic izations [NGOs] and corporate agencies) Product (GDP) and employed 70 per cent have been significant. While some of them of the population. This naturally made it a are localised in nature, others have made focus sector for development. The trend is vast coverage. The rationale behind these reflected in the fact that plan expenditure initiatives is that mainstream interventions on agriculture, irrigation and flood control were not inclusive. Green Revolution was was 37 per cent of total outlay in the First effective in making India self-sufficient in Five Year Plan (Bhalla, 2007). The absolute food grains but it created huge inequalities. amount of expenditure on agriculture in- Sections of farmers from dryland areas, creased consistently through the successive hilly regions and a few socio-economic plans although the proportion in total plan strata remained unaffected by majority of outlay kept on decreasing. In the Tenth Plan, agriculture development initiatives. Either it is 16.5 per cent. the technology was inappropriate or the Government initiatives in agriculture policies did not fit into their social, cultural sector have been primarily in developing or geographical context. In some cases infrastructure like electricity, dams, canal the markets did not support the initiative. network, promoting scientific research and Overall, there was huge scope for working extension through establishing a network of on issues like equity and sustainability. agriculture universities, Indian Council for The National Agriculture Policy 2000 Agriculture Research (ICAR) institutions recognized the need for stepping up public and Krishi Vigyan Kendras (KVKs). Broadly and private investment in agriculture. speaking, the focus of government ini- Realizing that there exists a niche area, tiatives has been on research and extension is many private agencies entered the sector directly aimed at production enhancement. either on their own or after being enabled 52 Pr a d e e p Ku m a r Mi s h r a

by the policy regime. This chapter focuses on with farmers helps government to perform such initiatives. An effort has been made to its mandated functions such as research and capture initiatives that have been effectively extension. (Farrington et al., 1997) implemented on a large scale. These ini- tiatives have not just been successful, they Corporate houses and NGOs have oper- have also challenged mainstream agri- ated on almost every sphere of agricul- cultural initiatives. ture sector. Starting from management of Krishi Vigyan Kendras, these agencies have ventured into action research, extension, 4.2. New generation marketing and promotion of collectives. initiatives This chapter tries to cover a few models that Private initiatives in agriculture have been have shown exemplary results. on several fronts—research and develop- ment (R&D), supply chain management, 4.3. The models information technology, extension and technology transfer, integrated natural Five models have been covered in this resources management programmes like chapter. The criteria of choosing these watershed development and several other models have been scale, sustainability, aspects. In case of R&D, private initiatives replicability and impact. contributed 16 per cent, foreign donors contributed 14 per cent and the state and 1. The first model deals with organic central government contributed the balance farming which has challenged the con- 70 per cent. In overall terms, private sector ventional high external input modern R&D accounts for more than 11 per cent agriculture. This not only provides an growth in total factor productivity. Private environmentally sustainable alternative sector research, especially in hybrid seed but has also grown as a business pro- and horticulture is expanding rapidly position due to the increasing demand (Ramasamy and Selvaraj, 2007). of organic foods. Compared to public interventions, the 2. The second model is about a specific private initiatives are known to be result crop, that is, paddy. Known as System oriented. Generally, they are market-driven of Rice Intensification (SRI), it has been rather than policy-driven and they operate continuously ignored and sometimes in a cost-effectiveness manner leading to derided by the scientific community. higher productivity. The civil societies have SRI, however, has been expanding and a distinct advantage which can be described most important it is becoming popular as follows: among the farmers. 3. The third model is about low-cost drip A particular feature of many NGO approaches irrigation developed by International is that they are deeply empowering; they Development Enterprise (IDE) that has involve long term face-to-face support by NGOs to farmers groups in identifying and gained wide acceptance among small addressing their problems, and help farmers and marginal farmers. to gain the confidence to take joint action 4. The fourth model is about Participatory in resource management and to articulate Technology Development (PTD). their demands on government services. This Agriculture Technology development approach requires long-term concentration had remained the responsibility of of resources in a few areas. By contrast, agriculture scientists. But a linear system government services have to spread their resources more thinly, and the best way of research → extension → adoption was they can help to achieve a functional kind of often not effective. PTD is a way forward participation in which enhanced interaction in this regard. New Generation Initiatives in Agri-based Livelihoods 53

5. The fifth model is about the use of in- a number of NGOs, farmers’ organiza- formation technology in integration of tions, promotional bodies and institutions market channels by private corporations (Narayan, 2005). that has been able to promote inclusive Extent of organic farming in India: growth. According to IFOAM, India has 1.02 million ha land under organic farming. Among 4.3.1. Organic farming and developing countries, only Argentina, certification China and Brazil have more land under The need for organic farming in India organic farming. Globally, 35 million ha of arises out of the unsustainable nature of agricultural land is under organic farming. conventional farming. Monoculture, ex- The world has about 1.4 million organic cessive dependence on chemical fertilizers producers. This is a sevenfold increase in and pesticides, resulting in increased soil the last ten years (Willer, 2010). India, with salinity and contamination of soil and water, 340,000 organic crop growers, tops the list. are a few of the problems associated with This is primarily because the small size current agriculture practices. holdings of Indian farmers. Although modest as compared to de- The global market for organic agricul- veloped countries, at an average of 96 kg tural produce is 50 billion US dollars, of per ha, intensity of use of fertilizer has been which the United States alone consumes high in India. Much of this use is in irrigated about half of all organic produces (Sahota, areas. Eighty per cent of fertilizer is used in 2010). India’s organic exports amount to 33 per cent of gross cultivated area (Narayan, 125 million US dollars. The government is 2005, p. 31). Such practices impact both planning to increase to one billion US dollars drinking as well as irrigation water. Long- in next five years (Organic Monitor, 2010). term use of fertilizer also affects the soil Challenges: The main challenges in organic health negatively. Excessive use of pesticide farming are related to certification, which has increased toxic residues in food grain, needs strong monitoring and adherence to fodder, vegetable, meat and milk (Dhaliwal standards in cultivation and input appli- and Singh, 1993). Daily pesticide intake of cation. Awareness among farmers regarding individuals has increased above acceptable certification is rather low. Another important level (Prakash, 2003). Organic farming is an issue related to organic farming is the alternative for reducing negative impact of organic market is a premium market and modern agriculture. steep growth would mean overdependence While organic farming has potential on export that could be risky sometimes. to overcome the negative aspects of con- Morarka foundation initiatives in 1 ventional high external input agriculture, organic agriculture development: The there is another reason for its increasing MR Morarka-GDC Rural Research importance. Rich nutrient content and Foundation (henceforth mentioned as lower toxic residue in organic foods has led Morarka Foundation), established in 1991 to increase in demand of organic products by leading industrialist Kamal Morarka, is worldwide. headquartered in Jaipur. The organization Organic agriculture movement in is a leading name in the field of organic India received inspiration and assistance farming in India. Morarka Foundation’s involvement with agriculture development from International Federation of Organic started in 1995 when, supported by the Agriculture Movements (IFOAM), which has 750 organizational members from 116 countries (IFOAM, n.d.). All India 1 This section has been primarily drawn from Federation of Organic Farming (AIFOF) websites of Morarka Foundation and Morarka Organic. is a member of IFOAM and consists of (Morarka Foundation, n.d.; Morarka Organic, n.d.). 54 Pr a d e e p Ku m a r Mi s h r a

Directorate of Agriculture of Government ICQS across 15 Indian states. Over 50,000 of Rajasthan under a World Bank aided of these farmers are also certified by various project, the Foundation implemented an international certification agencies. agriculture extension project in 60 villages The Foundation has also assisted entre- of Nawalgarh block of Jhunjhunu district of preneurs and private companies in venturing Rajasthan. It covered 10,000 farm families into organic farming. Collaborating with cultivating 25,000 ha of land, (Morarka professionals, scientists, farmers, private Foundation, n.d.). In the subsequent years, sector companies, it has been able to build the organization implemented District Rural strong organic agribusiness value chain Development Agency (DRDA) supported enterprises. The organization has facilitated watershed development projects and linkages between organic producers and Department of Biotechnology supported pro- traders. In the year 2006–07 it promoted an ject on biological management practices independent for profit agency, Morarka under which organic farming components Organic Foods Pvt. Ltd., for marketing the were taken up. produces to facilitate direct linkage between While implementing these projects, the consumer and producers. The com- the Foundation’s extension functionaries pany has ventured into international oper- found high cost of cultivation to be a major ations (Morarka Organic, n.d.). problem for the farmers. As a solution to the problem, the Foundation started pro- 4.3.2. System of rice intensification moting vermiculture.2 By 2000, the Foun- The System of Rice Intensification (SRI), dation had become the largest producer an innovation in the field of rice cultivation of vermicompost in the world. The Foun- done outside the agriculture establishment, dation currently has a capacity of produc- was developed by late Fr Henri de Laulaníe, a ing five million tonnes of vermicompost priest with knowledge on agriculture, in 1983, per year (Morarka Foundation, n.d.). as he observed a strange increase in yield The on-farm fertility management tech- when transplanted early (Rabenandrasana, nology, that is, vermiculture was awarded 1999). Early experimentations were done for excellence in technology innovation by in Madagascar. After experimentations, a the Ministry of Science and Technology, set of principles for SRI (Box 4.1 gives a Government of India in the year 2001 summary of it) was perfected. But till 1999, and 2002. Subsequently the organization it remained to be a local phenomenon expanded operations to other states. limited to Madagascar. But, SRI today has While working on its on-farm fertility been widely experimented in 22 countries management concept, the Foundation across the world. realized the increasing demand of organic SRI means different things to different food and certification procedures. The stakeholders. Originally, a set of principles organic farming interventions made by the applied to the farming; the rice research organization became a building block for establishment has taken it as a technique this idea. It promoted record maintenance (Shambhu Prasad, 2006). The criticism of procedures for meeting organic certification the scientific community has been mainly requirements. Subsequently, it developed because of the problems related to its an Internal Control System for Quality standardization as a technique. However, Management and Certification (ICQS). In the issue of standardization did not arise in the first two years about 4,000 ha area was the case of civil society as for them it is a set covered. Currently the programme covers of principles. The concept spread despite a about 250,000 farmers registered under lukewarm response from the agricultural establishments. Interestingly, the apathy 2 Vermiculture means artificial rearing of earth- worms. The excreta of earthworms is known as to SRI from establishment has been a vermicompost which is rich in organic content. worldwide phenomenon. New Generation Initiatives in Agri-based Livelihoods 55

Box 4.1: The SRI concept The basic concepts of SRI can be summarized 4. Keep paddy soil sufficiently moist as follows: but not continuously flooded, mostly aerobic and not saturated. 1. Use young seedlings to preserve mature 5. Actively aerate the soil as much as plant’s growth potential (these days possible, using a rotary hoe or cono direct seeding is also being tried out). weeder to control weeds. 2. Avoid trauma to the roots. Transplant 6. Enhance soil organic matter as much as quickly, shallow (1–2 cm), with no possible by applying compost, mulch, inversion of seedlings root tips as that manure, etc. Chemical fertilizers can be delays the plants resumption of growth used with SRI, but the best results have after transplanting. come with organic soil amendments. 3. Give plants optimally wider spacing. Source: Paraphrased from Uphoff (n.d., p. 5).

SRI spread rapidly as farmers found it interest in SRI. Alapati Satyanarayana, practical and significantly higher yield was Director of Extension, an initial sceptic, observed. It had environmental benefits too, became one of its proponents (Shambhu as it does not encourage use of chemical Prasad, 2006). fertilizers. In 2002, 15 countries shared ex- Civil Society initiatives on SRI have been periences related to SRI in an international much more extensive. Professional Assist- seminar in China. The conference not ance for Development Action (PRADAN), only pooled the experiences from several a rural development agency, experimented countries but it also opened new avenues SRI in Jharkhand and West Bengal; for making it a large-scale practice. Timbactu Cooperative in Andhra Pradesh; Unlike the hybrid seeds, propagation People’s Science Institute in Uttarakhand of SRI did not receive much support from and Himachal Pradesh; Centre for Rural the scientific community. In fact, they Development Training in Karnataka; while resisted its popularization. The credit for M.S. Swaminathan Research Foundation propagation of SRI goes to civil society (MSSRF) experimented in several states. organizations (Shambhu Prasad, 2006). Many other agencies played a key role SRI in India: In India, the first trial of in popularizing concept and practice of SRI was undertaken by Dr Thiyagarajan SRI. The World Wildlife Fund for Nature of Tamil Nadu Agricultural University (WWF) negotiated for policy change for (TNAU) after he attended the 2000 seminar its wider propagation. A joint project of in China. However, the TNAU experiment WWF and International Crops Research was a modified version of SRI where only Institute for Semi-Arid Tropics (ICRISAT) three of the SRI principles (single seeding, has supported SRI experimentation in wider spacing and use of weeder) were several states. followed (Thiyagarajan, 2002). The initial Awareness and knowledge about SRI has results were not very encouraging and the spread not through agricultural universities yield level was less than the conventional and extension officials, but through internet method of rice cultivation. Later, the farmers and farmers to farmer. Media too played from Andhra Pradesh and Tamil Nadu were a key role by highlighting significant sponsored by Cornell International Institute impro-vements in yield because of SRI, for Food, Agriculture and Development though at times its report did misinterpret (CIIFAD) for an exposure trip for SRI to information (ibid.). Sri Lanka. Acharya N.G. Ranga Agricultural The reported increase in yield due to SRI University, Hyderabad also took a keen has been to the extent of 1.5 to 2.54 tonnes/ha 56 Pr a d e e p Ku m a r Mi s h r a

in Tamil Nadu and Andhra Pradesh sprinklers. These sprinklers are pressured by (Satyanarayana, 2004; Thiyagarajan et al., 10,000-litre tanks located in small streams 2005). The highest yield has been to the 20 metres vertically above the field. During extent of 17.2 tonnes/ha (Satyanarayana, interaction with farmers, they found that 2004; Punna Rao and Satyanarayana, 2005). the systems were effective, but at about Decrease in consumption of water, increase 1,000 dollars, was affordable only with of straw yield, increase in labour productivity government subsidy. The 10,000-litre tank resulting in net returns to the extent of contributed to about 30 per cent of the 67 per cent has been reported (Sinha and cost. Thus developed the idea of designing a Talati, 2005). low-cost system. Based on this and with In recent years, however, the govern- inputs from engineers, a 30-dollar system ment has shown keen interest in promoting was designed using high density polyethylene SRI. National Bank for Agriculture and (HDP) pipe, a used 55 gallon drum and a Rural Development (NABARD) has taken a simple cloth filter (Polak, n.d.). lead in providing support to such initiatives. It took another five years to perfect and Various state governments have also come adapt the system and to finally develop a forward and provided support. low-cost drip irrigation system. IDE India Because SRI is a set of principles rather then tested the same in fields and observed than a technique, it has been adopted that in comparison to conventional flooding with modifications by farmers. This is method this produced additional crop yield the primary reason behind its growing of 30 per cent or more using half the amount acceptance. This very nature of SRI has been of water. Keeping in mind the Indian and a reason behind its non-standardization as Nepalese conditions, drip systems ranging a technique, resulting in serious criticism from 20 sq mts to 10 acres were developed. from the scientific community. Faulty As a result, the resource-scarce farmers can measurements, methodological difficulties start with smaller areas and add to it later. in experimentation, difficulty in large- Cost was further decreased by replacing im- scale propagation are the major criticisms ported kits with a locally available bucket. regarding SRI by the scientific community By that time, India already had a large (Shambhu Prasad, 2006). Sinclair (2004) market for drips, with about 50 drip system considers the results of SRI as ‘unconfirmed manufacturers. The drips cost about 750 field observations’, which cannot be accepted dollars per acre. The IDE system brought until the research is described in an unbiased down the cost to almost a third. However, manner in scientific journals reviewed by existing manufacturers were not convinced anonymous referees. of the system, hence IDE established two Irrespective of the criticisms, SRI has assembly plants of its own for this purpose. gained popularity among farmers and non- In the first two years, 10,000 units of drip research stakeholders. Its eco-friendliness, sets were sold in India and Nepal (ibid.). significant yield improvements and saving Today the mirco-irrigation system is used by on scarce inputs like water is the reason for 250,000 farmers in India (IDE, 2009). its adoption. 4.3.4. Participatory technology 4.3.3. Low-cost drip irrigation development technology Starting with Grow More Food Campaign The idea of low-cost drip irrigation was and followed by the Green Revolution, India born by accident. Paul Pollock, the founder has evolved from a food deficit country at the of International Development Enterprise time of independence to being self-sufficient (IDE), was having discussions with a banker in food-grain production. However, Green in Nepal about introducing Rainbird type Revolution brought with it a number of New Generation Initiatives in Agri-based Livelihoods 57 problems. The chief being that it could not A long-term interaction between outsiders bring about equitable distribution of benefits and local people, with the aim of generating and that the approach was largely envir- innovations based on indigenous knowledge onmentally unsustainable. Dwarikanath and cultures to develop sustainable livelihood systems. It involves and links the power (2007) observes that the hurried progress and capacities of agricultural research with of Green Revolution processes lost sight the interests and knowledge of local com- of a healthy farming system and farmers munities. (Salas et al., 2003, p. 4) were rarely guided adequately beyond crops and yields. In contrast to conventional training and The Green Revolution extension system visit approach, PTD has an element of em- was largely top-down, where farmers’ par- powerment of farmers. It is a participatory ticipation was minimal. Given its utility and action research method where there is simplicity of the measures, Green Revo- dialogue between outsiders (scientists or lution was a great success. But a large group experts) and farmers for working out a of farmers, particularly the resource-scarce technology development process that is ones and the farmers from rainfed area suitable to the area and acceptable to the remained bereft of the benefits. The Green farmers. Thus, PTD brings a paradigm shift Revolution measures were limited to a few in the knowledge system of agriculture. PTD selected crops like wheat and rice. has an inbuilt system of capacity building of An average resource-scarce farmer does farmers as they actively participate in the not have much access to technology and technology development process. The SRI capital; he/she cannot even take much risk; system too is a kind of PTD. has a mixed farming approach which in- Agriculture Man Ecology Foundation cludes pulses, coarse cereals, livestock, and (AME) and experience of PTD:3 AME is elements overlooked by the mono-cropping a Bangalore-based support organization system of modern agriculture. For a small/ operating in South India since mid-1980s. marginal farmer food security of the Aiming at promoting eco-friendly and household held the key to his/her decisions. sustainable agriculture, AME works with This was one of the reasons why many PTD as its ‘entry strategy’. AME follows farmers could not adopt Green Revolution PTD using PRA, Farmer Field Schools (FFS) methods. in Integrated Pest Management (IPM) and Participatory Technology Development Rapid Assessment of Agricultural Knowledge (PTD) is a counter-approach. It is a paradigm Systems (RAAKS). AME’s interventions and does not involve replacing a particular start with field-level guidance to farmers input with another or introducing particular and NGO field staff, and the lessons learnt technology (Box 4.2). It speaks about em- in the PTD processes are then fed upwards powering the farmers in the process of tech- to formal agricultural research establish- nology development, recognizing that ments (Naidu and Walsum, 2002). Box 4.2 farmers experiment on their fields and discusses the process followed in PTD. they bring in valuable insights that AME operates in drought-prone Deccan go undocumented and lost. Thus, the Plateau which, with annual rainfall ranging farmers’ informal experimentation helps in from 500 to 900 mm and 81 per cent of the developing locally appropriate technologies area, is under rainfed crops. Because existing regardless of whether they are supported by research institutions focused mainly on the scientific community. Veldhuizen et al. irrigated agriculture, AME worked to assist (2005) say that it is the field workers of local NGOs involved in promoting sustainable NGOs rather than scientists who recognize and understand how farmers experiment. In 3 This section has been largely drawn from Naidu operational terms, PTD is defined as: and Walsum (2002). 58 Pr a d e e p Ku m a r Mi s h r a

Box 4.2: The PTD process Initial assessment of problems in agriculture between AME and NGO and at a meeting with is done through participatory assessments farmers and NGOs to evaluate PTD results. methods such as Participatory Rural Appraisal Researchers and government extension staff (PRA) and Rapid Assessment of Agricultural are also invited to join at important stages in Knowledge Systems (RAAKS). This includes a PTD process. understanding key actors, their perceptions, Scaling up is done through three possible solutions to the problems and possible approaches: areas of collaboration.

This is followed by training of farmers l Farmer to farmer as well as of NGO staff. The training is par- l Farmer to farmer group ticipative and experiential and includes PTD l Farmer group to network/federation concepts, approach, problem identification, gender mainstreaming, monitoring and Monitoring is done at four levels, indi- evaluation. Farmers are encouraged to share vidual farmer, SHG, NGO and AME. Farmers’ their knowledge about indigenous technologies. monitoring and evaluation focus on crop The focus of the PTD processes is primarily on performance, labour requirements and cost- testing and adapting eco-friendly technologies benefit analysis. A system for documentation is that had been developed elsewhere. set up and maintained. This has been a difficult Sharing between the ‘primary’ stakeholders process as most people involved in PTD were takes place in several ways: during the weekly field workers and their documentation skills field visits of NGO personnel, during training are not very good. conducted by Agriculture Man Ecology Foun- dation (AME), at monthly review meetings Source: Naidu and Walsum (2002).

agriculture in the Deccan Plateau. AME is l Increased yields: paddy 20–40 per not an implementing agency. It guides field- cent, cotton 10–20 per cent, groundnut level facilitation through other NGOs and 20–30 per cent communicates the learnings to policy level l Increased quality of produce and research institutions. It also involves l Decreased risk and yield stability banks, input suppliers, processing units l Increase in farm biodiversity because and storage experts in deliberations on of inter/mixed cropping, trees, green PTD processes. manure l Reduced pest and disease incidence Since 1996, the Netherlands Government l Reduced cost of fertilizers to the extent has been giving AME an exclusive support of 40 per cent to act as a catalyzing agency, with aim to l Higher net profits because lower enhance linkages between the biomass cultivation costs. Paddy 30–40 per actors in Deccan Plateau region. In 1997, cent, cotton 20–30 per cent, groundnut a bilateral project was worked out that 10–20 per cent endorsed the mandate given to AME. l Better soil health and enhanced moisture AME started PTD activities in 1997 with retention capacity 270 farmers. During the next five years, l Higher crop productivity in subsequent it directly covered 2,500 farmers and ex- years due to residual effect of manure tended its reach to another 10,300 through (Naidu and Walsum, 2002) extension farmers, who are not part of PTD but come for an exposure to technologies AME works with all categories of farmers. developed in PTD process. The outcomes But farmers with very low resource levels are of PTD processes are as follows: generally not able to be directly involved in New Generation Initiatives in Agri-based Livelihoods 59

PTD experiments as at least 2–3 acres are newspapers regularly publish current prices, required so that some land can be spared for but only internet could provide the real experiments. However, the resource-scarce time information. But much of rural India farmers get indirect exposure as ‘extension does not have access to internet. Many farmers’ learning from those who have been NGOs and corporate agencies have their directly involved in the experiments. own initiatives in this regard. For example, The problems associated with PTD were the Morarka Foundation in Rajasthan primarily institutional. As PTD is process introduced information flow on price of oriented and time consuming, NGOs found commodities through pagers. However, the it difficult to implement. During the first first large-scale initiative, popularly known two years of the initiatives, a number of as ‘e-choupal’, was made by ITC Ltd. Today technologies had been tested. They thought we have many other similar initiatives like that it was time to spread the ‘proven’ Common Service Centres (CSC), which technologies to other farmers, villages provide many more services and also have and NGOs in their networks rather than a much higher spread. E-choupal being continuing in the experimental mode. the first large-scale initiative is an excellent example to discussion. 4.3.5. IT-enabling supply chain E-choupal initiative of ITC: E-Choupal Information technology (IT) revolution- began in 2003 as an ITC initiative. It targeted alized India’s economy in the 1990s. The use the small and marginal farmers, three-fourth of IT in industry and services provided India of the farmer population, for providing an edge in the beginning of 21st century. timely and relevant information on several However, IT-driven efficiency in agriculture issues—weather, transparent price discovery was not thought of by many. and technical know-how about farming. Traditionally, farmers sold their produces The e-choupal is connected through Very in Mandis. The network of Agricultural Small Aperture Terminal (VSAT), wireless Produce Market Committee (APMCs) or local telecommunication infrastructure. promoted by Government were the hub Solar battery chargers and uninterruptible of transactions. The Mandi system was power supply (UPS) are provided considering plagued with problems such as excessive large spells of electricity failure in rural areas. exploitation by middlemen and lack of The e-choupal is run by a ‘Sanchalak’ who sufficient information to farmers. Only the has been trained to access the web portal traders had access to price-related infor- and pass on information to farmers. There mation and farmers were exploited by their is also a ‘Samyojak’, that is, a commission unfair practices. agent covering 40 e-choupals, whose role For example, soyabean is exempted from is facilitating cargo procurement process India’s small-scale industries regulations (FAO, n.d.). to allow for processing in large, modern The system is designed to gather customer facilities. But 90 per cent soyabean crop information too. This helps in understanding was sold by farmers with small holdings to the location, consumer preference, financial traders in Mandi. In Mandi system, even if position and credit worthiness (ibid.). The the farmers have some tentative idea about information kiosk is also used for reverse the price trend (Annamalai and Rao, 2003) flows like agriculture inputs, Fast Moving they often have to accept a price collusively Consumer Goods (FMCGs), etc. By linking decided by the traders. physical infrastructure with virtual space, the Many interventions have been intro- e-choupal initiative has been able to bring a duced, recognizing information asymmetry transformation in agricultural procurement as an important bottleneck. Radio and in rural India. Today, there is a network of 60 Pr a d e e p Ku m a r Mi s h r a

6,500 e-choupal centres covering 40,000 All the models are eco-friendly and villages across 10 states of India. About four therefore environmentally sustainable. million farmers use this facility for trading While organic farming and SRI have been commodities like wheat, rice, pulses, soya, designed to be so, PTD and low-cost drip maize, spices, coffee and aqua-products. systems encourage low external inputs The reverse flow carries FMCG, durables, and water saving. Information technology automotives and banking services back to has helped building an efficient supply villages (ITC, n.d.). chain, indirectly contributing to saving of In response to the huge potential, ITC resources. has added Choupal Sagars as a component Most of the models are cost effective. to the initiative. Choupal Sagars are made- Higher productivity makes SRI and organic to-design agribusiness hubs that offer the farming cost effective while the low-cost drip following combination of services to rural is by design sustainable in financial terms. India: The PTD is process oriented and hence has a transaction cost but once institutionalized, l ITC agri-sourcing centres to provide farmers a transparent best price sales its long benefits would far exceed its cost. window The e-choupal model needs a high initial l Shopping centres offering a product cost and hence it is yet to pay back. However, range comparable to urban areas the fact that it has brought down the trans- l Facilitation centres delivering a host of action costs makes it beneficial for the farm-related services such as training, society and private benefit is assured in the soil testing, product quality certification, longer run. medical and clinical services, cafeteria All the five models have been imple- and fuel station mented at a large scale. The simplicity of the system, openness for farmers’ inclusion Twenty-Four Choupal Sagars are oper- and use of cost-effective mechanisms were ational in three states. key to scaling up. E-choupals have brought down trans- In terms of replicability too, the models action costs to the extent of 1.5 to 2 per cent. are positively placed. However, space for Services like quality testing have helped adaptation is essential as they are based on farmers fetch premium prices for their innovative ideas targeted at a perceived niche superior produces. It has improved com- area. Replication of SRI is a case in point. petitiveness in agricultural commodity mar- Replication of SRI does not always give ket. However, challenges still remain, as the encouraging results and this is the primary initiative, unlike other trading initiatives, reason for resistance in the establishment required huge investments. Even today, for SRI. quality testing, bulk storage, inadequate The main implications of the above connectivity and power pose challenges (FAO, n.d.). discussion are as follows:

l India is a vast country with diverse 4.4. Conclusion climatic situations and diverse livelihood The five large models ranging from a patterns, and, therefore, there exists farming system to the application of IT an immense scope for out of the box are completely different from each other. solutions. Innovative initiatives, in the They target different aspects of agriculture area of technology, markets, systems or and hence cannot be a comparatively an- processes can have positive impact on alyzed. But all the five models have some livelihoods of agriculture-dependent commonality. households. New Generation Initiatives in Agri-based Livelihoods 61

l New generation initiatives need not (and Dwarikanath, R. (2007). Some Insights into Agriculture actually do not) comply with established Development Today, AMEF Policy Advocacy Series 2. Bangalore: AME Foundation. pattern of thinking. Concepts like SRI FAO. (n.d.). ‘Bridging the Rural Divide: Case Study cannot be directly accommodated in Community based Transformation Systems, scientific research processes. Irrespective India, ITC-E-Choupal’. Available online at of all criticisms, SRI has been successfully http://www.fao.org/rdd/doc/ITC%20e-Choupal. implemented. Policies, hence, should pdf. Accessed on 5 July 2010. Farrington, John, Rasheed Sulaiman V. and Suresh Pal. provide enough room for such inno- (1997). ‘Strengthening Research and Extension vations to come up and bloom. for Rainfed Farming: Role of Social Science l New initiatives are not static approaches. and Institutional Factors’, Policy Brief 5. New The e-choupal transformed into Choupal Delhi: ICAR. Available online at www.ncap.res. in/upload_files/policy_brief/pb5.pdf. Accessed Sagar and SRI is being tried out for dif- on 29 June 2010. ferent crops and in different forms. It is IDE. (2009). ‘Annual Report 2008’. Available online at not the original idea or the nomenclature http://www.ideorg.org/OurStory/2008_Annual_ that is important (which generally is an Report_web.pdf. Accessed on 5 July 2010. IFOAM. (n.d.). ‘About the International Federation of issue in formal establishments), but how Organic Agriculture Movements’. Available online far it contributes to enhancing people’s on http://www.ifoam.org/about_ifoam/index. livelihoods. html. Accessed on 10 August 2010. l As these are private initiatives, financial ITC. (n.d.). ‘E-choupal: E-empowering Indian viability contributes a lot to the changes Farmers’. Available online at http://www.itcportal. com/rural-development/echoupal.htm. Accessed in the concepts. on 5 July 2010. Morarka Foundation. (n.d.). ‘Organic Agriculture These innovative models have developed Development and Promotion’. Available online because of out of the box thinking. Hence, at http://www.morarkango.com/organic_ agriculture/index.php. Accessed on 29 June some specificity is bound to exist. Policy- 2010. makers and the scientific community should Morarka Organic. (n.d.). ‘Our Story–Our Roots’. work towards standardizing these models Available online at http://www.morarkaorganic. to local conditions. An interesting feature com/our_roots.html. Accessed on 3 August of these models is that they have developed 2010. Naidu, Y.D. and Edith van Walsum. (2002). ‘PTD without much support from public funding for Sustainable Dryland Agriculture in South and public institutions. And at times, public India: Balancing Our Way to Scale, Participatory institutions have used small drawbacks in Technology Development’. Working Paper 7, the model to reject or criticize them. These Netherlands, ETC Ecoculture. Narayan, S. (2005). Organic Farming in India: models represent a different paradigm, and Relevance, Problems and Constraints, Occasional the establishment must provide an enabling Paper 13, Mumbai, NABARD. environment for such initiatives. Organic Monitor. (2010). ‘India: Government Sets Ambitious Organic Export Target’. Available online at http://www.organicmonitor.com/asia. References htm. Accessed on 5 July 2010. Polak, Paul. (n.d.). ‘The Design Process for the IDE Low Annamalai, K. and Sachin Rao. (2003). ‘What Cost Drip Irrigation System’. Available online at Works: ITC’s E-Choupal and Profitable Rural http://www.its.caltech.edu/~e105/readings/cases/ Transformation: Web-based Information and IDEdrip.pdf. Accessed on 29 June 2010. Procurement Tools for Indian Farmers’. Available Prakash, T.N. (2003). A Theoretical Framework online at http://www.value-chains.org/dyn/ to Promote Organic Produce Marketing in bds/docs/292/ITC%20e-choupal%20India.pdf. India, Indian Journal of Agriculture Marketing, Accessed on 5 July 2010. Conference Number Special, pp. 1–16. Bhalla, G.S. (2007). Indian Agriculture since Punna Rao P. and A. Satyanarayana. (2005). ‘Producing Independence. New Delhi: National Book Trust. More Rice With Less Water Farmers, Researchers Dhaliwal, G.S. and B. Singh (eds). (1993). Pesticides: and Extensionists’ Experiences and Impressions Their Ecological Impact in Developing Countries. with System of Rice Intensification in Andhra New Delhi: Commonwealth Publishers. Pradesh’, paper presented in 4th Annual 62 Pr a d e e p Ku m a r Mi s h r a

IWMI TATA Partners Meet on ‘Bracing up for the Thiyagarajan, T.M. (2002). ‘Experiments with a Future’, Anand, Institute for Rural Management, Modified System of Rice Intensification in India’, 24–26 February. in Uphoff et al. (eds), Assessments of the System Rabenandrasana, Justin. (1999). ‘Revolution in Rice of Rice Intensification (SRI): Proceedings of an Intensification in Madagascar’,ILEIA Newsletter, International Conference held in Sanya, China, 15(3/4): 48–49. Available online at http://www. pp. 137–139, 1–4 April, 2002, in Shambhu metafro.be/leisa/1999/48-49.pdf. Accessed on Prasad, 2006. 29 June 2010. Thiyagarajan, T.M., K. Senthilkumar, R. Priyadarshini, Ramasamy, C. and K.N. Selvaraj. (2007). Prioritizing K. Ezhilrani, S. Jothimani, P.M.M. David, J. Agricultural Research and Extension, INRM Policy Sundarsingh, A. Muthusankaranarayanan, Huib Brief No. 15. New Delhi: ADB. Hengsdijk and Prem S. Bindraban. (2005). ‘System Sahota, Amarjit. (2010). ‘The Global Market for of Rice Intensification for Enhanced Water and Organic Food and Drink’. Available online Rice Productivity in Tamil Nadu, India’, paper at http://www.organic-world.net/fileadmin/ presented in 4th Annual IWMI TATA Partners documents_organicworld/yearbook/yearbook- Meet on ‘Bracing up for the Future’, Institute for 2010/sahota-21010-market.pdf. Accessed on Rural Management Anand, 24–26 February, in 5 July 2010. Shambhu Prasad, 2006. Salas, Maruja, Xu Jianchu and Timmi Tillmann. Uphoff, Norman. (n.d.). ‘The System of Rice (2003). Field Manual Participatory Technology Intensification as a System of Agricultural Development (PTD): Linking Indigenous Knowledge Innovation’. Available online at http://www. and Biodiversity for Sustainable Livelihoods, 2nd future-agricultures.org/farmerfirst/files/T1c_ printing (electronic version) 2004. Kunming: Uphoff.pdf. Accessed on 24 May 2010. Yunnan Science and Technology Press. Available Veldhuizen, Laurens van, Ann Waters-Bayer and Chesha online at www.mtnforum.org/rs/ol/counter_ Wettasinha. (2005). ‘Participatory Technology docdown.cfm?fID=544.pdf. Accessed on Development: Where There is No Researcher’, 6 October 2010. in Julian Gonsalves, Thomas Becker, Ann Braun, Satyanarayana, A. (2004). ‘The System of Rice Dindo Campilan, Hidelisa de Chavez, Elizabeth Intensification: Evaluations in Andhra Pradesh’, Fajber, Monica Kapiriri, Joy Rivaca-Caminade paper presented at World Rice Research and Ronnie Vernooy (eds), Participatory Research Conference, Tokyo-Tsukuba, 4–7 November, and Development for Sustainable Agriculture and 2004 in Shambhu Prasad, 2006. Natural Resource Management: A Sourcebook, Shambhu Prasad, C. (2006). System of Rice Intensification Volume 1: Understanding Participatory Research in India: Innovation, History and Institutional and Development, CIP-UPWARD/IDRC. Challenges. Hyderabad: ICRISAT. Willer, Helga. (2010). ‘Organic Agriculture Worldwide: Sinha, S.K. and Jayesh Talati. (2005). ‘Impact of System Key Results from the Global Survey on Organic of Rice Intensification (SRI) on rice yields: Results Agriculture 2010’, presentation based on Helga of a new sample study in Purulia district, India’, Wiler and Lukas Kilcher (eds), The World of paper presented in 4th Annual IWMI TATA Organic Agriculture. Statistics and Emerging Partners Meet on ‘Bracing up for the Future’, Trends, 2010, IFOAM, Bonn, and FiBL, Frick. Institute for Rural Management, Anand, 24–26 Available online at http://www.organic-world. February. net/2010-presentations.html. Accessed on 5 July Sinclair. (2004). ‘Agronomic UFOs Waste Valuable 2010. Scientific Resources’,Rice Today, July–September 2004, p. 43. Available online at http://www.irri. org/publications/today/pdfs/3-3/grain3-3.pdf. Accessed on 29 June 2010. Financing Agriculture— Emerging Scenario

Bi s w a Ba n d h u Mo h a n t y

5.1. Introduction been harnessed till date. The production of food grains during 2008–09 was estimated Agriculture, the backbone of rural livelihood to be 229.85 million tonnes. India is one of Chapter security system, contributes 17 per cent of the leading countries in production of milk, 5 India’s Gross Domestic Product (GDP). tea, pulses, rice, wheat, fruits, groundnut, But its relevance in India’s economic, coffee, sugarcane, coarse cereals and cotton. social and political fabric is much more We have witnessed the successes of Green than its contribution to GDP. To quote Revolution (wheat) and White Revolution the ‘All India Rural Credit Survey’ (1954), (milk). But despite having the third largest ‘India is essentially Rural India and Rural skilled manpower and varied resource base, India is virtually the cultivators, the village India’s productivity is not even one-third of handicraftsmen and the agricultural labour.’ the best achieved anywhere in the world. Rural India is home to 74 per cent of the The financing of agriculture as a critical country’s 1.15 billion population. Agri- culture provides employment to nearly input is reinforced by the unique role of the 52 per cent of the total workforce. Fifty-seven Indian agriculture in India’s economy and per cent of the total population is directly its role in poverty alleviation. Financing or indirectly dependent on agriculture agriculture is not just financing an economic and allied sector. Its growth is essential for activity, but an intervention that has huge self-reliance, ensuring food and nutritional implications for the agriculture productivity, security, realizing equitable distribution well-being of the farming community, food of income and wealth, poverty alleviation security and environmental sustainability. and improving quality of life. Agriculture Credit is one of the financial services is also an important source of raw material required for agriculture and the ‘financial as also the source of consumption for many services’ are one of the several components industrial products, particularly fertilizer, of investments made in agriculture. Invest- pesticides, agricultural implements and ments would include farmer’s own labour, consumer goods. Growth in agriculture has seeds saved by him, his other savings, ex- a cascading impact on other sectors. tension services and his borrowings. Farmers India with its wide range of agro-climatic borrow from multiple sources, both formal conditions, soils and crops, is one of the 12 and informal. Informal sources encompass mega centres of biodiversity in the world. social networks, moneylenders, chit funds, It has 2.3 per cent of the world’s land area traders, microfinance organizations (MFOs) and 4 per cent of the earth’s fresh water and other unregulated entities. Formal resources. But it feeds about 17 per cent of institutions include Commercial Banks the world’s population. It has 11.6 per cent (CBs), Regional Rural Banks (RRBs), of world’s irrigated area, even though only Cooperative Banks and Non-Banking 60 per cent of our irrigation potential has Financial Companies (NBFCs). Formal 64 Bi s w a Ba n d h u Mo h a n t y

institutions generally provide production (1966) recommended that CBs should play a Short Term (ST), Medium Term (MT), complementary role along with cooperatives Long Term (LT) loans and bridge loans. for extending credit for agriculture. They also reschedule LT loans and convert The second phase is from nationalization ST/MT loans in case of natural calamities or of banks in 1969 to liberalization in 1991. other distress situations. The nationalization of CBs acted as a catalyst for extending agri-credit with widening 5.2. Agriculture credit over of branch network in rural areas. The concept of Priority Sector was introduced years specifying that certain portion of Adjusted Rural indebtedness has been an issue of Net Bank Credit (ANBC) be deployed in concern for Indian agriculture. It is stated the sector for the target group (e.g., 18 per that ‘the Indian farmer is born in debts, cent for Agriculture, 10 per cent for Weaker lives in debts and dies in debts’. Many quote Section, 5 per cent for Women, etc.). Lead the Shakespearean dictum: ‘He that dies Bank Scheme, introduced in December pays all debt.’ Development of responsive 1969, made specific banks in each district and appropriate rural credit system has the key agency for local development by been found to be very difficult and an issue entrusting them with responsibility for of continuous concern for over a century. evolving a coordinated approach to credit Efforts had been directed by policy-makers deployment, in consultation with banks such as Planning Commission, Govern- and other agencies. Three objectives, namely ment of India (GoI) and Reserve Bank of low rate of interest for agriculture, directed India (RBI) to address these concerns for lending for the disadvantaged and evolving a long time. responsive institutional delivery system were An analysis of agriculture credit can be pursued. The onset of Green Revolution divided into three distinct phases: (a) Pre- by 1970s focused on credit for purchase nationalization of banks, that is, 1947–69, of inputs, such as fertilizers, high yielding (b) Nationalization till liberalization, that varieties of seeds, pump sets, irrigation, is, 1969–91 and (c) Post-liberalization, that etc., in agriculture. RRBs were set up in is, 1991 till date. 1976 to primarily meet the credit needs of In the first phase which is from inde- Small Farmers (SF) and Marginal Farmers pendence in 1947 to nationalization of (MF). National Bank for Agriculture and banks in 1969, efforts were made for poverty Rural Development (NABARD) was establi- alleviation and development of cooperatives shed in 1982 to play central catalytic role with focus on development, through growth in financing, promoting and supervising with equity. By 1951, the provision of credit agriculture and rural credit institutions through cooperatives remained meagre. for ‘integrated rural development’. In Only 3.3 per cent of the cultivators had 1989, Service Area Approach (SAA) was access to credit from cooperatives and adopted wherein service area villages were 0.9 per cent from CBs. Bulk of the rural identified and assigned to bank branches, credit was extended by moneylenders using based on their proximity and contiguity. usurious practices at prohibitive rates. The Credit Plans were prepared, on annual basis, foundation for building a broader credit for the service area of each branch, which infrastructure for rural credit was laid by involved coordination between various the Report of All India Rural Credit Survey developmental institutions and credit (1954) which pinpointed the pivotal role institutions. of cooperatives stating, ‘cooperation has During the third phase (post- failed but cooperatives must succeed.’ The liberalization from 1991 till date), a series All India Rural Credit Review Committee of reforms measures was undertaken in Financing Agriculture 65 rural credit including agriculture as a part credit system as it has emerged, has been a of overall structural reforms initiated in product of both evolution and intervention 1991. High-Level Committees were set up and symbolizes the system’s response to the by GoI/RBI/NABARD to look into issues stimuli from continuing dissatisfaction with credit delivery. The concern for food security and concerns of rural credit and related and the need for building up buffer stocks, aspects. The recommendations had far- which guided the Green revolution, created reaching impact for revamping rural credit both enhanced and diversified type of credit delivery system and processes. Based on requirements for agricultural production. their recommendations and in tune with In India, a ‘supply-leading approach’ to the the international standards and practices, institutional development has been followed. certain policy measures were initiated (Mohan, 2006) for enhancing soundness, efficiency and productivity of credit delivery institutions. 5.3. Deepening of financial These included deregulation of interest rates, introduction of prudential norms services: Access for the (income recognition, asset classification poor and provisioning), increasing outreach, 5.3.1. Small farmers and marginal simplification of procedure, stimulating farmers credit flow to rural areas/weaker sections. The access to institutional credit by SF/MF, Formal banking industry was expanded landless and tenant farmers and oral lessees, with a thrust on opening rural branch and now consists of 80 CBs (public and private who constitute 82 per cent of the farmers in sector), 82 RRBs (46 amalgamated and 36 the country, has been major policy focus. As stand alone), 31 State Cooperative Banks, per National Sample Survey Organization 370 District Central Cooperative Banks (NSSO) Survey Report, 2003, there are 147.9 (DCCBs), 19 State Cooperative Agriculture million rural households in the country out and Rural Development Banks (SCARDBs). of which 89.3 million households (nearly There are nearly 35,000 rural and semi- 60 per cent) are cultivator households. Of urban branches of CBs, 15,500 branches of these cultivator households, 43.4 million RRBs and over a hundred thousand rural households, constituting 48.6 per cent, are outlets of cooperatives. indebted to either formal or non-formal Institution of Rural Infrastructure De- services or both and only 27 per cent (24.3 velopment Fund (RIDF) in NABARD during million households) are covered by formal 1995–96 is another significant develop- services. It implies that nearly 51 per cent of ment. Commercial Banks are depositing cultivator households translating to 45.95 funds with NABARD towards shortfall in million or over 200 million persons are mandatory lending for agriculture. These financially excluded. Eighty-eight per cent are used for financing rural infrastructure of the non-indebted households are under projects implemented by the State Gover- SF/MF category. The data in Table 5.1 nments. Introduction of Kisan Credit show that formal system has a distinct Card (KCC) in 1998 for facilitating flexible bias towards households with larger land credit delivery to farmers is noteworthy holdings. The data from the 59th round of development. 82.9 million cards were issued National Sample Survey (NSS) furnished till 31 March 2009. Financial inclusion and below are self-explanatory. inclusive growth have been focused on at The number of small farmers has been all levels. increasing due to continuing fragmentation of land. Credit to these vulnerable sections Thus, the concern with the inadequacy of both in terms of proportion of accounts and agricultural credit has had more than a volume of loans has been declining over the century of tortuous history. The agricultural years. Bankers perceive SF/MF as higher 66 Bi s w a Ba n d h u Mo h a n t y

Table 5.1: Debt from institutional sources as share of 32 per cent under term loan, against per land holding classes respective total financing for agriculture Size of land Debt from institutional during the year. Box 5.1 discusses the holding (ha) sources (%) possibilities of cooperatives improving their <0.01 22.06 performance in agri-finance, consequent to 0.01–0.40 43.30 the ongoing reforms. 0.41–1.00 52.80 1.01–2.00 57.60 2.01–4.00 65.10 5.3.2. Credit delivery innovation: 4.01–10.00 68.80 genesis of SHG-bank linkage >10.00 67.60 programme (SHG-BLP) All sizes 57.70 Despite phenomenal expansion of organ- Source: NSSO (2005). ized banking in India, a large number of credit risk than large farmers on account the poor continued to remain excluded of inability of former to provide collateral from their services. The policies, systems security. They also prefer to provide small and procedures were not ideally to enable short-term loan instead of long-term loan to poor to be part of formal banking system. SF/MF, thereby constraining their scope for Misconceptions about banking with the production and productivity enhancement. poor prevailed during 1980s, leading to As on 31 March 2010, out of 48.2 million serious aberrations in credit delivery. This agriculture loan accounts, 28.5 million prompted a search for alternatives to im- belonged to SF/MF, constituting 59 per cent. prove access of the rural poor to banks. But they were financed for only ` 1,182,771.1 The idea was to provide an integrated million, constituting 32.2 per cent of the microfinance service rather than providing total loan volume (` 3,669,188.2 million). just micro-credit. As a wide network of bank On the other hand, only 0.7 million tenants branches already existed, the strategy was and oral lessees had availed loan of ` 437.7 not on creating alternative organizations, million, translating to 1.19 per cent of the above but on findings ways and means to improve total. Provisional data have been compiled by the access of the poor to the existing banking NABARD. Out of the total credit provided in network through design of new products 2009–10 for agriculture, 73 per cent was for and delivery mechanism. crop loan and 27 per cent for term loan, with Women Self Help Groups (SHGs) cooperatives having the highest crop loan promoted by Non-Governmental Organ- at 89 per cent and CBs having the highest izations (NGOs) had been operating in

Box: 5.1: Reforms in Short Term Cooperative Credit Structures (STCCS) New hope for agri-finance Based on the recommendations of Task Force democratic functioning of cooperative for STCCS, the GoI in 2006 had announced institutions, 16 states have amended the a revival package with ` 135,960 million Cooperative Societies Act. This helps bring estimated outlay. The package aimed to make in autonomy in financial and administrative cooperatives a well-managed and vibrant matters and regulatory control of RBI. Other channel for financial services in rural India. initiatives included streamlining audit process, To facilitate implementation of the package, accounting system, supervisory strategy, 25 State Governments have so far executed deepening training and capacity building Memorandum of Understandings (MoUs) efforts. With improved institutional capacity with GoI. The package envisages legal and of STCCS, it is expected that quality and institutional reforms, improvement in quality intensity of financing to farmers would show of management and introduction of better visible changes. systems and practices in the Cooperative Source: NABARD, available at www.nabard.org Credit Structure (CCS). With a view to ensuring Financing Agriculture 67

India on small scale in the late 1970s/early to total capital formation has continuously 1980s. Based on the study findings of an declined. Action Research Project, the SHG-BLP Financial exclusion of farmers coupled model evolved as core strategy that could be with usurious interest rates and exploitative used by the banking system for increasing practices by moneylenders continue to access of the poor to formal banking sys- persist. There have been widespread con- tem. SHG-BLP was launched by NABARD cerns and unrest over the resultant agrarian in 1992, with the policy support of RBI. distress leading to farmers’ suicides in the With the success of pilot phase, SHG-BLP country. While precise reasons for individual had been mainstreamed in 1996. The pro- farmer’s distress is a matter of deeper study, gramme has achieved spectacular growth broad issues have a bearing on farmers’ during the last 18 years with 6.1 million plight with reference to financing. SHGs with savings of ` 55,456.2 million and Issues such as slowdown in agriculture 4.2 million SHGs credit linked with banks growth, low agri-productivity, natural re- with a loan outstanding of ` 22.6700 million sources degradation, unsustainable water as on 31 March 2009 (NABARD, 2009b). management and irrigation, crowding of Although the programme has been activity- investments, constrained post-harvesting neutral, it brings to the fore the immense and value addition, high wastage, long possibilities of financing agriculture with and inefficient value chain, inadequate participation of matured SHGs. infrastructure, fragile social security/risk Also, Micro-finance Institutions (MFIs), mitigation, uncertainty and fluctuations in different legal forms, have made rapid in price, market, weather and lack of strides and expanded outreach in rural appropriate extension and technology areas. They have adopted various models have a bearing on agriculture finance for delivery of microfinance services, such (Sahu, 2010). as SHGs, Joint Liability Groups (JLG), Indi- Although these issues cannot be fully viduals and Cluster Association of SHGs. resolved by the financial institutions, Their loan packages vary widely across they have a catalytic role in motivating, the country. Some MFIs have adopted the coordinating, following up and networking Grameen model. Quite often, apart from with the concerned agencies for minimizing financing SHG directly, the banks have the adverse effects of such constraints on financed MFIs for lending to SHGs and the effectiveness of investments. other small borrowers, under the SHG- BLP (n.b.: This is a model permitted under 5.4.1. Inherent constraints of SHG-BLP—Total bank finance through agriculture operations this channel stood at ` 50,090.9 million to l High dependence on natural factors 1,915 MFIs as on 31 March 2009). leading to production risks due to vagaries. Sixty per cent of the cultivated 5.4. Agrarian distress: An area land is dependent on rainfall, and rainfed of concern farming is perceived to be highly risky. l Constraints in infrastructure in terms Notwithstanding the above efforts, policy of connectivity, communication, irriga- focus and innovations in agricultural fi- tion, storage, social infrastructure, etc., nance, there has been fall in the share of in rural areas. agri-credit in proportion to total credit. l Dispersed population, difficult terrains Support services and public investments in leading to high cost of service delivery. agriculture have weakened. A considerable l Growing sub-division and fragmen- decline in rate of growth of area, pro- tation of land holdings, resulting in duction, productivity and area irrigated has uneconomic farm holdings. also been noticed for major crops. Gross l Issue of ownership of land causing diffi- Capital Formation (GCF) as a proportion culties to tillers and women borrowers. 68 Bi s w a Ba n d h u Mo h a n t y

5.4.2. Internal factors: bankers’ technical know-how and spurious use of perceptions and practices fertilizer and pesticides add to the farmers’ l Banks in general continue to harbour plight. Serious water stress arises due to high-risk perception with respect to depletion of groundwater resources. lending for agriculture, especially to The crisis has been exacerbated due to small farmers, new and uncharted environment degradation and a plateau areas/activities in agriculture. Tendency of existing agricultural technology. of banks to safeguard their bottom line l Rising population has exerted tremen- makes them perceive agriculture with dous pressure on land. Agriculture uncertainties in market, price, weather labour force has increased faster than the and support services as risky, particularly agricultural land leading to lower land- term loans. to-labour ratios. Labour productivity has l Availability of tangible collateral, decline stagnated and income gain per capita has in the price of the collateral, difficulties reduced. in enforcement of collateral, etc., hinder l In the absence of safety nets, modern bank financing. and comprehensive risk-mitigation l Bankers generally approach the proposals/ measures/techniques, supplementary schemes for financing agricultural ac- livelihood options in non-farm sector tivities from conventional lending tech- and due to the lack of comprehensive nology and practices. Apprehensions and cost-effective (life and non-life) with regard to recovery performance, insurance products including weather incidence of Non-Performing Assets insurance, farmers are adversely affected. (NPAs), in the backdrop of past experi- Current crop loan insurance, based on ence in certain regions/activities, in- area yield approach, suffers from low hibit them from becoming flexible and coverage and high claim to premium proactive. ratio. A comprehensive and all inclusive l Bankers have not developed required coverage needs a realistic and reliable domain knowledge and capability on estimation of crop damages and an project appraisal and technical know-how effective strategy of insurance coverage commensurate with developments/ and claim settlement policy. changes in several emerging areas of agri- l The Minimum Support Price (MSP) finance. They are not fully equipped to given to farmers is inadequate. Lack of adopt differential approach for different assured institutional mechanism for sale sectors and regions. Experiences of RRBs prompting prompts farmers to sell their and Cooperative Banks have mostly produce to middlemen at a lower price. been sporadic lending, mostly covered l Government Extension Services are by NABARD refinance under Automatic Refinance Facility (ARF). not able to address gaps in technology, adoption of new technology, inputs 5.4.3. Constraints in external supply management and integrated support environment nutrient management that could help l Market forces of demand and supply alleviate problems of farmers. often compel farmers to cultivate com- mercial crops, which require higher investment. When bankers shy away 5.5. Supportive measures of from financing them, they take recourse GoI to informal lending which involves high 5.5.1. Multiple schemes and cost of debt-servicing. Any shortfall in programmes yield and price brings misery to farmers GoI has been providing impetus to finan- borrowing at high rates. Inappropriate cing agriculture through various policy application of input mix, ignorance on packages/schemes from time to time. Financing Agriculture 69

During 1973–93, the GoI had introduced acceleration of expansion of KCC coverage, segment-focused/area-based schemes financing new investment projects in agri- like Drought-Prone Areas Programme culture and allied activities, rescheduling/ (DPAP), Desert Development Programme restructuring of farmers’ loans in areas (DDP), Integrated Watershed Development (affected by natural calamities), One Time Programme (IWDP) and Integrated Tribal Settlement (OTS) for farmers in distress and Development Agencies (ITDA) programme. redemption of loans from informal sources Recently, consecutive budgets have focused of credit. on agri-business development. Important On account of increased thrust and supportive approaches include GoI- intensive review during the period 2004–09, sponsored schemes with provision of subsidy Ground Level Credit flow (GLC) increased along with bank credit, interest subvention with an average annual compounding schemes for crop loans, Agriculture Relief rate of 23 per cent. In 2008–09, credit dis- and Debt Waiver Scheme 2008, institution bursement of ` 2,890,000 million could be of various Missions, etc. effected against the target of ` 2,800,000 The credit-cum-subsidy schemes operated million, with CBs achieving 115 per cent, through banks include schemes for setting RRBs 89 per cent and cooperative banks up of rural godowns, cold storages, agri- 67 per cent of their respective targets. The marketing infrastructure, organic farming, Pubic and Private Sector Commercial horticulture development, etc. Under GoI- Banks had advanced 42 per cent and 46.8 sponsored Agri Clinics (AC) and Agri per cent of ANBC, respectively, during Business Centres (ABC) schemes, banks are 2008–09. As per provisional data compiled providing agri-graduates financial assistance by NABARD up to July 2010, against the for setting up of AC and ABC. The National ` 3,250,000 million target set for banks in Horticulture Mission, National Mission of 2009–10, they accomplished ` 3,669,188.2 Sustainable Horticulture, National Food million with CBs, RRBs and Cooperatives Security Mission, Rashtriya Krishi Vikas achieving 110, 115 and 128 per cent targets Yojana (RKVY), National Missions on respectively. The share of CBs on agricultural Oilseeds/Pulses/Bamboo Development, etc., lending has registered sharp increase (75 per are some of the major schemes of GoI. cent in 2009–10 versus 35.9 per cent in The GoI’s initiatives in research, extension 1983–84) with corresponding fall in the and transfer of technology include the share of cooperatives (9 per cent in 2009–10 CSIR network and schemes such as World versus 56 per cent in 1983–84). Bank assisted Training and Visit (T&V) Increased credit flow for agriculture had actually resulted in higher credit intensity System of agriculture extension, Krishi for agriculture as a proportion of agricul- Vigyan Kendras (KVK) and Agricultural ture GDP—from 7.2 per cent in 1993–94 Technology Management Agencies (ATMA). to 33.3 per cent during 2008–09. The Development of State Agriculture University growth momentum has been sustained System (SAU) encompassing collaboration during the last five years. Flow of credit of each SAU with the American Land has trebled while it doubled in early 1990s. Grant College System had given impetus to However, repayment capacity enhance- research-oriented development of several ment, productivity, income increase and allied activities. price realization have not been evidenced 5.5.2. Doubling of agriculture credit due to increased credit flow. The GoI, as a part of its strategy to boost 5.5.3. Agriculture Debt Waiver agri-production, had announced a package and Debt Relief Scheme to double the flow of institutional credit (ADWDRS), 2008 to agriculture in three years starting from The National Commission on Farmers 2004–05. The programme envisaged (2005) under the Chairmanship of Professor 70 Bi s w a Ba n d h u Mo h a n t y

M.S. Swaminathan, as also the Expert Group independent assessment of the impact of the on Agricultural Indebtedness (2006) headed scheme to find out how much of the lofty by Professor R. Radhakrishna—both set objectives have been fulfilled, to draw lessons up by the GoI had given certain recom- for the future policy and approach. For mendations for extending relief to SF/MF. lasting and better impact, the Government, Against this backdrop, GoI announced however, may consider shifting focus from ADWDRS in 2008. ADWDRS granted supply-driven approach to demand-driven full waiver of all direct agricultural loans intervention. extended by banks to SF/MF and partial 5.5.4. Role of State Governments waiver to other farmers for loans disbursed Agriculture/Cooperation being State sub- between 31 March 1997 and 31 March 2007, jects, many State Governments have an- which were overdue as on 31 December 2007 nounced several farmer-friendly welfare and remained unpaid till 29 February 2008, programmes aimed at improving agri- subject to certain terms and conditions. culture production and productivity, liveli- These farmers were made eligible for fresh hood promotion through microfinance loans from the banking system, as per the development and other innovations. Ex- scheme. Over ` 720,000 million have gone amples of some of the state Governments’ into the accounts of 40 million indebted important and innovative initiatives are farmers under the scheme. given in Boxes 5.2, 5.3 and 5.4 The Gov- Several experts and institutions have ernments of AP, Kerala, Karnataka, Orissa critically assessed the scheme in terms of and Tamil Nadu have assumed Self Help concept and possible impact. The following Promoting Institution (SHPI) role under are broad inferences: SHG-BLP and given the programme a great momentum. Some State Govern- l ‘Default’ has been the basis of reward, ments have extended interest subsidy for thereby disincentivizing good borrowers. loans given to farmers/SHGs by banks, l The eligibility criteria pre-suppose ‘one especially cooperative banks. Provision size fits all’ farmers irrespective of the of interest subsidy for farmers through diversities of the country in terms of yield, cooperatives and denying the same to terrains, etc. farmer borrowers of CBs/RRBs discriminate l It tried to cure the symptom, rather than among farmers. the disease. l As an instrument of relief, ADWDRS is 5.5.5. Role of NABARD likely to have short-term effect, rather NABARD, as an Apex Development Bank than long-term impact. has been playing financial, developmental l The waiver has not invariably led to issue and supervisory role in agriculture and rural of fresh loans, as envisaged. development. It has been administering, as l Huge funds could have been gainfully a nodal agency, various schemes including used for reforms/revival of the sector, ARDWR, Interest Subvention, RIDF and meeting emerging infrastructural needs other sponsored programmes of GoI. It and for long-term asset creation. has been refinancing banks for a wide l Earlier commitment of GoI under MoUs spectrum of activities in tune with the na- with the State Governments in STCCS tional priorities. Various funds, namely reform package under Vaidyanathan Watershed Development Fund (WDF), Committee (VC) that recourse to such Financial Inclusion Fund (FIF), Financial waivers would not be taken, has not been Inclusion Technology Fund (FITF) and adhered to. Farm Innovation and Promotion Fund (FIPF), aim at adding value to credit The waiver was declared as one-time interventions for agriculture. The Potential measure and was stated to be beginning Linked Credit Plan (PLP) prepared annually of a process. There is, therefore, need for by NABARD for every district reflects Financing Agriculture 71

Box 5.2: Operation Barga: Share croppers empowerment in West Bengal through participatory land reforms strategy Operation Barga aimed to bestow inheritable their standard of living and quality of life. rights to sharecroppers, whereby quasi- Notwithstanding the operational constraints property rights were conferred to registered and political controversies, it has given sharecroppers. Within three years, one sharecroppers access to credit, technology million sharecroppers were included in the and market. Consequent to this measure of programme. This change of status from people’s participation in the development labourers to land owners, inclusion of their affecting livelihood and collective action, there names in record of rights, fixation of fair rent has been substantial increase in agriculture and hereditary rights for cultivation assured output, wages, decline in poverty, increase in farmers of stable livelihood and improved food intake, etc. Source: Thorat (2008). the potential that could be harnessed for small niche markets, market linkage for financing agri-culture and allied activities vegetable farming, especially organic in that district. These are expected to be a farming, open new horizons of agri- reference for financing banks. business. l The value chain in production, pro- 5.6. Changing face of cessing, packaging, grading and stand- agriculture ardization of farm produce warrants 5.6.1. Facets of change: New new format of finance. horizons for finance l The modern rice mills, popularization of Changing agriculture scenario and per- branded atta and e-Choupal indicate that spectives bring to fore the premise for trans- private sector sensing opportunities and formation in agriculture financing. Some filling up gaps in government action. of the important potential is as follows: l Designing, appraisal, implementation, monitoring and evaluation are assuming l An ever-increasing younger population, more significance. rapid growth in the middle and upper l Diversification and commercialization income segment bring in shift in the of agriculture warrant large farmers and food preferences and demand for retailed agri-entrepreneurs to look for higher organized products. Processed and fast financial securities designed to suit their foods are in greater demand. New gen- projects. The potentials of SF and MF, eration of customers with changing tenants and the landless can be harnessed lifestyles and growing income has the for agriculture production by provid- ability and willingness to pay for these ing innovative microfinance products products. encompassing credit, savings, insurance, l The growth and modernization in Indian leasing, etc. agriculture are taking place with adoption l Integrated watershed development pro- of hybrid seeds, advanced cultivation grammes are gaining momentum in method and use of non-conventional dryland areas and watershed commun- energy. ities are looking for increased institu- l Commercial ventures of organic far- tional credit and banks’ involvement in ming, horticulture, floriculture, cash the whole process. crops, spices, tea, coffee, seafood, etc., are increasingly being supported. Export of 5.6.2. Required approach for flowers, grapes and mangoes is a success bankers: responsive and story. System of Rice Intensification responsible finance (SRI) and innovations in marketing Post-liberalization, agriculture is becoming organic rice directly to consumers in more and more demand-driven rather than 72 Bi s w a Ba n d h u Mo h a n t y

Box 5.3: Bhoomi in Karnataka: Bringing sea-change in land records management system Bhoomi is the first e-Governance project In the second phase of Bhoomi, the land implemented by the Karnataka Government records have been established on web wherein with technical assistance from National all the taluka databases are getting uploaded Informatics Centre (NIC). It has successfully to a web-based central database. This will computerized more than 20 million land allow private agencies to set up village level records. Under the project, more than 6.7 kiosks to download and issue the documents million farmers of the state get various e- to farmers. A farmer can check the status of a services. Farmers can access the database and mutation application on touch screen kiosks. are empowered to follow up. Farmers have All the stakeholders are benefited in this been able to comply with banks’ requirement Public Private Partnership (PPP) model. related to land with ease and promptness. Source: Karnataka State Government, available at www.bhoomi.karnataka.gov.in.

Box 5.4: Soil Health Card: A pioneering initiative of the Gujarat government The Gujarat Government has introduced a supports cost effective soil enrichment but Soil Health Card Scheme for every piece of also reduces land erosion a great extent. cultivated land. The farmers can get their Farmers who used to grow 1–2 crops can soil examined for mineral and other nutrient now grow 3–4 crops. This in turn may spur composition. This helps them apply right financing of farmers. amount and type of fertilizer. This not just Source: Gujarat State Government, available at www.gujaratindia.com.

production-driven as was the situation and sustainable agriculture and not just post-Green Revolution. Globalization and on increasing productivity. Excessive implications of World Trade Organization use of pesticide, inorganic fertilizer and (WTO) agreement call for greater focus on other agro-chemicals has contributed to quality, hygiene and certification. These environmental degradation. There is need developments warrant fresh knowledge and to include components that address soil skills for bankers and farmers. Extension erosion, nutrient management, declining architecture and programmes need to water table, water pollution, need for be oriented towards income generation water management, power scarcity and

Box 5.5: Samanwita: Commercial banks collaborate with community-based organizations for community development State Bank of India in collaboration with the agricultural and allied activities. One such Government of Orissa has promoted Samanwita project was cultivation and processing Grama Unnayan Samiti (Samanwita), a uniquely of organic spices. SHGs were engaged in designed society, dedicated to community production of turmeric, black pepper and development and rural upliftment in a pre- mustard. Marketing arrangements have dominantly tribal area of Orissa. The objective been made through State Level Corporations of the society was integrated with rural uplift such as Orissa State Cooperative Milk Pro- in predominantly tribal area, with multifaceted ducers’ Federation (OMFED) and Orissa functions. These covered formation of Women Rural Development and Marketing Society SHGs, arranging linkages for financing these (ORMAS). Samanwita had been considerably SHGs, vocational training for locally feasible changing lives in the remote, tribal dominated activities, health, hygiene and family welfare and under developed district of Orissa. programmes and demonstration projects for Source: Bhatt (2009). Financing Agriculture 73 renewable energy, marketing and price in contingency planning. To make these financing farmers. To arrest adverse trends, programmes effective, the process, design sustainable, responsible financing and social and institutional framework for the pro- reporting, community participation are gramme are very crucial. A huge quantity warranted. of organizational efforts, for networking, convergence and coordination is also 5.6.3. Value chain finance essential. Financial institutions need to be Various value chain models of financing integrated in the whole process, so that are emerging, for example, processing they could carve out space and scale for and exports after production under con- intervention. tract farming, cold chains for production- procurement-processing logistic, retailing fruits and vegetables and warehousing and 5.7. Paradigm shift in warehouse receipt. With the tenant far- financing agriculture ming and contract farming system gaining Based on the experience gathered in several momentum, financing for mechanization interventions, a paradigm shift in approach and production and distribution of agri- to financing and developing farmers, par- implements is getting intensified. Inte- ticularly small and marginal farmers is gration of process at a wide scale under slowly taking place. Financing agriculture, value chain means that banks are to secure involving scattered farmers from diverse repayment of loans at higher levels of areas and background has been costly, risky the value chain. Area-based schemes for and cumbersome. There is constant change agriculture and diversified sub-sectors, and in technology, processes, organizational related infrastructure, require more term theories and socio-political climates. This loans and, as such, project with a focus on has mandated continuous innovation in activities like organic farming, integrated products, processes, organizational pattern water management, use of alternative and delivery mechanism in agriculture sources of energy, etc., are being encouraged. financing. There is a trend: 5.6.4. Livelihood finance Livelihood is a comprehensive approach. l From supply-driven products and ser- Promoting sustainable livelihood for far- vices to demand-driven ones. mers would encompass financial services, l From top-down supply-centric pro- agricultural business development services ducts and services to a whole range of and institutional development services. interventions—activity, production, ex- Financial services include savings, credit, tension, technology and marketing in a comprehensive insurance (health, crops and market-driven approach. livestock) and infrastructure development l From conventional delivery practices (road, power, market, health, education, to innovative and cost-effective services. skill development, coping with natural disaster/calamities, etc.). In India, most of The emerging approaches are: the livelihood programmes have preferred SHGs as delivery routes. 1. From Individual Lending to Group Livelihood programmes covering far- Approaches: With success of micro- mers need huge investments in capacity finance movement, particularly SHG- building, access to market, technology Bank Linkage Programme in India, and arrangement for extension services Group approach is now accepted as a and infrastructure. Livelihood finance for better, cost-effective and sustainable way vulnerability reduction and addressing of economic and social empowerment. structural issues of poverty require financial Learnings from SHG-based development deepening of products, processes, innovation, banking which are relevant for financing 74 Bi s w a Ba n d h u Mo h a n t y

small and marginal farmers have been 4. From Direct Delivery Mechanism to given as under: Financial Intermediaries: Considering the magnitude and locational diver- l SHG portfolio is safe and per- sities among farmers, the delivery forming. and intricacy of financial services and l Mutual trust and peer pressure credit plus interventions required for work better than collateral lending. them, direct and conventional ways l Partners and consultative approach of financing farmers have not been is necessary for better results. cost-effective and efficient. Thus, there l Space for flexibility and innovation has been emergence of various insti- should be provided for expansion. tutional models, intermediaries like l Programme can be up-scaled in a Business Facilitator (BF), Business phased manner. Correspondent (BC) adopting various l Promotional efforts to be focused on Information and Communication building human capital. Technology (ICT) tools and products l Financial, organizational and oper- for catering to varying financial needs. ational sustainability is dependent on Various safeguards, internal and ex- scale, system, quality, effectiveness, ternal checks and control are being enabling environment and sup- evolved to minimize the risks involved portive mechanism for graduation in such mechanisms and approaches. process (Mohanty, 2009). 2. From Sporadic to Area-based Sector 5.8. Innovative approach: Specific Cluster Approach: Cluster New perspectives in approach has been very relevant and financing effective for promoting farmers’ income levels and living standards in view of Many banks, development finance insti- tutions, promotional agencies and cor- economy of scale, development of com- porates have begun supporting farmers mon facilities and organized imple- through new and innovative approaches mentation in specific areas, activities/ and models. GoI, RBI, NABARD, State sub-sector. Thus, cluster approach is Governments and banks have played a prioritized and preferred as compared catalytic role in terms of policy initiatives to sporadic approach as former results and promotional measures in this dir- in impact creation and visible change in ection. Some of these initiatives are outlined the farmers’ pursuits. in this section: 3. From Credit to Credit and Financial Services: In rural credit focus all 1. Joint Liability Groups: JLGs have along has been on credit dispensation. been recognized as a good business Development banking on the other hand proposition for banks to finance small, considers that credit would be effective marginal, tenant and oral lessee far- and result oriented if accompanied with mers. A JLG is an informal group com- related promotional and developmental prising of 4–10 individuals coming inputs, and that savings, insurance, together for the purpose of availing bank remittance, business counselling and loan on individual basis through group other business services are essential mechanism against mutual guarantee. ingredients for banking with poor. Joint undertaking given by the JLG and Thus, there have been attempts to bring the affinity among the group members about transformation from credit to serve as a collateral substitute for the comprehensive financial services. loans. Activity-based JLGs have come Financing Agriculture 75

up in different parts of the country to diversities of supportive programmes; pursue specific agriculture and allied (b) providing risk mitigation instru- activities. MFIs have been financing ments in the back drop of uncer- JLGs in a large measure. Simplified tainties of monsoons, inadequacies of documentation, group dynamics, infrastructure, other contingencies and quality of clients, good repayment (c) empowering them with knowledge prospects, promotional support from and skill in relation to management NABARD for formation and linkage, of production, finance and marketing extension from the State Government— associated with the agribusiness. all make JLG financing attractive Banks may require services of an for the banks. NABARD has issued intermediary, Community Based Or- revised operational guidelines during ganization (CBO) to fulfil these emer- October 2009 and decided to extend ging needs of matured SHGs taking promotional assistance to banks and up viable agribusiness. The banks JLG promoting institutions to upscale are expected to provide incremental the JLG-Bank Linkage programme. financial services to SHGs or finan- JLGs of farmers are expected to be cing CBOs to enable them to assume formed in increased scale. the above role. Some of the CBOs like 2. Self-Help Groups: SHGs have trans- Myrada and Dhan Foundation have formed over the years SHGs’ borrowing developed organizational structures profile have changed from consum- and broader approach to facilitate ption to production and from pro- such interventions for SHGs. In many duction to income generation activities parts of the country, SHGs have taken (IGA). The SHG-BLP originally recourse to specific parts of the value envisaged that members of matured chain, depending on their convenience SHGs could directly approach finan- and capacity. There is clear division/ cing institution for raising larger funds specialization of work SHG-wise for for IGA at appropriate stage. NABARD procurement, grading, marketing and implemented a pilot project in nine processing in certain contiguous areas. districts in nine states in 2005–06 for An example illustrating possible ways promotion of micro-enterprises among of banks integrating with CBOs is given the matured SHGs. The project envisaged in Box 5.5 on page 72. Boxes 5.6 and 5.7 engagement of a suitable identified on page 76 illustrate examples of NGOs NGO in each pilot district as the Micro and other intermediaries providing Enterprise Promotion Agency (MEPA) innovative facilitations for marketing in and adoption of a 3M approach (Micro agribusiness. Planning, Micro Market and Micro 3. Business Correspondents and Business Enterprise) developed by Marketing and Facilitators: In June 2006, RBI had Research Team (MART). The project’s issued a new set of guidelines permitting end-term assessment by NABARD the banks to use Business Facilitators revealed that most beneficiaries chose (BFs) and Business Correspondents to pursue the traditional activities, by (BCs) to expand outreach for accelerating building on their existing capacities financial inclusion. BCs are permitted and capabilities and these activities were to carry out transaction on behalf of mainly (77 per cent) farm and off farm the banks as against BFs who facilitate activities. bank to carry out transactions, but Facilitation of the people’s institu- cannot transact on behalf of the bank. tions like NGOs and SHG Federations In November 2009, RBI has enlarged at the grassroots level added advantage the category of persons who can act for the following primarily: (a) evolving as BCs. Now, besides the Technology 76 Bi s w a Ba n d h u Mo h a n t y

Box 5.6: Branding products of Farmers/SHGs—marketing perspectives Shri Kshetra Dharmasthala Rural Development dispensation of collateral/land records in the Project (SKDRDP) in Karnataka has created system. A study on tenant farmers in Karnataka suitable marketing infrastructure and a brand where tenant farming has been prohibited name Siri for marketing of agri-based products revealed that they continue to take shelter of SHGs/farmers facilitating quality standards under SHG route for their financial needs, in and increased popularity and market demand. view of the innate flexibility in the system. Landless farmers/oral lessees take recourse to Source: www.skdrp.org SHG/JLG route for bank finance because of

Box 5.7: Vegetable and Fruit Promotion Council, Kerala (VFPCK): Price discovery for SHGs through a farmers’ market model VFPCK was registered as a Section 25 Company produce at a central location and collectively in 2001 under which Farmers Market, known as negotiate with traders. Later on, the SKS secures Swasraya Karashaka Samithis (SKS), have been a legal entity as a society under the Society formed to facilitate sale of vegetable produce of Registration Act, 1860. SKS is managed by a members of SHGs associated to it. VFPCK is a Committee comprising of representatives of successor of Kerala Horticulture Development SHGs associated with it. SKS facilitates col- Project (KHDP), which was initiated by the lection of daily price range of vegetables pre- State Government in 1993 in collaboration with vailing in the nearby markets. Based on the the European Union, to enhance production information and the demand and quality of of vegetable and fruits in the State. Each SKS is vegetables, benchmark price is determined and provided with infrastructure, namely building, sales prices decided. office, weighing machine and space for display Organizational support in form of VFPCK of vegetables. and SKS helps SHGs in price discovery for sale SKS begins as an informal organization of their produce at optimal price. where farmers come together to bulk their Source: www.vfpck.org

Vendors, authorized organizations— increasingly provided with financial NGOs, MFIs, individuals and a host services through BC mechanism. The of other entities including authorized BC/BF model is extensively used for functionaries of well-run SHGs-linked Government-supported MANREGA to banks—can be BCs. These guidelines programme and social security pen- have inspired banks to take recourse to sions. FIF and Financial Inclusion BCs as (a) it proves more cost-effective Technology Fund (FITF) with overall than branches, (b) enables to reach corpus of ` 5,000 million each has the unreached for financial inclusion, been instituted in NABARD with con- (c) facilitates doorstep banking and tribution from GOI, RBI and NABARD (d) helps in up-scaling business faster. in the ratio of 40:40:20 in a phased manner over five years. The liberaliza- Notwithstanding risks involved in cash tion of RBI guidelines, promotional handling, accounting, safety of funds, grant, funds for experimentation of viability and technology integration, technology solutions/devices, capacity the channel provides tremendous op- building measures, provision of supple- portunities for financing farmers in the mentary funds for filling up viability difficult and inaccessible areas. Many gaps, training and capacity building banks have internalized BCs and BFs efforts and, above all, the enthusiasm significantly. of banks to make strides in rural areas Keeping the poor at the centre of the in delivery of financial services for the strategy, the SF, MF, Scheduled Castes target population have made BC/BF (SCs), Scheduled Tribes (STs), mi- mechanism a very promising delivery grants, tenants and oral lessees can be channel for the future. Financing Agriculture 77

Box 5.8: Financial assistance for strengthening supply chain system: Fruit and vegetable auction market (SFVAM), Bangalore Recognizing the need for an efficient horti- participate. The produce supplied by individual culture market which would stimulate pro- growers is subjected to grading/sorting and ductivity, raise quality standards, reduce packing at the FA level. The country’s first state losses and ensure increasing supply of fresh of the art International Floriculture Auction horticultural produce at reasonable prices to Centre set up here provides a common platform consumers, the GoI had approached National for growers and buyers to explore more busi- Daily Development Board (NDDB) to evolve/ ness opportunities in the international and implement procurement and marketing of domestic markets. The FAs are linked with horticulture produce system. NDDB had Financial Institutions for meeting the credit promoted SFVAM with an objective to provide requirements with tripartite arrangements optimal condition and new trading oppor- for recovery of loan at the selling point in tunities for fruits and vegetables. SFVAM has the market. Since producers are expected to organized farmers into Farmers Associations adopt Good Agricultural Practices (GAP), (FA) in different parts of the country for the demand for higher credit is anticipated. sourcing raw materials for the market. The SAFAL is a good model of technology, credit fruits and vegetables are sold under a brand and market linkage for perishables. name SAFAL. SFVAM, auction system is Source: Unpublished study conducted by based on a single, central auction in which Karnataka Regional Office, NABARD in all the registered buyers (Business Associates) 2006.

4. Wadi Approach for Tribal project period. Bharatiya Agro Industries Communities: Wadi is not merely a Foundation (BAIF) has done pioneering programme of agri-horti-forestry but work in this direction in Maharashtra an approach for sustainable livelihood and Gujarat under a Kreditanstalt für and better quality of life, for tribals and Wiederaufbau (KfW)-NABARD assisted other backward communities. Over programme. The Wadi approach is being the last two and half decades, Wadi replicated through a Tribal Development (small orchard) has been transformed Fund (TDF) instituted in NABARD. The into a multidisciplinary programme approach could usher a new way of life for rehabilitation. The key strategy is for 20–25 million families across 250 to provide sustainable livelihood from tribal communities who live in or close an acre of land for the participating to forested areas and undertake minor poor family. Each Wadi owner could forest produce collection as part of their earn ` 20,000–25,000 annually from livelihood. the small piece of land, once the trees 5. Contract Farming: With the increasing start bearing fruits. There are other demand for value-added and high- supplementary activities for income quality niche products and the need generation. During the gestation period, for integration of food value chain, the people are engaged in promotion of efforts have been directed by some of agriculture in inter-space, introduction the corporates to adopt contract far- of short gestation cash crops, processing of food, herbal medicines, livestock ming mechanism. The contract far- and poultry. They are also organized ming system pre-supposes three basic into SHGs which are linked with banks agreements—Market, Resource and to enable them to access credit. Local Management provisions. Under mar- people’s organizations are linked with ket provision, growers and buyers agree Government/Development Agencies, to terms and conditions for future sale market outlets and Panchayat Raj and purchase of crop/agri-product. Institutions (PRIs) to empower people Under the resource provision, the buyer to ensure sustainability beyond the agrees to supply selected inputs and 78 Bi s w a Ba n d h u Mo h a n t y

technical advice. Under the manage- expectations of agribusiness enter- ment provision, the grower agrees prises. Indian Organic Farmers Produce to follow recommended production, Company Ltd, Kerala, producing methodology, inputs, cultivation and certified organic products, Vanila India harvesting specifications. Producer Company Ltd (Vanilco), Contract farming encourages market- also in Kerala with members growing led production of crops and generates and marketing Vanila, Banana India steady income for individual farmers. Producer Company Ltd (BIPCL), in Contract farming generates gainful Kerala, formed by banana growers employment in rural communities, facilitating value addition are some of particularly for SF, MF and the landless the Producer Companies. Government and promotes self-reliance in general of Madhya Pradesh under the District by garnering locally available resources Poverty Initiatives Programme (DPIP) and expertise to meet new challenges. has promoted a large number of Pro- It also benefits the buyer in terms of ducer Companies in various parts of assured flow of raw materials, long the State. The State Government has term commitment for supply at pre- been supporting these companies determined price and earning goodwill through policy measures and financial for the firm. NDDB led SAFAL ex- assistance. In Gujarat, the Junagarh periment at Bangalore in the public Dairy has been constituted a Producer sector (see Box 5.8 on page 77) and con- Company to ensure better price for the tract farming at the aegis of private milk producers (Murray, 2008). companies, namely Reliance, PepsiCo, Most of the Producer Companies are Pantaloon, etc., are examples of contract still in a nascent stage and operating farming. as providers of technical know-how Financial institutions play an im- or facilitating marketing. There has portant role in providing finance for not been significant demand for bank high-tech agriculture under contract finance by these companies. However, farming format. They also provide as the Producer Companies take roots, production credit to farmers and act they will need capital from the banking as payment channels for companies, system. As these Companies do not providing crop insurance products have anything substantial other than to farmers. They also offer various producer members’ equity to leverage banking products like warehousing borrowings, the banks may have to adopt receipt financing and commodity unconventional approaches relying on based financing for their clients/farmers. their credibility, guarantees/undertaking 6. Producer Companies: In the Mandi by the promoter institutions/purchase system, there is no premium for quality order/agreements. The model is or long-term relationships. Agribusiness evolving, and financial institutions enterprises, with high capital investment can tap the opportunity right from are, therefore, increasingly looking for their incubation. The Producer Com- direct tie-up with farmers to ensure panies in various commodity segments consistent, continuous and adequate may be evolved into different formats: supplies supply. As it is not practical to (a) aggregator, input provider, deal with individual farmers, the agri- (b) intermediating with corporate business enterprises are looking for entities and (c) with own processing aggregates or intermediary institutions. facility, brand and market channels. Producer companies which combine These will help in making farming positives of cooperative enterprise more remunerative and opening up and efficiency of a company meet the opportunities for bank finance. Financing Agriculture 79

Box: 5.9: Supply chain integration in horticulture Through debt financing, ICICI Bank facilitated linkages with the growers and markets. The the Advani Group in creation of 18,000 MT supply chain integration for horticulture crops, of controlled atmosphere storage facilities for such as apples ensured higher price realization apples (Dev Bhoomi) in Himachal Pradesh. for farmers and also resulted in giving better The bank facilitated investment by the private quality of horticulture produce to the ultimate sector in the value chain and helped develop consumers. Source: Kochar (2009).

Box 5.10: ICICI Bank’s warehouse receipt-based financing ICICI bank developed a product wherein a Black Boxes’ at around 50 warehouses across farmer could avail loan against produce stored the country facilitate monitoring from re- in a warehouse. The bank also helped to develop mote locations and, thereby, reduces cost of cost-effective security system for warehouses monitoring. It also facilitates doing business where farmers could safely store their produce. with smaller warehouses where the SF and MF The cost of monitoring was reduced by use of stock their produce. Global System for Mobile Communications Source: Kochar (2009). (GSM) technology. Introducing intelligent

7. Agri Export Zones (AEZ): GoI in 2001 h. Increasing employment oppor- introduced a scheme for boosting export tunities by providing comprehensive support Agricultural and Processed Food mechanism for a particular potential Products Export Development Authority produce in a contiguous area. The (APEDA) has been identified as nodal support mechanism encompasses de- agency and National Horticulture velopment and sourcing of raw materials Board, Ministry of Food Processing, and packaging leading to exports. It is Ministry of Agriculture, NABARD, a cluster approach for a geographical Export-Import Bank of India (EXIM region with a potential product and Bank), etc., are involved as convergence adopting an end-to-end approach partners. Forty-eight AEZs with a pro- integrating the entire process, from jected export of ` 103,000 million in production till it reaches the market. five years are operating in various parts The anticipated benefits are as under: of the country. A web-based monitoring a. Strengthening backward linkages system is already in place. Besides fi- with a market-oriented approach nancing farmers by way of production b. Ensuring product acceptability and loans, the banks support stakeholders its competitiveness abroad as well as in contract farming in AEZs. Several in the domestic market successful ventures of contract farming c. Bringing in value addition to basic in AEZ have been witnessed. The AEZ in agricultural produce Gherkins in Karnataka is a case in point. d. Bringing down cost of production 8. Creating Value Chain with an Inte- through economy of scale grated Approach: Commercial Banks e. Ensuring better price for agricultural are increasingly involved in financing produce different models for infrastructural f. Improving product quality and development in agriculture, which has packaging a multiplier effect. By financing different g. Promoting trade-related research products and targeting diverse players in and development the value chain, a complex but sustainable 80 Bi s w a Ba n d h u Mo h a n t y

system is created. Banks provide greater investment in farm technology. medium and long-term loans under the Retailers such as Reliance Retail and integrated model. An example of bank Bharati, exporters such as Gautam Green facilitating supply chain integration is Company and Mahendra Shubhlabh given in Box 5.9 on page 79. Yes Bank and consolidators such as DCM Shriram has been supporting an Integrated Agro are positioning themselves as farm to Food Park (AFP) Scheme (Kapoor, fork supply chains (Atre, 2008). The 2009). A typical AFP has some focused entry of this chain will create innovative food chains and has processing and and need-based products and service some part of production facilities within opportunities for banks. The retail the park. These parks require a large boom is expected to revolutionize the supply of raw material from nearby farm credit scenario. Rural India is areas for which they need collection changing in terms of market size and centres. These centres termed Rural diversity and corporates, banks and Transformation Centres (RTC), besides professionals will get many more oppor- collection, can also undertake first level tunities. The success story of ITC’s of quality control. As transformation of e-choupal programme given in Box 5.11 rural economy is one of the main ob- is a vivid example of corporate sector’s jectives for sustainable development intervention in agribusiness. of Agro Food Park, they make a strong case for PPP for rural development. Bottom of the Pyramid (BOP) markets Financing mega infrastructure models represent 80 percent of humanity. It is impact a big chunk of rural population reasonable to expect that four billion people and provides tremendous scope for in search of an improved quality of life financial inclusion. will create one of the most vibrant growth 9. Financing of Rural Marts: Rural markets we have ever seen. Private sector Marts help rural consumers in buy involvement in development can be a win for both the BOP consumers and the private back of outputs, crop finance, supply sector. All of us can learn. The flow of ideas, of agri-inputs, transfer of information knowledge, and innovation will become a (weather, price, demand and supply) two-way street-from the developed countries and door delivery of products. Major to the developing as well as the reverse. corporate houses such as the Tatas, Multi National Companies (MNCs) can Birlas, Bharati and Reliance and the help BOP markets to develop. They can also world’s giant retailers such as Mart, learn from BOP markets. (Prahalad, 2006) Tesco and Carrefour are entering rural sector with huge investments in retail- 10. Technology Applications: Considering supply chain. These organized retailers that a good number of farmer customers provide farmers with seeds, facilitating are illiterate and find it difficult to them to increase yields with the assured utilize services of regular automated buy backs. Their entry has resulted in teller machines (ATMs), banks have

Box 5.11: ITC’s E-Choupal: Linking business with societal purpose 6,500 ITC e-choupal centres spread across Small farmers can manage risks better, by 40,000 villages have benefited 4 million farmers, linking to future markets. E-Choupal’s particularly SF/MF. The e-choupals provide digital infrastructure has empowered the farming know-how and services, timely and farmers in many ways including accessing relevant weather information, transparent to banking service. price discovery and access to wider markets. Source: ITC, available at www.itcportal. These enable farmers to bargain as virtual com/www.echanpal.com. buyers’ cooperatives, and opt for best practices. Financing Agriculture 81

introduced biometric ATMs which and farmer customers’ welfare. These facilitate operation for illiterate farmers include agri-extension units, high-tech (e.g., Punjab National Bank [PNB]). agri-finance branches and agribusiness Under the branchless banking model, marketing units with specialized, tech- banks have introduced biometric smart nically qualified and dedicated staff. SBI card-based technology with the help has created Marketing and Recovery of BC/BF. This facilitates reach to the Team (MART) in each region with re- last mile customers. The technology sponsibility for marketing and building provides cost-effective and transparent relationships with farmers, dealers of services. Emphasis has been on financial agri-products, organizing promotional inclusion in the unbanked centres with events, loan sanctioning, monitoring focus on women, landless, agriculture and recovery, appraisal of high-value labourers, tenant farmers and oral proposals, advisory services and follow lessees. Technology has enabled field up. Structured loan products such as functionaries to utilize their time on Kisan Bike, Agri-Venders’ Bike, Farmers field visits with a view to meeting farmers Home Loan, Land Purchase Scheme by for business counselling, guidance and Indian Bank and Syndicate Kisan Saathi also recovery of advances. Some of the Scheme, and Syndicate Gram Yojana banks (e.g., State Bank of India [SBI]) by Syndicate Bank are some examples. have introduced kiosk banking, mobile Kisan Sathi Yojna of Purvanchal Gramin banking, bulk opening/bulk handling Bank is an example of a Debt Swap and small ticket asset accounts on product to relieve farmers from clutches technology platform based on debit of moneylenders. Many of the banks card/master card operations through have improved upon KCC mechanism BC. Training and sensitization for with additional provisions. E-KCC such applications for bank’s own staff enables the user to operate from any and the customers have been also branch for cash withdrawal or input embarked upon. An example of training purchase. It seeks to refine the true con- strategy adopted by banks is furnished cept of KCC to the extent of bringing in Box 5.12. anytime, anywhere money for farmers Technology has been leveraged by and integrating features of electronic opening accounts by Customer Service card and KCC Scheme. Point (CSP) of BCs engaged through 12. Farmers Awareness/Facilitation Smart Cards which are biometric. These Measures are operated through Point of Sale (PoS) a. Farmers Clubs (FC): The Farmers mechanism and finger point recog- Clubs programme was launched by nizing machines which enable custom- NABARD, soon after its inception ers to transact business through CSPs in 1982, to propagate the concept of operating in nearby areas. development through Credit under 11. Special Products and Delivery the then Vikash Volunteer Vahini Mechanism: Many of CBs have estab- (VVV). The programme has been lished specialized setups to cater to the redefined and enlarged over a period specific needs of agriculture financing of time with an aim to organize

Box 5.12: Mobile vans for knowledge management (KM) of farmers Punjab National Bank has been using mobile crops, allied activities and soil testing and vans at Farmers’ Training Centre at Sachakhera jatropha cultivation. The van doubles as an (Haryana) for providing off-site training on information Kiosk. improved package and practices of agriculture Source: Kamath (2009). 82 Bi s w a Ba n d h u Mo h a n t y

farmers around a common agenda of c. Business Counselling Centres: access to credit, technology, market Many banks have embarked upon and extension services. NABARD financial/business counselling pro- has been providing promotional grammes for knowledge manage- grant for formation, nurturing and ment of farmers. Indian Bank has maintenance of Clubs (for initial set up Financial Literacy and Credit three years) through CBs, RRBs, Counselling Cells, conducts Agro- Cooperative banks and grassroots extension Service meets, intensive organizations (NGOs, PRIs, KVKs, farm credit campaign and Green Plus etc.). The FCs have been assuming campaign. Canara Bank has formed role of Self Help Promoting Insti- Canara Grameena Vikas Vahini as a tutions (SHPIs) and also BF for CBs. vehicle for inclusive growth, set up Federations of FCs have also been Green Brigades, deployed vehicles formed where FCs function as agents for financial literacy campaign, pro- for dissemination of technology for vides extension services on farm the farmers with the help of KVKs. technology and imparts vocation The recent policy focus has been training to farmers. SBI has estab- on formation of federation of FCs/ lished Farmers’ Corner (Kisan March) Producer Groups/Companies at and undertakes Farmers’ Training district level with a view to promoting Programmes. access to credit, productivity and 13. Credit Information Bureau: The income through collective efforts. As establishment of Credit Information on 31 March 2009, there were 38,215 Bureau (India) Limited (CIBIL), pro- Clubs covering 87,724 villages in 581 moted by SBI, Housing Development districts (NABARD 2009a). Finance Corporation (HDFC), Dun and b. Special Organizational Outfits of Bradstreet Information Services India Banks: Several banks have set up Pvt. Ltd (D&B) and Trans Union Inter- special organization arms. Syndicate national Inc. (Trans Union) is a major Bank promoted Syndicate Agri- step for assessing credit worthiness/ cultural Foundation (SAF) to credit rating of borrower and risk- disseminate scientific farming tech- based pricing of loans. Comprehensive niques. SAF, in turn, established credit information can be provided Farm Information Exchange Clubs by collecting, collating and disseminating (FIECs) for farmers and Farm credit information pertaining to both Schools for schoolchildren. Indian commercial and common borrowers Bank established Agri Credit to a closed user group of members. RBI Intensive Branches (ACI) and Micro has permitted three more Credit Bureau, State Branches. They have also set namely Experian Credit Information up Micro Credit Kendra’s (MCKs), Co. of India Pvt. Ltd, Highmark Credit a special window for microfinance Information Services Pvt. Ltd and in rural and semi-urban areas. Equifax Credit Information Services Pvt. The Rural Development and Self Ltd. This will provide a broad range of Employment Training Institutes credit data and information solutions (RUDSETI) symbolizes synergy of and thereby contain NPAs and improve banks and NGOs in pursuit of skill portfolio quality of banks. Some of and entrepreneurship development the MFIs constituting Microfinance of rural unemployed youth. The Institution Networks (MFINs) have replication of RUDSETIs in all dis- invested in Alpha Finance Consul- tricts in a phased manner would go tants (P) Ltd to set up Credit Bureau a long way in farmers’/agri-entre- to address issue of multiple borrowing preneurs’ capacity building. and over-indebtedness. Financing Agriculture 83

14. Process Simplification: Consequent to already started developing products competition, adoption of technology around WRs. An example of one and emerging need for flexibility, speed, of the banks’ product in financing cost cutting and quality of financial ser- against WRs is given in Box 5.10 vices, there has been continued efforts on page 79. They can establish for re-engineering delivery processes linkage with the Commodity Future in the banks. The banks have made market through financing WR and, attempts at simplification of documen- thereby, facilitate the farmers or an tation, introduction of flexi timings, aggregate of farmers to take a pos- increased delegation of sanctioning ition in future market to manage the powers to branch managers and redressal price risk in the given commodities. mechanism for customer’s grievances. They can avail professional help of Codes of Standard and Fair Practices Collateral Management Companies have been introduced in banks with set up for management of warehouse supervisory guidance of RBI/NABARD. and produce stored, while financing Some of the important changes/trends against WRs. Farmers will get loans in the banking sector are outlined below: at favourable terms and bankers would minimize credit risks under a. Scale of finance for various crops this arrangement. and farm and off-farm activities have been liberalized and each bank has been determining its own scale of 5.9. Role expectations finance. Agriculture has unfolded immense scope b. Banks are taking recourse to for diversification, commercialization collateral-free lending approach for and creation of wealth for the economy. dispensation of microfinance. Though a critical input, Credit is not a c. With BC/BF mechanism in place sufficient criterion to bring about trans- and technology solutions at their formation of subsistence agriculture to disposal, as also the MANREGA sustainable agriculture livelihoods. It is experience, some banks have started also not sufficient if only a small segment disbursement of loans by way of of enterprising farmers capitalize emerging direct credit to farmer’s account. opportunities. Actual development of d. Agri-rural activity is getting more agriculture is when the bottom segment business oriented and each household of farmers becomes capable of availing has its distinct identity, interest and economic opportunities. The changing priority. Considering differential paradigm in agriculture demands pro- needs and advantages of household active, progressive and forward-looking analysis, a discriminatory approach roles from stakeholders, particularly GoI, fi- for financial and other support ser- nancial institutions, development agencies vices with household as unit is being and farmers to carry forward the agenda realized. Some banks have started for inclusive growth and sustainable agri- financing accordingly. culture. Based on the above analysis, the e. With enactment of Warehousing following approaches are suggested: Development and Regulation Bill, Warehousing Receipt (WR) becomes 1. Government of India/State a negotiable instrument and the Governments banks can, therefore, finance against pledge of WR. This enables farmers to l Shifting emphasis from supply- store their produce and take advan- centric approaches/programmes to tage of any favourable price move- demand-driven services for greater ment in future. Some banks have and sustainable impact. 84 Bi s w a Ba n d h u Mo h a n t y

l Accelerating and deepening infra- 2. Financial Institutions and Develop- structure development in rural areas ment Institutions to boost agriculture production and l Encouraging good repayment productivity. culture—incentivizing farmers for l Phasing out capital subsidies and prompt repayment. redirecting resources for promotion l Ensuring financial services to far- of infrastructure. mers by banks/MFIs at affordable l Transforming all extension services cost and in conformity with ‘social per- of GoI and State Governments to formance management’ principles. become market-led, participatory l Providing greater long-term finance and responsive. for capital formation in agriculture l Enhancing production and pro- and allied activities. ductivity through systematic and l Developing internal capacity in pre- comprehensive interventions. paration, appraisal, monitoring, eva- l Evolving/implementing compre- luation of livelihood programmes, hensive and cost-effective agricul- project lending and area based inte- ture insurance schemes including grated schemes. weather insurance and addressing l Training and exposures for officials climate changes risks. to be up-scaled and deepened. l Bringing under convergence all l Support innovative business models departments related to livelihood in agriculture for farmers’ employ- promotion. ment and income enhancement. l Create an enabling and congenial l Adopting a soft recovery approach environment for recycling of credit; towards farmers. and not announce any further waiver of loans. 3. Farmers

l Encouraging private investment in l Farmers need to know about agriculture for capital formation. programmes/schemes, avenues, their l Strengthening financial institutions rights, entitlements and obligations. and community-based organizations l Considering that most community to ensure their effective participation based platforms/institutions are in livelihood promotion and sus- envisaged as participatory, farmers’ tainable agriculture development involvement in the whole process is measures. essential. l A farm-to-work programme so l Modern agriculture practices are that those employed in seasonal knowledge intensive and technology/ agricultural work can move to other skill based. Farmers need to fam- supplementary work in between. iliarize themselves with the same. l Taking measures for KM of farmers, l Farmer borrowers need to inculcate particularly in key areas such as credit discipline for financial insti- modern farming techniques, tech- tutions to recycle funds. nology, agri-markets and disaster l Progressive farmers may assume management. The Four Cs (Con- role of knowledge workers under nectivity, Contents, Capacity-building, the aegis of Farmers Clubs and pro- Care and management), as National pagate best practices. Farmers’ Commission put it, are cen- l Farmers should take recourse to tral to making all knowledge man- business counselling in the event of agement missions successful. stress. Financing Agriculture 85

5.10. Conclusion Identification Number (UID) Project of GoI, Financial Inclusion Plans (FIP) of The Government of India has envisaged a banks and Farmers’ Commissions of some 4 per cent growth in agriculture during the State Governments should ultimately 11th and 12th plan periods. Agriculture, provide identity, dignity and empower- therefore, would be one of the major con- ment to the teeming millions of farmers. tributors towards achievement of the planned 9 per cent economic growth rate. We must continue to invest, nurture and Keeping in view ground realities in agri- support an environment that can harness culture, doubling of current growth rate is a the energies and aspirations of farmers. daunting task. GoI has made enormous investment in irrigation, input subsidies, References farm loan waiver and extension. Banks Atre, S.V. (2008). ‘Retail Boom: New Opportunities have stepped up agri-credit support sub- in Agricultural Finance’, National Journal of stantially. Policy initiatives have been Agriculture and Rural Development, Jan–Feb taken, on recommendations of National 2008: 9–11. Commission on Farmers, for boosting Bhatt, O.P. (2009). ‘State Bank of India: The Pioneer in Indian agriculture and salvaging farmers’ Agriculture Lending’, CAB Calling, Special Issue, plight in the area of credit, technology, ex- Oct–Dec 2009, 33: 11–16. Kamath, K.R. (2009). ‘Punjab National Bank’s tension and marketing services. However, Initiatives in Agriculture Credit’, CAB Calling, considering challenges from climate change, Oct–Dec 2009, 33: 22–26. science and technology, farmers’ distress and Kapoor, Rana. (2009). ‘Financing Agriculture and targeted growth, much more policy reforms, Agribusiness: Yes Bank’s Approach’, CAB Calling, efficiency and speed in implementation Oct–Dec 2009, 33: 45–53. Kochar, Chandra D. (2009). ‘Reaching out to Rural and above all, passion, mission and vision India: The ICICI Bank Experience’, CAB Calling, are necessary. Oct–Dec 2009, 33: 17–21. The development should include Mohan, Rakesh. (2006). ‘Agricultural Credit in adoption of a vision-based approach in India—Status, Issues and Future Agenda’, stimulating support to agriculture, creating Economic and Political Weekly, Mar 2006, XLI: conducive economic climate, rationalization 1013–23. Mohanty, B.B. (2009). ‘Transformation of Credit of financial services for farming, tech- Delivery for the Poor through SHGs-Bank Linkage nological and extension services in tune Programme’, paper presented at LBS Academy, with market dynamics and conservation of Mussorie, 2009. natural resources. The financial institutions Murray, E.V. (2008). ‘Producer Company Model- have onerous responsibility in carrying Current Status and Future Outlook—Opportunities for Bank Finance’, CAB Calling, June 2008, 32: forward the above mission. They need to 45–51. play a catalytic role much beyond credit NABARD. (2009a). Annual Report 2008–09. Mumbai: dispensation and recovery. They need to NABARD. adopt a developmental perspective vis-à-vis ———(2009b). Status of Microfinance in India 2008–09. agriculture and farmers’ welfare. The activity Mumbai: NABARD. for which the farmer is financed should NSSO. (2005). Indebtedness of Farmers’ Households, Survey Report No. 498 (59th Round). New pay for itself, generate sustainable returns Delhi: NSSO. and be environmentally safe. Prahalad, C.K. (2006). The Fortune at the Bottom It is not the quantum of money that of the Pyramid, pp. 61–62, Wharton School has flown in, but how much sustainable Publishing. employment, income, livelihood and quality Sahu, B.S. (2010). ‘Agrarian Crisis—Distress, Suicides and Emerging Challenges’, presented at 92nd of life for farmers have been effected that is Conference of the Indian Economists Association, the benchmark for success for measuring Bhubaneswar, 2010. success of financial services. The above Thorat, YSP. (2008). ‘Indian Agriculture 2017’, CAB paradigms coupled with the ongoing Unique Calling, June 2008: 68–71. 86 Bi s w a Ba n d h u Mo h a n t y Agriculture Marketing— From Livelihoods to Enterprise

Re s h m a An a n d

6.1. Introduction l The country has abundant water re- ources that can be tapped more effi- The key premise in this chapter is that sig- ciently to increase the proportion of Chapter nificant transformation in agri-marketing irrigated land. in India, particularly efforts to include small 6 l Most states have the potential to double marginal farmers, will come through only if farm yields through better application overall agriculture is treated as an economic of known cropping best practices and activity—not merely a source of livelihood available technology. for farmers across the country. This change l Consistent economic growth over the in perspective is perhaps the most import- last 10 years has opened up large market ant factor that will inspire necessary changes opportunities in the domestic market in government policy, direct investment for mass-market foods, value-added towards infrastructure and create fertile processed products and niche premium ground for new, scalable enterprise models foods. While 2008–09 was a trying period and successful public private partnerships for organized retail, there is a resurgence (PPP). The chapter shares a variety of dis- of activity in this space. tinct case studies—each starting with the premise of a market based agri-marketing However, our inability to leverage this model but taking a different route to reach opportunity to our advantage is evident that objective. from the following facts:

6.2. Current situation l Agriculture’s contribution to Gross Domestic Product (GDP) continues to We face a dichotomy in the state of agri- reduce relative to other sectors despite culture in India. The country has all the providing employment to more than critical elements and resources for a robust half the country’s population (Table 6.1). agriculture-based economy: l Repeated Fragmentation: The country has more than 100 million small farm- l India has over 190 million hectares of ers with landholdings between 1 and cultivable land, second only to the United 4 hectares. They account for 30 per States and more than China and Europe. cent of cultivable land in the country. It has 20 per cent of the world’s irrigable The share of small farmers in the total land under food grains, is the second number of landholdings increased from largest grower of vegetables and produces 70 per cent in 1971 to 80 per cent in 1998 17 per cent of the world’s cotton. and is expected to be at 83 per cent 88 Re s h m a An a n d

Table 6.1: Agriculture sector: key indicators at support to the sector at the cost of stream- constant prices (2004–05) (%) lining investments and ensuring a robust Item 2007–08 2008–09 marketing network in agriculture. Growth in GDP in agriculture 4.7 1.6 and allied sectors The National Agriculture Policy 2000 Agriculture 5.0 1.1 assessed that the Indian agriculture sector Forestry and logging 2.2 2.9 Fishing 6.0 6.3 faces problems of capital inadequacy, lack Share in GDP—agriculture and 16.4 15.7 of infrastructure support and demands side allied sectors constraints such as controls on movement, Agriculture 13.9 13.2 Forestry and logging 1.7 1.7 storage and sale of agricultural products. Fishing 0.8 0.8 These have continued to affect the eco- Employment in the agriculture 52.1 nomic viability of the agricultural sector. sector as share of total The Tenth Plan document further notes: employment in 2004–05 as per CDS The current market system is dominated by Source: Central Statistical Organization (CSO) and Department of Agriculture and Cooperation Current traders. Appropriate and effective linkages Daily Status (CDS). between the producers and sellers continue to be weak. The absence of rural road con- nectivity and other infrastructure, combined by the end of 2010. Between 1960 and with improper management, lack of mar- 2000, the average farm size in India ket intelligence and inadequate credit support shrank from 2.7 hectares to less than has resulted in a system that is unfavourable 1.2 hectares. Low farm productivity fol- to the farmers. The adverse impact of all lowed as a consequence of repeated land these is more pronounced in the case of the fragmentation. small and marginal farmers who consti- l Poor Infrastructure: Post harvest losses tute about 78 per cent of the entire farming due to wastage and poor infrastructure community. . . . Further, primary rural mar- kets are not equipped with basic facilities account for an estimated 10 per cent like platforms for sale and auction, electri- of food grain production and 25 per city, drinking water, link roads, traders’ cent of fruit and vegetable production. premises, facilities for post-harvest man- Inadequate rural road connectivity and agement etc. other supporting infrastructure (e.g., cold storage network, etc.), results in considerable wastage every year. 6.3. Agri-marketing—Scope, key players and channels l Limited Irrigation: Only about 35 per cent of agricultural land is irrigated. 6.3.1. Scope Irrigation networks are yet to reach a Agriculture marketing comprises all the considerable proportion of the farmers, operations involved in the movement of which increases their vulnerability by produce from the farm till it reaches the making them exclusively dependent on ultimate consumer. Several functions are rainfalls. involved in this process, such as: l Livelihood versus Economic activity: For long, agriculture has been treated as 1. Buying and assembling a means of livelihood for a substantial 2. Transporting and loading/unloading proportion of rural population rather 3. Grading than an economic profession, which 4. Storing/warehousing leads to the obvious efficiency conse- 5. Processing quences. This notion has been reflected 6. Financing in the mindset of policy-makers as well 7. Risk-bearing who have focused more on providing 8. Retailing Agriculture Marketing 89

6.3.2. Key players in agri-marketing agricultural commodities and build up 6.3.2.1. The Producer: Most farmers or a sizable buffer stock of food grains to producers sell their surplus either in the ensure National Food Security. village or in the local market or mandi. Some l Specialized Marketing Organizations: farmers, especially the large ones, assemble For commercial crops, especially those the produce of small farmers, transport it with potential in the export markets, to the nearby market for sale. there are a host of specialized organiza- tions that focus on promoting markets 6.3.2.2. The Government: In the interest for these products, providing quality of public welfare, the Government in India standards, encouraging value addition intervenes heavily in the agri-marketing and providing requisite support to system in the following ways: farmers to improve productivity. Key organizations include: l Framing of rules and regulations for the protection of the interest of farmers and o Cotton Corporation of India (CCI) consumers. The government regulates the o Jute Corporation of India (JCI) sale of agricultural produce, sets support o Tea Board prices for farmers and also intervenes in o Coffee Board distribution of food stocks. o Spice Board l Promotional activities such as storage o National Oilseeds and Vegetable Oils and warehousing, transportation and Development Board (NOVOD) communication facilities credit facility o Agricultural Processed Products through various institutions, grading and and Export Development Agency standardization. (APEDA) l Administration of prices at different levels o Marine Products Export Develop- of marketing guaranteeing minimum ment Agency (MPEDA) support prices to producers, providing l Cooperatives and Federations commodities at fair prices to consum- ers and fixing the rates of commission o The National Agricultural Cooperative charged by commission agents. Marketing Federation (NAFED) l Influencing supply and demand by o All India Cotton Cooperative Feder- import, export, internal procurement ation Limited and distribution. o National Dairy Development Board (NDDB) To deliver its agenda, the government l Departments and Boards relies on a network of organizations. These include: o The Directorate of Marketing and Inspection (DMI) l The Food Corporation of India (FCI): o State Level Agricultural Marketing FCI procures a sizable portion of mar- Departments and Agricultural Mar- ketable surplus of food grains and other keting Boards agricultural commodities at incentive o State and Lower Level Cooperative prices from the farmers on behalf of Marketing Societies the Central and State Governments. It releases the stocks through the public 6.3.2.3. The Trader/Retailer/Processor: distribution system (fair price shops The main trading functionaries in the and controlled item shops). It aims to marketing channel for agricultural com- minimize seasonal price fluctuations modities include village traders, primary and inter-regional price variations in and secondary wholesalers, commission 90 Re s h m a An a n d

agents, processors and retailers including and market margins. Therefore, com- vendors. Private trade, despite government modities become costly for the final intervention, has continued to dominate consumer and this reduces the producer’s the trade in agricultural commodities. The share in consumer’s prices. This is the quantity of agricultural producers handled traditional and dominant channel as by the government agencies has been about nearly 60–70 per cent agricultural pro- 10 per cent of the total value of marketed duce is sold through this channel. surplus. Around 10 per cent of the mar- keted surplus is handled by the producers 6.5. Key challenges in or consumers cooperatives. Thus, nearly agricultural marketing 80 per cent of the marketed surplus of agri- 6.5.1. Regulated markets under cultural products in India is handled by Agricultural Produce Market private sector—largely unorganized. Committee (APMC) have discouraged enterprise and 6.4. Channels private sector participation Agricultural markets in most parts of the Characteristics of channels of agricultural country are established and regulated under marketing affect the prices paid by con- the State APMC Acts. The APMCs, set up in sumers and shares of them received by the major production and arrival centres across producer. The shorter the channel, lesser the country, perform the crucial function the market costs and cheaper the com- of organizing agriculture trade and pro- modity to the consumer. When the channel viding a meeting point for buyers and is long with more intermediaries, prices are sellers. These 7,161 regulated markets, or more and producer’s share is less. The key mandis, are mostly primary wholesale mar- channels for agri-marketing in India are: kets. Farmers can only sell their produce at mandis and not directly to buyers.

l Government Channel: Producer—Gov- Though the APMCs were set up to ernment Department—End Consumer protect farmers from exploitation of inter- The government channel is used mediaries and traders, as well as ensure mainly for food grains like rice, wheat and better prices and timely payment for their produce, these markets have become in- sugar. In some essential commodities, efficient over a period of time. During the when the prices are unduly high or low, past 50 years, no significant improvement the government enters into market to has taken place in the functioning of agri- buy the commodities and sell them to cultural markets. The APMC Acts have protect the interests of both—producer created monopolies and entry barriers and and consumer. prevented disintermediation. This mono- l Cooperative Channel: Producer— poly of government-regulated wholesale Cooperative—Consumer markets has prevented development of a The cooperative channel for farm competitive marketing system in the coun- produce has few success stories in India. try, providing little help to farmers in direct In Maharashtra, this channel is used marketing, organizing retailing, a smooth raw partially in important fruit crops like material supply to agro-processing indus- grapes, pomegranate, banana, oranges. tries and adoption of innovative marketing l Private Channel: Producer—Village systems and technologies. Merchant—Wholesaler—Commission The multiplicity of charges imposed Agent—Retailer—Consumer. on these markets is a major disincentive In the private channel, there are many for the corporate private sector players intermediaries, which result in high costs to participate. Private sector participation in Agriculture Marketing 91 agri-marketing continues to be tentative on farmers have limited access to mandis. Any account of factors above and the difficulty wasted produce for a small farmer can be to obtain the produce of uniform quality extremely damaging. for which a premium price can be charged. Poor linkages in the marketing chan- While a Model Act has been proposed, it is nels and poor marketing infrastructure yet to be implemented across states. lead to high and fluctuating consumer prices. And only a small proportion of 6.5.2. Low investment in the consumer rupee reaches the farmers. infrastructure and There is substantial wastage, deterioration productivity in quality and frequent mismatch between Over the last 25 years, India has not invested demand and supply spatially and over time. enough in raising agricultural productiv- Ninety per cent of effort (and investment) ity. Government, the largest investor in in Indian agriculture is production oriented; Indian agriculture, sells seeds, fertilizer, only 10 per cent is on marketing and post water and extension services to farmers and harvest phases (CII, 2009). also buys their products. But government’s Both agricultural output and GDP could investments have focused on subsidizing get a major fillip by reduction in wast- not developing agriculture. Bottlenecks such ages and inefficiencies in the marketing as rural road connectivity and other sup- process. Insufficient investment in raising porting infrastructure (e.g., cold storage productivity has been the biggest obstacle to network, etc.) result in considerable wastage food security in India. Developing countries every year estimated at over ` 5,000 billion. such as Indonesia and China recognized Most mandis are typically located near the importance of raising productivity and important towns, centres of production, dis- have long since transformed their agricul- trict headquarters or major trade centres. ture sectors to the enduring benefit of their While it is true that every district has a people. mandi and that they are spread through- out the length and breadth of the country, 6.5.3. Inter-state barriers to trade small farmers have limited access to these There are significant inter-state barriers mandis. Transactions take place between to trade. These barriers prevent seamless commission agents and wholesalers. Market movement and price distortions on account intermediaries purchase the farm produce of tax structures and physical blockages from farmers, often in advance, and bring (Box 6.1). These barriers have a significant it to mandis for sale to wholesalers. Small impact on prices and avoidable wastages.

Box 6.1: Interstate barriers to trade Taxation-related barriers Physical barriers l Variation in rates across states (rationalized l Physical controls using the Essential Com- after VAT introduction, but not eliminated) modities Act (like stock limits at times of leads to evasion through paper trades by short-term shortages) lead to long-term unscrupulous players. supply distortions. l High rates (most common rate of 5 per cent l Restrictions on movement of specific com- appears low, but impact already low margins modities create situation of uncertainty. in agribusiness) are also an incentive for l Multiple check posts cause serious wastage evasion. of perishable agri-produce. l Multi-point taxation (APMC cess is collected l APMC regulations restrict movement of at multiple points) has a cascading impact agri-produce to attractive markets over on prices. long distance, restricting ability of farmers to manage price risk. Source: CII (2009). 92 Re s h m a An a n d

6.5.4. Large number of Challenges of capital inadequacy, lack intermediaries distorting of infrastructure support, lopsided in- prices without any benefits vestments and demand side constraints to farmers such as controls on movement, storage Poor infrastructure and low penetration and sale of agricultural products have of marketing network have resulted in continued to affect the economic viability a large number of intermediaries in the of agricultural sector. In this context, agri-marketing system. This results in small marginal farmers would continue high price fluctuations. Prices realized by to slip into poverty. Their way out of the the farmers still remain low end and bulk low land holding—low productivity—low of the margin between the farm-gate and income cycle is if they grow and sell high- final price is consumed by intermediaries. value, labour-intensive crops such as off- A study conducted by Images Retail (CII, season fruits and vegetables and have 2009) indicates that the retail price of pro- access to very cheap small-farm irrigation, duce sold by the farmer can go up to 3.5 times financing, good seeds and fertilizers and the farm-gate price. They also suggest that if markets where they sell their crops at a the product is routed through a cooperative profit. This requires a significant set of of the farmers and a distribution company, macro and micro reforms which are de- the end retail price can be 26 per cent lower, tailed in the next section. resulting in better prices for farmers and/or reduced prices for consumers. 6.6. Critical drivers to 6.5.5. Agriculture financing seen as transform agri-marketing separate from marketing in India Agriculture sector financing has so far mainly concentrated on production financing, leav- 6.6.1. Implementation of the ing behind equally important marketing amended model APMC Act finance. During the Green Revolution, co- The Ministry of Agriculture, Government of operative institutions played a major role India (GoI) formulated a model APMC Act in providing production financing in many in 2003, and advised states to implement the parts of India. Over the years, various gov- Act. The amended Act aims at a complete ernment policies have weakened these transformation of agricultural market- institutions and agriculture financing has ing in India to make it more market and not kept pace with the increased demand, growth oriented. It permits farmers, local thereby impacting agriculture sector growth authorities and others to establish new in the country. Considerable efforts in recent markets, set up purchase centre, farmer/ years to improve agriculture financing consumer markets for direct sale in any through measures such as reduction in area and promote PPP in management interest rates, mandating banks to increase and development of agricultural mar- the share of loans to the sector and Kisan kets as well as contract farming. The pro- Credit Cards among others, a large gap posed Act encourages: still remains between provisioning and the requirement, forcing farmers to fall 1. development of competitive agricul- back on the informal sector. There exists ture marketing, complementariness in agricultural mar- 2. deregulation of the marketing system keting and financing; ignoring this attri- and bute and dealing with them separately 3. promotion of private investment in has impacted growth of agriculture and management and development of agri- impacted price realization by farmers. cultural markets in India. Agriculture Marketing 93

Under the new Act: if alternative markets are established. The traders and commission agents fear losing l Private players will be allowed to open business and income. and operate agriculture markets, where The implementation of the model APMC farmers can sell their produce. It will Act will boost farm incomes considerably end state monopolies and result in over a period, as: competitive pricing for the farmers. l There is no compulsion on farmers to l There exists a huge gap in the consumer bring their produce to the mandi. They prices and farmer realizations, primar- can directly sell the produce to private ily due to presence of intermediaries. parties, food chains and retailers. Reduction of intermediation costs will l Contract farming has been allowed reduce consumer prices and improve the so that the food processing and retail realization for the farmers. industry can get desired quantity and l Contract farming results in companies quality of the produce, without any need providing farmers with assured prices, to route it through the notified markets. technical inputs and credit. This has the potential to improve yields and the qual- Provision has also been made in the ity of farm produce. Act for constitution of State Agricultural l A modest 10 per cent cumulative in- Produce Marketing Standards Bureau for crease in production and realizations promotion of Grading, Standardization could enhance farm incomes by more and Quality Certification of agricultural than ` 500 billion, thus boosting the produce. This would facilitate pledge finan- rural economy and demand potential, cing, direct purchasing, forward/futures substantially. trading and exports. Despite the radical changes that the 6.6.2. Encourage private sector model APMC Act can usher in, so far only investment for market a few states have adopted it and that too infrastructure partially (Table 6.2). The resistance to the The private sector participation in devel- adoption of the model Act is from the state oping marketing infrastructure for agri- governments, traders and commission culture is limited to warehousing, cold agents. The states fear loss of market fee storage and pack-houses. In the absence

Table 6.2: Status of implementation of APMC Act in India

S. No. Stage of reforms States/Union Territories (UTs) 1. States/UTs where APMC Acts have been Madhya Pradesh, Himachal Pradesh, Punjab, Sikkim, suitably amended Nagaland, Andhra Pradesh, Chhattisgarh, Rajasthan, Orissa, Arunachal Pradesh, Maharashtra and Chandigarh 2. States/UTs where reforms to APMC Acts have Haryana, Karnataka, Gujarat and National Capital been partially modified: Territory of Delhi a) by amending APMC Act/Resolution b) by Executive Order Uttar Pradesh 3. States/UTs where there is no APMC Act in Bihar, Kerala, Manipur, Andaman and Nicobar Islands, operation Dadra and Nagar Haveli, Daman and Diu and Lakhshadweep 4. States/UTs where APMC Act already provides Tamil Nadu for the reform 5. States/UTs where administrative action has Assam, Mizoram, Tripura, Meghalaya, Jammu been initiated for introducing the reforms and Kashmir, Uttarakhand, Goa, West Bengal, Pondicherry and Jharkhand Source: Ministry of Agriculture, GoI, available at http://agricoop.nic.in/Annual Report06-07/AGRICULTURAL %20MARKETING.pdf. 94 Re s h m a An a n d

of adequate government support in terms l provisions to allow private entrepre- of a conducive policy regime, minimum neurs to cover price and yield risks for guarantee of returns (as is the case with other farmers. infrastructure such as power and road), fair competition (monopoly of APMC markets), 6.6.3. Address risk mitigation in the private sector is cautious about its role agricultural marketing in the area of agricultural marketing and Farmers are most vulnerable to market- infrastructure development. Yet, its share of related risks, such as fluctuation in com- investments is higher vis-à-vis government modity prices due to their poor holding spending (Table 6.3). capacity and cash requirement for the next There is a need to ensure that policies crop. Crop insurance is complicated and attract serious and committed private sec- does not cover all crops. It has a complex sys- tor participants to the value chain. The key tem of loss assessment. It would be necessary players include providers of agricultural to revise current insurance schemes to cover inputs, micro-irrigation, financing and all crops, input costs and cash requirements risk management services, fresh produce following a year of loss. Actuarial premiums aggregators and marketers, food pos- should be charged with subsidies only sessors, poultry or dairy producers and for small and marginal farmers within the processors and those that can help build scheme. extension services capabilities. The government has been trying to To encourage the private sector to make implement various market mechanisms investments in marketing infrastructure on to cover farmers’ market-related risks. These the required scale, a favourable regulatory include future and spot trade of agricultural environment needs to be created to attract commodities through electronic exchanges large entities. This would include: and implementation of warehousing receipt system. The real benefits of these instru- l liberalized credit norms to entrepreneurs ments need to reach the target beneficiaries. for agricultural marketing activities; An integrated approach, in which efficient l changes in the market regulatory frame- systems of e-spot trading, grading and qual- work to allow private entrepreneurs estab- ity certification, scientific warehousing and lish market yards and other regulatory collateral management, crop/weather insur- facilities; ance and futures benchmarked over the l changes in the cooperative laws to allow counter offered forward contracting, could farmers' cooperatives to work along cor- exploit complementarities between agri- porate lines and compete with private cultural marketing and financing, and will trade; help address the current problems in these l review of existing legal instruments to functions. The ultimate objective should be facilitate the entry of entrepreneurs in to develop marketing and financing systems marketing activities and wherein price discovery takes place in an

Table 6.3: Public and private investment in agriculture and allied sector at 2004–05 prices

Investment in agriculture and allied sectors Share in total investment (` crore) (per cent) Year Total Public Private Public Private 2004–05 78,848 16,183 62,665 20.5 79.5 2005–06 93,121 19,909 73,211 21.4 78.6 2006–07 94,400 22,978 71,422 24.3 75.7 2007–08 110,006 23,039 86,967 20.9 79.1 2008–09 138,597 24,452 114,145 17.6 82.4 Source: Department of Agriculture and Cooperation (2010); http://www.indianbusiness.nic.in/economy/ agriculture.htm. Agriculture Marketing 95 efficient manner, cost of marketing reduces, credit institutions are member driven, based quality of produce improves, farmers are on self-help and democratic principles. The able to get their payment in time, farmers members should have ample flexibility to get both production and marketing credit devise their recovery procedures so as to in time, transaction costs are reduced and reduce their overdue and to make their in- risks are minimized. stitution economically viable. Credit from cooperatives is generally 6.6.4. Revamp cooperative used for producing low valued products. institution network This demands diversification of loans in At present, there are over 60,000 primary order to enable a large number of farmers cooperative marketing societies of which and weaker sections of people to take 3,500 are special commodity marketing loans for area-specific viable activities like societies. At the district level, there are dairying, poultry farming, aquaculture, 160 Central Marketing Societies. At the pisciculture, goat and sheep rearing, seri- state level, there are 29 general purpose culture, etc. Further, the cooperatives have State Level Cooperative Marketing Feder- a high potential to diversify in different ation. In additions, there are eight State export promotion activities like processing Level Trade Cooperative Development of agricultural commodities like tea, cashew Corporations/Federations. nuts, spices, jute, coir, sugar and its by- Punjab, Maharashtra, Uttar Pradesh products. This calls for a better linkage and Gujarat accounted for 75 per cent of between the cooperative credit institutions the total value of the agricultural produce and cooperative marketing agencies to make marketed by cooperatives. The three major the cooperatives as a banking institution commodities that accounted for about competitive in this globalized era. 75 per cent of the total sales are food grains, sugarcane and cotton. Efforts are being made by the govern- 6.7. Emerging developments ment to recapitalize and revive the Indian and impact of reforms in Cooperative Sector. Professionalization of agri-marketing cooperatives along with modernization With the right set of reforms in agri- of their operational procedures would marketing, the impact will be seen in the facilitate their development as self-reliant following areas: and economically viable rural financial or- ganizations, after ensuring better manage- 6.7.1. Increase in direct marketing rial skills with efficient risk management, initiatives resulting in better safeguarding against market imperfections, rates for farmers and lower transparency, accountability, quality ser- prices for consumers vices and achieving higher recovery ratio Direct marketing enables farmers to dir- with minimal or no subsidy support from ectly sell their produce to the agri-processor, the Government. marketer (organized retail) and consumers. While increasing the capital base of the It also involves farmers cultivating speci- cooperatives, there is also recognition of fic produce to meet demands of buyers. the need for appropriate credit planning This increases price realization for farm- and appropriate loan appraisal system for ers due to significantly lower marketing ensuring viability and feasibility in dis- and intermediation cost. In South Korea, bursing loans to the borrowing members. To this marketing model has ensured 20– increase the outreach of cooperative credit 30 per cent lower end consumer prices, to millions of its poor members, steps are despite 10–20 per cent increase in farmers’ being taken to ensure that the cooperative realizations. 96 Re s h m a An a n d

Examples of successful implementation marketing firms for production support include Apni Mandis for vegetables and at predetermined prices. This stipulates a fruits in Punjab and Haryana, Rythu Bazars commitment on the part of the farmers in Andhra Pradesh and Uzhavar Santhaigal to provide a specific commodity in terms in Tamil Nadu. of quality and quantity as determined by There is also a small but emerging trend the purchaser, and commitment on the of cultivating communities wherein end part of the company to support the farmer consumers support and buy produce from for production through inputs and other farmers directly (Box 6.2). This movement is technical support. Contract farming is still at a nascent stage though very replicable becoming popular and there are a number across the country. of success stories like Maul, NDDB, Pepsi Co, etc. (see Box 6.3). Major crops include 6.7.2. Regulated contract farming potato, tomato, groundnut and chilli in providing fair rates to farmers Punjab, safflower in Madhya Pradesh, palm and stable supply lines for oil in Andhra Pradesh and cotton in Madhya companies Pradesh and Tamil Nadu. Contract farming may be defined as an Contract farming evokes sharp responses agreement between processing and/or and scepticism and is seen essentially as

Box 6.2: Cultivating communities India is witnessing sporadic local initiatives people who benefit. A growing number of One of the key pillars of Gorus strategy where consumers buy directly from produ- CSAs have developed in Europe and North is ensuring that what the farmers grow is a cers. Around the world, small-scale farmers America, particularly since the early 1990s. good match with the demand. At the start of are diversifying their production and income One such example in India is the Gomukh every growing season, Gorus staff and all as a response to the changes in the world’s Centre for Rural Sustainability (GORUS), the farmers get together to estimate the likely food systems. Community Supported Agri- located about 40 km from Pune. Gorus demand for vegetables in the season based culture (CSA) is a marketing approach launched a novel initiative of providing organic on the experience of the earlier year and the that encourages local, environmentally vegetables to consumers at their doorstep. It is change in the number of consumers. Once sustainable food production. The CSA con- an innovative idea that marries convenience the quantities are estimated, they estimate cept originated in the 1960s in Switzerland for consumers, assured market for farmers the land required to grow the vegetables and Japan, where consumers interested in and a quest for sustainable farming. and other produce. This is matched against ‘safe’ food joined up with farmers who were In operation now for more than two the total land that the farmers have and the seeking stable markets for their crops. In years, GORUS has a network of about quantities are allotted to each farmer on a Japan, CSA is called teikei, which translates 50 committed families as consumers and pro rata basis. Thus, at the beginning of each as ‘putting the farmer’s face on food’. CSA 25 farmers as suppliers, and is growing season, the farmer is allotted the area of each is a partnership of mutual commitment steadily. Every Saturday, consumers receive vegetable that he or she is to grow. between a farm (producer) and a community an email form that has to be filled out and sent While cultivating communities will be of supporters (consumers). The partnership by Tuesday. The form has a list of vegetables small in numbers, the model is easily replicable provides a direct economic and social link along with their prices. On Wednesday, the to other regions. Kavita Mukhi’s initiated a between the production and consumption orders are delivered at home. All the produce Farmers’ Market that connects Mumbai with of food. CSA can take many forms, but is 100 per cent organic. organic farmers across Maharashtra. Markets the essence is that CSA members make a The initiative began as a small in-house are held on a Sunday giving consumers an commitment to the producer to support pilot project of the Gomukh Trust that opportunity to know more about the produce, the farm throughout the growing season, works on issues of sustainable agricultural where it comes from and how it benefits by purchasing a share of the season’s harvest development for marginal farmers in the them and the farmers. Such efforts need a upfront. The farm provides, to the best of its Kolwan valley near Pune. They started organic strong local champion—an individual or an ability, a supply of seasonal fresh produce cultivation of vegetables on one of their own organization. The convenience and promise throughout the growing season. In return, demonstration farms and established a of fresh, quality produce would always ensure the farm is guaranteed a reliable market for marketing relationship with 5–6 families. In a regular market for farmers. a diverse selection of crops, and the farmer about six months, this experiment attracted Source: http://www.indiatogether.org/2010/ receives a guaranteed yearly income. One the attention of many neighbouring farmers, feb/agr-gorus.htm; http://www.leisa. of the key differences between CSA and the who expressed interest in joining it. Soon, info/index.php?url=getblob.php&o_ industrial food system is that the risks of more families also joined the community id=204076&a_id=211&a_seq=0 production are shared equally between the supporting the farmers. Agriculture Marketing 97

Box 6.3: Suminter Organics: A case study of contract farming Suminter Organics adopted an integrated commercializing their products through a approach to procuring, monitoring and selling fair and transparent process. Suminter India organic produce. The business model is built on Organics has built lasting relationships with its the premise that by offering organic certifica- current customer base in the Netherlands and tion and training to Indian farmers, the sponsor the United States. can ensure a supply chain of quality organic To support their activities abroad, the goods, pay the farmers a premium over market company created a division in the Netherlands prices, and thereby make agriculture a viable that meets the growing demand through the option for these farmers. distribution of their produce. Through this To make the process of procuring and branch, Suminter has captured the entire value marketing as efficient, transparent and fair chain, from the farm to the market. Their as possible, each step has been integrated into Netherlands division handles warehousing their business model. and marketing, which eliminates third-party Suminter contracts with over 1,000 farmers, exporters and traders. It is this type of integrated buying back all of their products and provid- supply chain that differentiates Suminter from ing the necessary farming inputs for organic its competitors. They have even come up with cultivation. Suminter then provides the for- an internal solution to the biggest problem ward linkages that farmers require to bring facing organic farmers—the prevention of pest their products to market. Through this and bacteria attacks. Suminter has an exclusive process, farmers incur substantially lower joint venture with the Dutch company Eco2 costs and also receive a 10 per cent premium BV, which has a well-respected technology for over market prices. In this way, Suminter chemical-free fumigation. India Organics bridges the gap between the Source: Consolidated from World Resources company’s suppliers and the global market, Institute Archives (2007), NextBillion.net (2007) and www.suminterindiaorganics.com. an agreement between unequal parties, can contribute to both increased income namely: for farmers and higher profitability for sponsors and reduced risk and uncertainty l Unorganized small-scale farmers, with for both parties when efficiently organized little bargaining power and limited and managed.’ resources to raise productivity and com- ‘The advantages and disadvantages of pete commercially. contract farming vary according to the l Powerful agribusiness, offering pro- physical, social and market environments in duction and supply contracts which— which sponsors and growers operate.’ The in exchange for inputs and technical FAO guide says: advice—allows them to exploit cheap labour and transfer most risks to The prime advantage for farmers is that the producers. sponsor will normally undertake to purchase all produce grown, within specified quality A Food and Agriculture Organization and quantity parameters. Contracts can provide farmers with access to a wide range of (FAO) guide released by the Agriculture managerial, technical and extension services and Consumer Protection Department, that otherwise may be unobtainable. Farmers 2001, argues that well-managed contract can also use the contract agreement as col- farming has proven effective in linking the lateral to arrange credit with a commercial small farm sector to sources of extension bank in order to fund inputs. advice, mechanization, seeds, fertilizer and credit, and to guaranteed and profitable Small-scale farmers are frequently reluc- markets for produce. ‘It is an approach that tant to adopt new technologies because of 98 Re s h m a An a n d

the possible risks and costs involved. In 6.7.3. Increasing application contract farming, private agribusiness will of Information and usually offer technology more effectively Communication Technology than government agricultural extension (ICT) creating more transparent markets for services, because it has a direct economic farmers interest in improving farmers’ production. Information technologies can revolution- Skills the farmer learns through contract ize the way farmers update themselves on farming may include record keeping, the information related to agri-inputs, credit, efficient use of farm resources, improved markets, weather, extension advisory and methods of applying chemicals and fertil- other e-governance services. E-choupal, izers and knowledge of the importance Warana, Grameeen Sanchar Society (Grasso), of quality and of the demands of export Reuters Market Light, AGMARKNET and markets. Farmers also gain experience in Lifelines are a few successful examples. The carrying out field activities according to a Department for agriculture has developed strict timetable, and they often apply tech- four portals and 40 web sites covering niques introduced by management to other both Headquarters and its Field Offices/ cash and subsistence crops. Directorates to make information and ser- Nevertheless, both parties in contract vices accessible to the farming community. farming must accept a degree of risk. For These portals are DACNET (http://dacnet. farmers, there is the uncertainty involved nic.in), AGMARKNET (http://agmarknet. in growing new, unfamiliar crops and nic.in), DAC (http://agricoop.nic.in) and producing for markets that might not always INTRADAC (http://intradac.nic.in). live up to their expectations—or to their AGMARKNET Portal (http://agmarknet. sponsors’ forecasts. On the sponsor’s side, nic.in) provides information on (a) prices risks can arise when dealing with farmers and arrivals of agricultural commodities at who, in turn, may have negotiated use of various mandis in eight Indian languages; the land with traditional owners. Before (b) trend analysis of prices and arrivals at entering into contracts, the sponsor needs market/district/state level and (c) grading, to ensure that access to land is secured, at packaging, standards, sanitary requirements least for the term of the agreement. ‘The and marketing charges. Over 300 commod- contract farming system should be seen ities and 2,000 varieties from 1,500 markets as a partnership between agribusiness and are being covered. In all, 3,700 markets are farmers,’ the FAO guide concludes: proposed to be covered during the Eleventh Plan. More commodities/varieties would To be successful it requires a long-term com- be covered on a need basis. Information on mitment from both parties. Exploitative ar- prices and arrivals is updated on a daily basis. rangements by managers are likely to have Conversion of this portal into other regional only a limited duration and can jeopardize languages is in progress. A Geographical In- agribusiness investments. Similarly, farmers formation Systems (GIS) based National need to consider that honouring contractual Agricultural Market Atlas for providing arrangements is likely to be to their long-term information on areas of production, move- benefit.1 ment, storage market/consumption centres is also under development. Mobile companies are also targeting rural areas with specific products and services. 1 A Food and Agriculture Organization (FAO) guide released by the Agriculture and Consumer Protection The Nokia Life Tools project is one such Department, 2001. Available at http://www.fao.org/ag/ example along with the Airtel and Reuters magazine/0107sp.htm Market Light project, both of which are Agriculture Marketing 99 marketing commodity-specific informa- models include joint ventures, build- tion packages to farmers. operate-transfer (BOT) and build-own- Amongst the promoters of ICT initi- operate-transfer (BOOT). atives in agri-marketing are public sec- Key successful PPPs include Safal tor, not-for-profit sector and private sector market in Karnataka for modernization companies who are targeting the major of wholesale markets. ITC’s e-Chaupal, stakeholder, that is, the farmer, with their Haryali Kisan Bazaar, Mahindra Subh unique information delivery systems. Labh, Cargil Farmgate Business and Tata However, the success of these models de- Kisan Sansar are all initiatives of market- pends on how effectively and efficiently ing distribution in the PPP format. Besides, farmers are able to make use of these commodity exchanges and futures mar- technologies. kets have come up in the form of National Commodity and Derivative Exchange Ltd 6.7.4. Growing number of Public (NCDEX) and Multi-Commodity Exchange Private Partnerships (PPPs) Limited (MCX). Table 6.4 shown the sourc- There are many examples of success- ing operations of some key companies. ful PPPs. It is a widely held belief now that with increasing policy changes 6.7.5. Increasing private equity aimed at private sector participation in interest in agribusinesses agri-marketing, PPPs will be a dominant Indian agro-based companies are now model in the coming years. Major PPP attracting a host of private equity players,

Table 6.4: Agri-produce sourcing operations of key companies (contract farming, direct purchase and ppp models)

Company States Products ITC Ltd Uttar Pradesh Wheat, corn Madhya Pradesh Soya Karnataka Coffee Andhra Pradesh Aqua-products Mahindra Shubh Labh Tamil Nadu, Andhra Pradesh, Karnataka, Paddy Rajasthan Tata Kisan Sansar Madhya Pradesh Wheat Haryana Basmati rice Karnataka Fruits (pomegranate, papaya, sapota and guava) Maharashtra Fresh vegetables Uttar Pradesh, Punjab Paddy and vegetable seeds EID Parry Tamil Nadu Sugar, banana, cashew, tapioca and groundnut Pepsi Foods Punjab Potato, tomato, groundnut, chilli and paddy Hindustan Lever Limited Madhya Pradesh Wheat, spices Punjab, Haryana Tomato Punjab Basmati Field Fresh Foods Punjab, Jammu and Kashmir, Himachal Pradesh, Fresh fruits and vegetables Haryana, Western Uttar Pradesh, Uttarakhand Nijjer Agro Foods Ltd Punjab Fruits and vegetables Maxworth Fruits Andhra Pradesh, Karnataka and Tamil Nadu Fruits Satluj Agricultural Pvt Ltd Punjab Field fresh vegetables Reliance (Anil Ambani Group) Punjab Fruits and vegetables Jamnagar Farms Pvt Ltd Punjab and Gujarat Horticultural crops (Mukesh Ambani Group) Reitzel India Pvt Ltd Karnataka Gherkins Appachi Cotton Company Tamil Nadu Cotton Ugar Sugar Works Ltd Karnataka Barley Source: Chakraborty (2009). 100 Re s h m a An a n d

Box 6.4: Prominent private equity in agribusinesses

Some prominent recent investments include: l More recently, the Carlyle Group a global private equity investment firm, based in l 2008: $50 million investment by Blackstone Washington, will be investing ` 11 billion in Hyderabad-based Nuziveedu seeds, which in Tirumala Milk Products headquar- is one of the largest hybrid seeds companies tered in Guntur district of Andhra Pradesh in India. through the Carlyle Asia Growth Partners IV l Morgan Stanley’s investment in castor oil (CAGP IV). The ` 60 billion company was maker Biotor Industries, through its Asia started by four rural entrepreneurs nearly fund. 10 years ago. l $5 million was invested by ePlanet Ventures in Chennai-based Sree Ramcides, a 36-year- Source: http://indiamicrofinance.com/ old family-run agro-solutions company. indian-agriculture-offers-spring-of-hope- l Nexus India (a subsidiary of Nexus Ven- for-private-equity-firms.html; http:// ture Partners) invested ` 1 billion in Sohan indiamicrofinance.com/agricultural- Lal Commodity Management, an agri- commodity-logistics-firm-inr-10-crore- commodity logistics and procurement com- investment-nexus-india.html; http://india pany based in Delhi. microfinance.com/carlyle-group-invest-rs- l In 2008, Nexus India had invested between 110-crore-tirumala-milk-products.html ` 1 and 2 billion in Suminter India Organics, an organic farming firm.

who sense potential on account of strong mandis. However, direct sourcing from demand and the sector’s insulation from the the farm-gate ensures minimal wast- credit-induced economic crisis in the West. age and lower cost. This would enable Within the agribusiness, private equity retailers to have uniform quality of firms are exploring various areas including produce of desired variety. agri-biotech and seeds, food processing, While organized retail (especially organic farming, crop protection, integrated food retailing) in India is still in an cold chain management, and logistics and evolutionary phase, there is immense distribution (see Box 6.4). room for improving productivity (and reducing cost) by reducing the 6.7.6. Organized retail and food intermediaries between the farm and the processing industry creating fork. It was aptly noted that very little has demand for agri-produce been done in India to establish a direct Agri-marketing reforms, when imple- procurement mechanism by leading mented, could have significant implica- tions on food processors and retailers. retailers. Even today, major retailers Organized food processing is under 10 per continue to procure from mandis rather cent in India and organized retail penetration than setting up their own supply chains in Food and Grocery is a meagre <1 per cent to procure directly from farmers, which (Table 6.5). These are opportunities that could help improve productivity through could emerge significantly over the next better cold storage, warehousing, etc. 10 years. Lack of policy stability with regard to Foreign Direct Investment (FDI) in

l Organized Retail: Organized retail could retailing has inhibited entry of foreign reduce the end-price for consumers (and retailers and their best practices. With increase its value add) by establishing the the government indicating a change farm to fork supply chain. Currently, on the FDI policy in retail, there would most retailers procure agri-produce be significant ramifications on the (especially perishable produce) from rationalization of food supply chain. Agriculture Marketing 101

Table 6.5: Indian food industry: key statistics

Particulars 2002–03 2006–07 2010–11* 2014–15* Food industry size (US$ billion) 175 200 250 300 Food processing industry size (US$ billion) 70 85 110 150 Share of food processing in total food industry (%) 40 43 44 50 Size of organized food processing sector (US$ billion) 13 23 37 60 Organized sector in food processing industry (%) 19 27 36 40 Organized food processing in food industry 7.6 11.6 15.8 20 Source: KSA Technopak, Report for Global Food Marketplace 2008 in partnership with Ministry of Food Processing Industries and FICCI. Note: *Projected. l Food Processors: The level of food sugar production and handloom. But in the processing in India is lower than most core farming activities, there has been no suc- developed and developing countries. cessful cooperative movement in the coun- The segment is highly fragmented try. This is despite sound business reasons and dominated by the unorganized existing for joint or cooperative farming. sector. Improvement in agri-marketing Small holdings necessarily mean low pro- infrastructure would benefit food duction and low economies of scale, unless processors through better pricing, there is heavy investment in technology. stable supply of raw materials and This problem can be offset when small customized produce. The key sectors landowners join plots and work together. that show promising growth prospects Further, joint management of large plots include Fruits and Vegetables, Meat means distribution of risk—a crucial factor and Poultry, Dairy and Packaged in a business heavily dependent on uncertain Foods. Key players include Nestlé (milk monsoon (see Boxes 6.5 and 6.6). Cooperative procurement), Marico (safflower and farming has worked extremely well in highly copra procurement) and ITC (input developed market economies. Between material procurement through Choupal 60 and 75 per cent of the market share in Sagar). grain trade is held by agricultural cooper- atives in Denmark, France, Ireland, Austria 6.7.7. Renewal of local enterprise and Sweden. Even in the United States, through cooperatives and agricultural cooperatives enjoy a 38 per cent organizations of farmers share of the market in trading grain alone. Cooperatives have had success in fields like Cooperative farming is conceived and dairy, agricultural credit, sale of fertilizer, promoted as a farmer controlled setup,

Box 6.5: Cooperative paddy cultivation in Thrissur, Kerala One of India’s success stories is a cooperative of the work, from cultivation, to pumping out of 2,400 small farmers in Thrissur, Kerala, who water from the paddy fields and harvesting are carrying out organic paddy cultivation with the crop. AFCB distributed ` 15 million to support from the Adat Farmers Cooperative the farmers as interest-free loans of ` 6,000 Bank (AFCB). Members pool in their hold- each. While total cost of cultivation in 2006 ings, jointly cultivate the land using improved was ` 21 million, expected gross returns were practices, and receive wages for their daily ` 51 million. The remaining ` 30 million labour. When the produce is sold, at the end of was to be distributed among the farmers, the season, they receive a dividend in propor- proportionate to their landholdings. tion to the area of land contributed by them, Source: Consolidated from published reports and a share of income from the produce propor- in India Microfinance Business News 2009–10; tionate to the labour they have contributed. and http://www.thehindubusinessline. The bank set up nine farmers’ committees com/2006/05/08/stories/2006050801830300. to undertake responsibility for various aspects htm 102 Re s h m a An a n d

Box: 6.6: Dharmapuri Precision Farmers Agro Services: A local farmer enterprise model Enterprise models that deliver a ‘package’ sell these key inputs. Of the 300 farmers how, farmers should band into a company. of solutions for the farmer including who were part of the pilot project, 166 In 2007–08, its first full year, DPFAS inputs, water and market linkages will bought the idea. They formed a public recorded sales of ` 15 million—on capital see quick and replicable adoption. Case limited company, Dharmapuri Precision employed of ` 1.6 million. Such an operation in point: Dharmapuri Precision Farmers Farmers Agro Services (DPFAS). Each farmer does not need much working capital, as Agro Services. subscribed ` 10,000 to the company’s equity, farmers tend to pay in cash, while companies Dharmapuri, about 120 km south of and became a shareholder. The company give goods on credit. Turnover of DPFAS Bangalore, is a water-deficient district. collected ` 1.66 million as equity capital. rose to ` 35 million in 2008–09, of which, It averages an annual rainfall of 90 cm— From that sum, DPFAS set up a retail outlet ` 15 million came from the sale and instal- about 25 per cent below the national in Dharmapuri. The 400 sq. ft outlet procures lation of drip-irrigation kits (zero in the average. Hence, farmers here used to sow agricultural goods and inputs—fertilizers, first year). only one crop a year, often keeping vast pesticides, seeds, equipment—directly from In each of those two years, the company tracts of their land barren. companies. This ensures quality. Farmers declared a dividend of 40 per cent. So, each This drew a team of three professors also got better prices. Unlike local dealers, shareholder got ` 4,000 each year on an from Tamil Nadu Agricultural University who charged maximum retail price (MRP), investment of ` 10,000. Yet, even after a high (TNAU), led by Professor E. Vadivel, the retail outlet sold goods at a nominal payout, DPFAS has cash to spare. It is putting to the district in 2006. They spent two mark-up to cost price. Farmers buy goods at this cash to good use to invest in similar years with the farmers, and introduced 3–25 per cent below MRP, improving their companies promoted by farmers in other them to precision farming—a more margins further. districts. DPFAS wants to buy 20 per cent of healthy and efficient way of cultivation. These 166 farmers of Dharmapuri district the equity of these companies. In Erode, it will At the heart of precision farming is drip are reaping it rich for two reasons. One, they invest ` 0.1 million in a company planned irrigation where, instead of flooding the embraced advanced farming practices. Two, by 40 farmers, with an initial contribution field over-ground, a mixture of water in a move whose impact is still playing out, of ` 10,000 each. Other districts in the pipe- and soluble bio-fertilizers is fed through they came together to form a company. line include Madurai, Trichy, Salem and a network of pipes below the ground. Ramanathapuram. Three hundred farmers were identified for So, they embraced business structures and a pilot project in precision farming, over a business practices typical of a registered Overall, DPFAS farmers have become period of three years. The state gave them company—equity capital, shareholders, brand ambassadors of precision farming a cash subsidy of 80–100 per cent to buy management, board of directors, financial and business structures in Tamil Nadu. The drip-irrigation kits for 1 hectare of their reporting and audit of accounts, among State Government has extended the precision land holding. A majority of them saw their other things. farming project to all districts, with a 50 per yields rise 50–200 per cent in the first year The arrangement is functioning well. cent subsidy on drip-irrigation kits. About itself. But one issue troubled the farmers. They have eliminated middlemen in the 12,000 farmers have received training and The fertilizers and pesticides they sourced input side and are working on doing the implemented precision farming techniques from local dealers were often spurious same on the output side. Crop yields have so far. and inferior. Vadivel and team examined risen 50–200 per cent. Several farmers who Source: India Microfinance Business News the inputs, and agreed with the reading of were mired in debt have since become debt 2009–10, available at http://indiamicrofinance. the farmers. Their solution: stop buying free. And for each of the last two years, they com/the-company-of-farmers-should- from them. have earned a super normal 40 per cent farmers-corporatize.html; http://business. Vadivel advised the farmers to come return on their investment in the company. outlookindia.com/article/aspx?261658 together to float a company that would Dharmapuri is a revelatory tale of why, and

capable of providing key inputs and ser- 6.8. Conclusion vices for the production and marketing In conclusion, agricultural marketing in of the products at harvest time on behalf of India can change its record with the right the poor and powerless farmers. Indirect mix of intelligent regulation, investment contracting through farmer cooperatives in infrastructure, streamlining of credit may be an effective mechanism to counter and credit institutions, encouragement of any potential exploitation that a contract private sector involvement with adequate farming agreement may have. checks and balances and encouragement Agriculture Marketing 103 of local enterprise. This moderate and Confederation of Indian Industries (CII). (2009). deliberate approach would address both Background Paper, Agriculture Marketing Summit December 2009, New Delhi, CII. supply side and demand side actors and will Department of Agriculture and Cooperation. deliver results and value the farmer and the (2010). Annual Report 2009–2010. Ministry of consumer alike. Agriculture, GoI. Available at http://agricoop.nic. in/AnnualRepor2009–10/AR.pdf NextBillion.net. (2007). ‘Rising Ventures: Suminter References Makes “Satva” a Sustainable Business Pro- position’. Available at www.nextbillion.net/ Chakraborty, Debashis. (2009). ‘Contract Farming in blog/2007/06/03rising-ventures-suminter-makes- India: Unique Solution to Multilayer Agricultural satva-a-sustainable-business-prop Problems?’ Review of Market Integration, 1(1): World Resources Institute Archives. (2007). ‘The WRI 83–102. Weekly Roundup’, 5 June 2007. Available at http:// archive.wri.org/page.cfm?id=4455&z=? 104 Re s h m a An a n d Climate Change and Agriculture—Challenges and Opportunities in India

Sh a i l e s h Na g a r * a n d Ja y e s h Bh a t i a **

7.1. Introduction would continue to be important in India’s economy in the years to come. This chapter reviews available literature After independence, Indian agriculture Chapter on potential effects of climate change adopted modern methods and area under on agriculture in India and discusses 7 irrigation increased at a fast pace. But, a vulnerability of agriculture, especially dry- significant proportion of agriculture land land agriculture to climate induced changes. is still dependent on rainfall, and food The chapter then discusses the challenges production is considerably dependent on and opportunities for adaptation in the dryland agriculture. Although food grain agriculture sector due to climate change. production in India has increased from A programmatic intervention has been 50 million tons in 1951 to 212 million tons used as an example to detail the opportunities in 2002 with the mean cereal productiv- available. ity increasing from 500 kg/ha to almost Agriculture contributes around 20 per 1,800 kg/ha, lack of alternative liveli- cent to the Gross Domestic Product (GDP) hoods and widespread poverty continue in India. Even though the share of agriculture to threaten livelihood security of small and in the GDP has been declining over the last marginal farmers in the dryland agricul- 50 years, the agriculture sector in India is still crucial for rural livelihoods as it not ture region (MoEF, 2004). Rainfall quantity only helps feed the growing population and its distribution vary considerably both of the country but also employs a large temporally and spatially across the country. labour force. Agriculture sector employs an Extreme climatic events like droughts and estimated 56.4 per cent of the total workforce floods also affect agriculture production and supports 600 million people directly or frequently in India. indirectly (GoI, 2007a). The contribution of agriculture to the livelihoods of a vast 7.2. Dryland areas in India majority in India cannot be overstated. Drylands constitute regions where agriculture It is expected that the agriculture sector is predominantly dependent on rainfall. It consists of areas with rainfall below critical * Consultant, NR Management Consultants India minimum level. According to this definition, Pvt. Ltd. **Director, NR Management Consultants India it is estimated that 177 districts constituting Pvt. Ltd. 42 per cent of districts in India covering 106 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

56 per cent of the total geographical area agriculture are also from the dry districts. fall in the category of drylands (Shah et al., This has been shown in Table 7.2. 1998). Madhya Pradesh, Rajasthan and Maharashtra together account for nearly 7.3. Dimensions of climate 50 per cent of the dry districts and 52 per change in India cent of dry areas in India. Dryland areas are significant in terms of Rainfall and temperature are two key cli- agriculture as 53 per cent of India’s gross matic factors that are predicted to be affected sown area is in dryland condition, the due to rise of Green House Gases (GHGs) dryland crops account for 48 per cent of in atmosphere. Consequent to that are the the area under food crops and 68 per changes in availability of and access to water. cent of the area under non-food crops. This section, in brief, discusses the expected An estimation of the area covered under change vis-à-vis these two factors and the different crops in drylands in India is consequences of these changes on water given in the Table 7.1. availability. Table 7.1 illustrates the importance of dryland areas in the country’s food security. 7.3.1. Temperature Dryland districts account for almost 80 per One of the main impacts of climate change cent of the output of coarse cereals, nearly is expected to be on temperature. Climate 50 per cent of maize, 65 per cent of gram studies project that in the scenario of and tur, 81 per cent of groundnut and 88 per doubling of carbon dioxide concentra- cent of soyabean (ibid.). tion, India’s climate could become warmer Dryland areas are important vis-à-vis by 2.33°C to 4.78°C (Longern, 1998 cited rural livelihoods in India. Around 50 per in Gupta, 2005). Studies suggest that with cent of the total rural workforce in India respect to 1980, there may be an increase is located in the dry districts and about in annual temperatures of 0.7°C to 1.0°C half of the rural main workers engaged in by 2040 (Lal et al., 1995 cited in Gupta, 2005). A detailed assessment by these studies Table 7.1: Share of drylands in All-India cropped suggests that maximum temperature will area, 1989–90 increase by 2°C to 4°C during the 2050s in Dryland area under the region south of 25°N (south of cities Crop/Crop group each crop (%) such as Udaipur, Khajuraho and Varanasi). Jowar 92 In the northern region, temperature increase Bajra 95 Maize 57 may exceed 4°C. Rise in temperature not Ragi 69 only directly affects life, but is also one of Barley 39 the causal factors for extreme events which Total cereals 45 Gram 76 impact lives and livelihoods at a large scale. Tur 88 For example, in 1998, around 3,000 people Total pulses 77 died in India due to heat which was worst Total food grains 51 Total food crops 48 in 50 years and in the next year, a tropical Groundnut 79 Sesamum 79 Table 7.2: Share of dryland main workers in Rapeseed 31 total workforce, All-India, 1991 Linseed 80 Soyabean 78 Share of dryland main workers Share Total oilseeds 66 Cotton 63 In agricultural labour 48% Tobacco 50 In cultivation 49% Total non-food crops 68 In total agricultural sector 49% Total cropped area 53 In total workforce 47% Source: Shah et al. (1998). Source: Shah et al. (1998). Climate Change and Agriculture 107 cyclone in Orissa left 10,000 dead. The fre- regions will experience drastically decreased quency of such extreme events is expected to precipitation, which will further deterior- increase with changes in temperature. ate drought conditions (Gosain and Rao, 2003 cited in Gupta, 2005). Lower rainfall 7.3.2. Rainfall and increased temperature causing more Another important aspect of climate change evaporation would further reduce the avail- in India is predicted to be on monsoons. ability of freshwater in the watersheds, soil Predictions are based on studies that model moisture would decline and hydrological numerous variables to assess changes in zones would become more arid. monsoon pattern. Although these studies River systems across the country will be differ on the scale of variation, it is certain affected by the climate change and chang- that the mean monsoon intensity and vari- ing rainfall pattern. Studies conducted ability is expected to increase (Ashrit et al., by The Energy Research Institute (TERI) 2001; Chung et al., 2006; Kumar et al., 2006; on climate change effects in India suggest and Kumar et al., 2003 cited in Panda, 2009). that by the year 2050, the average annual These studies project that major parts of runoff in the river Brahmaputra will dec- the country would experience an overall line by 14 per cent and that Himalayan decline in the number of rainy days. At river systems draining into the Gangetic a disaggregated level, it is predicted that basin is gradually dying out (Tangri, 2003 western and central parts would experience cited in Gupta, 2005). On the other hand, decline in more than 15 rainy days, whereas intense flooding is projected in Mahanadi, near the foothills of Himalayas and in Brahmani, Godavari and Cauvery basins Northeast India, the number of rainy days due to increased precipitation (Gosain and may increase by 5 to 10 days. These studies Rao, 2003 cited in Gupta, 2005). also project a 20 per cent rise in all-India summer monsoon rainfall and further rise in total rainfall over all the states, except 7.4. Impacts of climate Punjab, Rajasthan and Tamil Nadu, which change on agriculture show a slight decrease. The previous sections have discussed the importance of dryland agriculture in food 7.3.3. Water security and livelihoods of the rural people Consequent to the probable change in in India; and the phenomenon of climate monsoon pattern, as a result of climate change and its impact in India. This section change, water availability and access will would attempt at understanding the impact be impacted. Temporal and spatial avail- of climate change on agriculture in India. ability and access to water is already highly The information given in the section per- skewed in India. Economic progress, in- tains to impact on overall agriculture. Dry- creased area under agriculture and increas- land agriculture can be considered as more ing population, have led to exponential vulnerable due to its complete dependence increase in the demand for water. According on weather. to the Ministry of Water Resources the Climatic factors affecting agriculture in- amount of water available per person in clude temperature, rainfall, carbon dioxide India is decreasing steadily—from 3,450 cm concentration, changes in soil moisture, in 1951 to 1,250 cm in 1999 and is expected etc. Changes in these factors would have to further decline to 760 cm per person effect on agriculture. As stated earlier, a in 2050 (Shiva, 2002). Western parts of large area in India is under dryland con- Rajasthan and the Kutch region in Gujarat ditions and agriculture in these regions already experiences chronic drought situ- is entirely dependent on climatic factors. ation. Sabarmati and Luni basins in these Consequently, the effect of climate change 108 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

would have most direct and immediate Table 7.3 summarizes findings of vari- impact on agriculture in such areas (World ous studies on climate change impact on Bank, 2009). agriculture in India. At the global level, it is expected that The Inter-governmental Panel on Cli- cold temperate regions of the north may mate Change (IPCC) reports project that have some short-term gains from the ris- the productivity of different crops will be ing temperature due to low initial values affected and rice and wheat yield could de- of temperature. Whereas the south, where cline considerably due to climatic changes most of the natural resources dependent (IPCC, 2001a; IPCC, 2007). The economic developing countries are located, would loss from such loss of productivity is esti- be negatively affected as the temperatures mated to range between 9 per cent and there are already reaching limits of crop 25 per cent (net revenue at the farm level) for tolerance. a temperature rise of 2°C to 3.5°C (Kumar It is not only overall temperature that will and Parikh, 1998a). impact agriculture but seasonal variations A more micro assessment suggests that in temperature may also be responsible for the coastal regions of Gujarat, Maharashtra some indirect impact on agriculture pro- and Karnataka would be most negatively duction. The initial values of climatic factors affected in terms of agriculture, whereas are important for assessment of impact small losses may also occur in Punjab, of future climate change events. Warmer Haryana and western Uttar Pradesh (Sanghi spring and summer temperatures in India et al., 1998). Various simulations using are expected to harm agriculture produc- dynamic crop models indicate a decrease tion in India as the temperatures are already in yield of crops as temperature increases in quite high. A rise in winter temperature is different parts of India, while there may be expected to affect farm income as low winter a small increase in the irrigated rice yields. temperatures help control pests. However, wheat yields in central India are

Table 7.3: Climate change and agriculture in India: Findings from various studies

Author Findings IPCC (2007) • Mean sea level rise of 0.18 m to 0.59 m by 2090 relative to the 1980–99 level • Increased flooding of low-lying areas and loss of crop yields from inundation and salinization of fresh water sources • Increase in precipitation events Gosain et al. (2006) • Water shortages throughout Kutch, Saurashtra, Mahi, Pennar, Sabarmati and Tapi MoEF (2004) • Irrigated rice yields may have a small gain • Wheat yields in central India are likely to suffer drop in crop yield up to 2% in pessimistic* scenario, but there is also a possibility that yields may increase by 6% if the global change is optimistic. • Some decrease in Sorghum yield in western India only if temperature increase is beyond the projected scenarios Kumar and Parikh (1998a and 1998b) • Rice yields will fall by 15–25% and wheat yields by 30–35% • 2°C warming would decrease net income by about 8% • 3.5°C rise would reduce income by 20–26% Sanghi et al. (1998) • A 2°C warming would reduce average net income by only about 3–6% • A 3.5°C warming would reduce income by 3–8% Garg and Hassan (2007) • Major river basins in the country will face a water deficit by 2050 Rosenzweig and Parry (1994) • Grain yields would fall 25–40% if temperature rose by 4°C Guiteras (2007) • Projected climate change over the period 2010–39 reduces major crop yields by 4.5–9%. • The long-run (2070–99) impact reduces yields by 25% or more in the absence of long-run adaptation Source: Authors.

*‘Pessimistic’ scenario refers to high increase in temperature and low increase in CO2, while ‘optimistic’ scenario refers to large increase in CO2 and a low change in temperature. Climate Change and Agriculture 109 likely to suffer reduction in crop yield up to one-half in future. This reduction does not 2 per cent (MoEF, 2004). Mendelsohn and take into account change in technology Dinar (1999) review various studies and sug- and it is estimated that further reduc- gest that there will be regional variation in tion according to the report may be pos- the effect of climate change on agriculture sible because of improved technology in in India. Warming would affect the western terms of improved irrigation, better seed coastal districts most heavily, whereas dis- varieties, etc. tricts in several eastern states along the coast All the studies quoted before indicated are expected to benefit. The desert and marg- that there would be a significant reduction inally dry areas would not be very sensitive in agricultural yields in India because of to warming as the productivity in these areas climate change effects. Areas with higher is already so low that additional warming poverty and high dependence on agricul- will not harm further. ture are more vulnerable in comparison to Agriculture will not only be affected others. It is expected that the major impact directly by the climatic factors mentioned will be on the dryland crops (Gupta, 2005). above but also from the indirect effects of Damage to livelihoods would be severe climate change in terms of increased fre- unless rapid and complete adaptation quency of droughts, floods and cyclones. measures are adopted. Also, the inundation and salinization of large amount of coastal land due to sea- 7.6. Impacts of agriculture on level rise is going to affect agriculture pro- climate change duction in India. Another indirect effect on agriculture would be through changes in It is not only climate change that affects irrigation needs due to variability in rainfall agriculture, but agriculture also contributes and temperature (causing evaporation). towards climate change through produc- tion of GHGs. In India, agriculture pro- cesses contribute to about 17 per cent of 7.5. Adaptation to ameliorate the GHG emissions. These are primarily climate change impact due to methane emission from enteric fer- It is to be noted that the afore-mentioned mentation in ruminant animals and paddy studies do not factor adaptation by farm-ers cultivation, and nitrous oxides from appli- while calculating the net impact of climate cation of manures and fertilizers to the change on agriculture in India. Broadly, soils (MoEF, 2010). According to Food and adaptation is understood ‘as a stress response Agriculture Organization (FAO) reports, in light of access to resources and the abilities the emission from agriculture sector is of people to cope’ (Downing, 1991; Adger expected to rise across the world in the and Kelly, 1999; and Adger, 2000 cited in future due to following factors: Smit and Wandel, 2006, p. 284). Although Kumar and Parikh (1998a) l More land being brought under agri- suggest that even with adaptation of crop- culture from land uses like forests ping patterns and inputs by farmers in l Increased energy demand because of response to climate change, losses would higher use of irrigation and fertilizer remain significant, Mendelsohn and Dinar l Changes in the pattern of land use (1999) estimated that the adaptation by induced by growing demand for meat individual farmers may be responsible for l Increased GHG emission from enteric reducing potential climate change damages fermentation as well as from manure be- in agriculture by between one-fourth and cause of increased production of meat 110 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

In India, agriculture sector is the third 7.7. Impact of livestock largest emitter of GHGs after Energy and rearing on climate Industrial Processes sectors. Figure 7.1 pro- change vides an understanding of the share of dif- ferent sectors in overall emission of GHGs Livestock rearing is an integral part of agri- culture sector in India. This is much more in in India. Carbon dioxide (CO2) emissions dryland areas where cattle rearing provides from agriculture are considered to be in- economic stability to farmers faced with significant due to utilization of CO in 2 uncertainties in farm production. Cattle photosynthesis process. However, methane and small ruminants are the major source of (CH ) emissions are high on the account of 4 methane emissions in India (MoEF, 2004). large number of livestock in India. In India, methane produced from livestock In absolute terms, total national CH 4 is highest amongst all agricultural sources. emission in the year 2007 was 20.56 mil- Decomposition of organic animal waste is lion tons of CO equivalent. Of this, the 2 another source of methane production, the share of agriculture sector was 67 per amount of which depends on how waste cent. Emission due to enteric fermentation is managed. In India, only 5–10 per cent (10.1 million tons of CO2 equivalent) and of cattle and 10–20 per cent of buffaloes paddy cultivation (3.33 million tons of are of improved breed. The rest are low- CO2 equivalent) were the highest sources of producing, indigenous breeds. CH4 emission in the agriculture sector (see While the GHG emissions are expected Figure 7.2). In paddy cultivation, methane to increase in future, there are several is produced from anaerobic decomposition possibilities through which emission from of organic material in flooded rice fields, agriculture sector could be reduced. Overall, which escapes into the atmosphere primarily a reduction in the volume or intensity of by diffusive transport through rice plants agricultural activity or an improvement in during growing season. the cropping practices and efficient use of Total Nitrous oxide (N2O) emission in inputs (assuming a stable level of output of India in 2007 was 0.2 million tones of CO2 agricultural product) reduces agriculture’s equivalent contributing 0.02 per cent of the GHG emissions. total GHG emissions. Significant emission There is an increasing need to analyze

of N2O was from the agriculture sector, agricultural practices in terms of their miti- which accounted for 61 per cent of total gation potential and encourage agricul-

N2O emission. tural practices that lower carbon emission.

Figure 7.1: Distribution of GHG emissions from India in 2007

Source: MoEF (2010). Climate Change and Agriculture 111

Figure 7.2: Sources of GHGs within agriculture sector

Source: MoEF (2010).

This can be done by providing farmers There are several policies and pro- with advice and incentives on the best land grammes of the Government of India management options as regards climate (GoI) that have a bearing on adaptation change. in the agriculture sector. The three key policies discussed in this chapter include the 7.8. Government policies National Action Plan on Climate Change, the Integrated Watershed Development affecting adaptation in Programme and the Mahatma Gandhi agriculture National Rural Employment Guarantee In this section, government’s policies related Scheme. to adaptation in agriculture sector would 7.8.1. National action plan on be discussed. The focus on adaptation is climate change intentional as the largest portion of GHG The GoI has drafted a National Action from agriculture stems not from agri- Plan for Climate Change (GoI, 2008) in culture but the allied activity of livestock which it has resolved to create eight mis- rearing (enteric fermentation). Given that sions to work on climate change and its a large population still depends on agri- probable impact in different sectors. One culture for their livelihood, the impact of these missions is National Mission for of climate change on the productivity of Sustainable Agriculture. The focus of the agriculture is a critical issue. In this context national mission is on the four aspects of (a) while mitigation actions by the govern- Dryland Agriculture (b) Risk Management ment are as yet optional,1 there is every (c) Access to Information and (d) Use of reason for the government to start looking Biotechnology. at suitable adaptation measures. 1. Dryland Agriculture: The mission 1 India has taken a leadership role among realizes the importance of drylands developing countries in espousing the principle that for food security as also for providing it is the developed countries that were primarily responsible for the climate change and therefore should livelihoods to rural poor. The plan is to bear the responsibility of mitigating its effect. The work in four strategic areas in order to developing economies should not be made to share the improve productivity of the drylands and burden of mitigation. However, this stance is getting facilitate farmers’ adaptation to climate softened now in light of the fast economic growth of India and subsequent rise in the GHG emissions in change. The areas include (a) crop im- India. provement, (b) improving methods to 112 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

conserve soil and water, (c) stakeholder l developing nutritional strategies for consultations, information sharing managing heat stress in dairy animals and capacity development of farming so as to prevent nutrient deficiencies community and (d) financial support leading to low productivity. for adopting relevant technologies to overcome climate stress. 7.8.2. Watershed development 2. Risk Management: Understanding programmes that climate change induced extreme Watershed development has become a key weather events put farmers at risk, the strategy in India for not only addressing mission gives priority to strengthen- resource degradation but also creating ing agriculture and weather insurance durable assets in the natural resource mechanisms and supports insurance domain. The key objective of watershed providers through development of development is to restore ecological bal- weather derivative modelling, facili- ance in the degraded and fragile dryland tates weather insurance through use ecosystems by developing and conserving of web technology, facilitates resource land, water and vegetative cover. In doing mapping and land-use planning at so, watershed development programmes the level of watersheds and vulner- reduce the vulnerability of the community able eco-regions. The mission aims at residing within the watershed areas towards developing and implementing region- climate. specific contingency plans based on Integrated development of natural re- vulnerability and risk scenarios. sources on watershed basis is carried out 3. Access to Information: The third focus largely by Ministry of Agriculture, Minis- of the National Mission for Sustainable try of Rural Development, National Bank Agriculture is on access to information. of Agriculture and Rural Development, The mission realizes that no need-based externally funded projects (bilateral and and interactive modes are available to multilateral) and international NGOs. Some farmers for information. The mission agencies support development of multiple plans to create regional databases on natural resources (e.g., Ministry of Rural physical resources and processes asso- Development), while other agencies also ciated with agriculture and provide support development of livelihoods (farm information in the form of block-level production system as well as off-farm data and state-level agro-climatic atlases. livelihoods) in addition to development This information would also include of natural resources but as an integral part medicinal plants, agro-forestry, livestock of the watershed programme. Up to the and agro-processing. Tenth Five Year Plan, a total of 51 million 4. Use of Biotechnology: The fourth hectares with an overall investment of aspect of Mission’s focus is the use of ` 192 billion was covered under watershed Biotechnology. The focus is towards development projects (GoI, 2007b). drought proofing, taking advantage Watershed development programmes of elevated CO2 concentrations, in- have become the most important vehi-cle creased yields and increased resistance for promoting growth in dryland areas to disease and pests. The mission plans of India. During the Eleventh Five Year to achieve this by Plan, the existing three area development l genetic engineering, programmes—Integrated Wasteland Devel- l developing crops with more efficient opment Programme, Drought Prone Area water and nitrogen use, for greater Programme and Desert Development tolerance to drought, submergence Programme—have been consolidated into or salinity and a single programme called the Integrated Climate Change and Agriculture 113

Watershed Management Programme demand-based employment to rural people (IWMP). This consolidation is for optimum who earn their daily wage through manual use of resources, sustainable outcomes labour. The National Rural Employment and integrated planning. The common Guarantee Act entitles all rural households guidelines, effective from 1 April 2008, in India to 100 days of wage employment. for Watershed Development Programme The key feature of MGNREGS is not only have been formulated and an amount of 100 days employment entitlement but also ` 18 billion allocated for IWMP during the potential to create durable assets in 2008–09. rural areas that can mitigate the risks aris- In dryland areas of India, a specific ing from a changing climate in India. Thus, programme ‘National Watershed Devel- MGNREGS has the potential for not only opment Program in Rainfed Areas’ creating assets in the common domain like (NWDPRA) is being funded by the GoI check dams on rivulets and digging com- for watershed development. NWDPRA mon ponds, but now also on the private focuses on scientific land use through de- lands of the marginal households like velopment of integrated farming system on creating farm ponds, land levelling, etc. the principles of watershed management The potential of MGNREGS in mitigat- in each community development block ing adverse effects of climate change on where arable area under assured means of farmers stems from the fact that it is a social irrigation is less than 30 per cent. Guide- security measure ensured by the law. Even lines for NWDPRA were prepared and used in case of adversity, the farmer can claim during the Tenth Plan period. Whereas their right to livelihood from MGNREGS, IWMP is funded through Department of thus reducing livelihood vulnerability of the Land Resources under Ministry of Rural farmer to natural travesties. The scheme also Development, NWDPRA is funded through facilitates adaptation as it tries to create dur- able assets in the public and private domain, Department of Agriculture and Cooperation which results in conservation of natural of Ministry of Agriculture. resources like water and soil. Planning Commission, in its working group report has proposed to develop all the waste land/dryland areas (88.5 mil- 7.9. Challenges to adaptation lion ha) in a period of 20 years (i.e., up in agriculture sector to Thirteenth Five Year Plan) at a cost of There are several challenges to adaptation ` 727 billion with peoples’ participation. The of the community in agriculture sector evaluation of dryland area developmental in the context of climate change. These programmes like Drought Prone Areas challenges can be broadly divided into the Programme, Desert Development Pro- three categories of Capacities, Technologies gramme, National Watershed Develop- and Resources. This section discusses each ment Project for Rainfed Areas (NWDPRA), of these broad challenges. etc., by various agencies indicates promise in watershed programmes for improving 7.9.1. Challenges related to dryland areas and facilitating adaptation capacities by farmers. Meaningful adaptation by farmers would require specific capacities at local, regional 7.8.3. Mahatma Gandhi National and national levels. Challenges related Rural Employment Guarantee to capacity development would include Scheme developing knowledge base and dissem- Mahatma Gandhi National Rural Em- ination of relevant information, which ployment Guarantee Scheme (MGNREGS) is would result in adoption of appropriate the flagship scheme of the GoI that provides technologies and practice for adaptation. 114 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

Increasing awareness about climate change level possible with increased accuracy for among farmers is another challenge. preparing appropriate plans for adapta- Developing capacities would include tion. This will require huge financial inputs developing knowledge base and dissem- along with technically trained human re- ination of relevant information, which sources. National Action Plan on Climate would result in adoption of technology Change (NAPCC) has outlined a plan for and practice appropriate for adaptation. creating such a knowledge base, but the Increasing awareness about climate change implementation of NAPCC is still very among farmers is another challenge. unclear. India has a wide network of public agri- When institutional capacities are de- culture research institutions. Indian Council veloped and substantial knowledge base of Agriculture Research alone has four on adaptation strategies at different levels deemed agriculture universities and 45 insti- is available, proper transmission of such tutions under it. The state governments information will be required. Transmission have their own agriculture universities and of information related to climate change institutions. Taking a lead, Indian Council and appropriate responses to climate for Agricultural Research (ICAR) had change is still poor in India. This, combined launched a network ‘Impacts, Adaptation with inadequate infrastructure in many and Vulnerability of Indian Agriculture to marginal areas and low levels of human Climatic Change’ in 2004 which has ex- capital, constitutes major constraints for panded to 25 centres across the country now. adaptation. Climate Change has also been identified as a priority area for National Agricultural 7.9.2. Challenges related to science Innovations Project Funding by ICAR. and technology Despite these initiatives, there is still a lot Adaptation in agriculture to varied climate to be done in terms of institutional capacity would require technological innovations development. in the spheres of climate modelling for ICAR identifies following areas in capa- predicting accurate local level climate city development that need to be focused change effects, crop science, biotechnology, on for climate change adaptation in agri- etc. This would require massive financial culture:2 resources and skilled manpower. India currently lags behind in the world in terms l Establish an Agricultural Intelligence of generation of suitable knowledge related System for impact of weather and inputs to Climate Change (see Figure 7.3). on production of important commodities Government expenditure on Research at national as well as international level and Development (R&D) in Climate l Weather watch groups Change is low just as in overall R&D sector. l Increase pest surveillance According to a Planning Commission l Explore feasibility of establishing feed, report, the expenditure on overall R&D fodder and seed banks was about 0.74 per cent of Gross National l Increase farm insurance coverage using Product in 2004–05, about three-quarters in weather derivatives the public sector and the rest in the private l Enhance climate literacy sector and higher education institutions. There is an urgent need for mapping The total public and private expenditure on vulnerability of various areas at the smallest overall R&D in India, which amounts to a little less than $4 billion a year, pales into insignificance in the light of a global total 2 Available online on http://www.icar.org.in/en/ which is of the order of a trillion dollars node/250. Accessed on 27 July 2010. (GoI, 2006a). Climate Change and Agriculture 115

Figure 7.3: Number of papers on climate change published in peer reviewed journals

Source: Data on country-wise number of papers on climate change was gathered from Web of Science on a search query for ‘Climate Change’.

Various institutions are now working availability of irrigation and credit and on issues related to climate change within generating awareness on climate change per their own sphere of activities. Institutions se. Irrigation infrastructure and availability like Indian Remote Sensing Agency, Indian of credit to farmers, especially small and Agriculture Research Institute, Ministry of marginal farmers in dryland areas is anyway Water Resources, the India Meteorological less which makes farmer in these areas more Department and the Institute of Tropical vulnerable to climate induced changes. Meteorology are in the process of technology development and dissemination, which are 1. Increasing Area under Irrigation: One of essential for adaptation to climate change. the key adaptation measures to reduce However, for developing an integrated climate-induced vulnerability is to adaptation mechanism, there is a need to provide resource inputs in agriculture. enhance technical and institutional cap- Thus, increasing area under irriga- acity to understand, analyze and address tion becomes a priority in adaptation. climate change. India has a large science However, there are challenges with and technology institutional base in many regard to water use and availability that areas relevant to climate change research. would need to be overcome. Seventy- These institutions have to develop a shared five per cent of the total water available vision, integrated approach and network- in India currently is used for irrigation. ing for synergistic research in climate change As much as 20 per cent is required to relevant to policy-making. meet domestic and municipal needs— leaving just 5 per cent for industrial 7.9.3 Challenges related to needs. With warming, there is expected resources to be increased demand for water from Challenges related to resources at the domestic and industrial consumption. national or state level include financial This may limit the availability of water for resources that would be required to aug- irrigation. A large area under irrigation ment capacities of various institutions, already receives water from ground- establish networks and infrastructure for water sources. Further pressure on these dissemination of appropriate knowledge resources may also lead to groundwater which have been briefly discussed earlier. depletion, soil salinization and water Constraints at the local level pertain to logging. Many states in India need to 116 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

adopt measures for restricting the use of stabilize farm incomes, particularly in groundwater to prevent a water famine disaster. Around 75 million farmers in the future (IPCC, 2001b). The problem have benefited from the scheme till is further compounded by the nature of December 2005 with the total sum small and marginal landholdings, which assured of ` 705 billion (GoI, 2006b). are characterized by highly unequal Though some innovative insurance ownership of and access to productive products are now available (Box 7.1), assets such as land and water (World given the scale of India’s agriculture, Bank, 2009). their coverage and total farmers in- 2. Micro-credit and Insurance: Another sured is still negligible. Increasing the key resource that should be available area and the number of farmers under at the local level for reducing farmer such schemes and designing effective vulnerability arising from climate insurance schemes is still a challenge change is microfinance and agriculture for GoI. insurance. Crop insurance assumes a vital role in the stable growth of the 7.10. Opportunities available agriculture sector in India as crop pro- in adaptation duction is still dependent on vagaries of weather and large-scale damages due This section discusses various potentials to attack of pests and diseases are com- existing in India in terms of adaptation to mon. Innovations in microfinance gen- climate change in agriculture. Using the case erally and in micro-insurance products of Western Orissa Rural Livelihood Project specifically may aid farmers’ capacity to (WORLP), the chapter highlights various adapt to climate change. This is espe- strategies/actions that may be promoted cially true in production settings that by the policy-makers and civil society at are exposed to greater variability and large. more frequent extreme events (Lybbert It is now established that the policies and Sumner, 2010). that are designed to strengthen current The National Agricultural Insurance coping capacity also have the power to Scheme (NAIS) is being implemented strengthen long-term adaptive capacity. from rabi 1999–2000 season with This is best exemplified by measures such the objective of providing insurance as crop productivity enhancement, crop coverage and financial support to the insurance, seed banks, alternative (off-farm) farmers in the event of failure in any of employment options and enhanced access the notified crops as a result of natural to inputs and markets. At the micro-level, calamities, pests and disease, and to help several strategies are adopted by farmers

Box 7.1: Innovation in micro-insurance A recent pilot programme by the private sector at other times in the growing season results in in India with an NGO into banking involves overall, aggregate precipitation appearing to be risk being insured if rainfall is insufficient. satisfactory for crop growth. Some 200 farmers The growing season for the crops in question, are involved in this pilot programme. This groundnuts and soybean has been divided pilot provided some key lessons related to such into sections so that a critical shortage of pre- weather insurance that would be a challenge for cipitation in one part of the growing season will the policy-makers and institutions designing trigger the index policy, even if ample rainfall such schemes in futures.

Source: Gine et al. (2007). Climate Change and Agriculture 117 themselves or there is a scope for facilitating especially in areas where the land and its environment provided by policy (Table 7.4) holding capacity are more marginal. In which ensures better coping by the farmers. wasteland and watershed development Many of these strategies already form part of programmes like WORLP, a large num- the programmes on watershed development ber of natural resources management and wasteland development in India. (NRM) activities are implemented through Interventions in these programmes a series of interventions to manage and increase the adaptive capacity of the com- check runoff from catchments and to munity to cope with climate induced stress, reduce sediment load in water bodies.

Table 7.4: Climate change hazards, impacts, micro-level strategies and actions for adaptation to climate change

Climate change hazards Impact Strategy Adaptation actions • Shift of season • Damage to forest • Dissemination of knowledge and education • Afforestation/reforestation • Drought/aridity • Decreased food security • Improved farm-level infrastructure design • Agro-forestry • Erratic rainfall • Decreased functionality of human • Vector control • Animal pest control • Floods settlements • Appropriate crop selection • Appropriate irrigation methods • Sea-level rise • Landslides • Alternative cultivation methods • Aquaculture • Storms • Loss of crops • Post-harvest management • Bunds/ridges/terraces • Extreme heat • Water shortages • Pest control • Check dams • Extreme cold • Soil erosion • Rain water harvesting • Cold-resistant housing • Vector borne diseases • Loss of livelihoods • Soil conservation • Crop processing • Low survival/productivity of livestock • Sustainable water management • Disaster mitigation • Low survival/productivity of poultry • Natural resource management • Disaster preparedness • Low productivity of fisheries • Nutrient management • Disaster rehabilitation • Loss of land • Livelihood diversification • Drought-resilient crops • Water logging • Appropriate livestock selection • Early warning • Coastal inundation/erosion • Appropriate poultry selection • Exterminating vectors • Damage to human settlements • Diet diversification • Flood-resistant housing • Urban heat islands • Improved house design • Food processing and storage • Increased disease incidences • Appropriate appliances • Forest management • Disaster risk management • Harvesting of wild foods • Heat-resistant housing • Horticulture • Hydroponics • Improved cropping system • Indigenous forecasting • Integrated agriculture–aquaculture • Livestock breeding • Ponds • Portable household appliances • Poultry breeding • Promotion of handicrafts • Rangeland management • Restoration of coastal ecosystems • Retaining walls • Saline tolerant crops • Sea dykes • Seed priming • Seed selection and storage • Soil fertilization • Storm-resistant housing • Tanks • Temporary land redistribution • Vermicomposting • Vocational training • Water allocation • Weed control • Wells Source: Anonymous. 118 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

These strategies enhance water resources in watershed development and employment and improve land productivity. Such activ- generation programmes, it can be argued ities also influence water, nutrient, carbon that sustainable agricultural practices to and production cycles in ecosystems, which increase resilience to climate change can are in turn influenced by the prevalent cli- be facilitated through these well-funded matic conditions. A major part of the NRM government agricultural and watershed activities are intended to increase recharge programmes. through the unsaturated root zone to the A case of such watershed development extent that less rainfall is available for pos- programme in India is the Western Orissa sible runoff. Reduced runoff is generally Rural Livelihood Programme. A recent accompanied by reduced soil loss, and study was conducted to assess WORLP minimal sediment load is thus deposited in outcomes in terms of climate change issues water bodies. in the project area. The case given in the Two large-scale programmes imple- following section provides evidence to the mented by GoI—MGNREGS and Integrated potential of such projects/programmes Watershed Development Programme— in addressing vulnerability arising from that have a direct bearing on the adaptive variation in climate. capacity of the farmers and which directly influence productivity of agriculture, espe- 7.11. Case of Western cially in the dryland regions. Orissa Rural Livelihood 3 The MGNREGS is a rights-based employ- Programme (WORLP) ment entitlement which exclusively focuses 7.11.1. The programme on manual works that are mostly directed Western Orissa Rural Livelihood Pro- towards creating or strengthening natural gramme is being implemented in four of asset base. The expenditure across the the poorest districts in the state, namely country in MGNREGS in 2008–09 was more Bargarh, Bolangir, Kalahandi and Nuapada. than ` 270 billion with highest priority to It is implemented by the Orissa Watershed water conservation works. Many of the Development Mission (Government of interventions under MGNREGS provide Orissa) with support from the Department co-benefits of adaptation and mitigation to for International Development (DfID). climate change (Table 7.5). The programme started in August 2000 In the context where a large amount of with a total cost of ` 2.3 billion (GBP financial resources are channelled by the GoI 32.75 million) and covers 870 villages

Table 7.5: Benefits of mgnregs with respect to climate change adaptation and mitigation in india

MGNREGS’ co-benefit of mitigation to MGNREGS’ co-benefit of adaptation to climate change climate change Coping with increasing water stress Carbon sequestration • Water conservation/rainwater harvesting • Land development; soil conservation • Increased irrigation • Tree planting activities • Enhancing water-use efficiency • Afforestation and Horticulture • Land development leading to improvement in soil water- holding capacity/reduction in soil erosion Coping with extreme events • Employment security—Income during non-agricultural seasons • Forestry and horticultural incomes • Drought proofing and flood protection Source: Adapted from Sharma (2009).

3 The case is excerpts from Synthesis Report: Effects of Climate Change in WORLP (WORLP, 2006). Climate Change and Agriculture 119 across 290 watersheds in 29 blocks of the 7.11.2. Impact of the programme four districts. The four project districts com- 1. Impact on Natural Resources: Under pare with sub-Saharan Africa in terms of the WORLP programme, a number of human development indicators. soil and water conservation measures The project aimed at establishing ef- have been implemented in the project fective approaches to sustainable rural districts. In addition to these interven- livelihoods through watershed develop- tions, some micro-irrigation measures ment in the targeted districts which would such as the surface treadle pump, rope be adopted by Government agencies and and washer pumps, pressure pumps other stakeholders. and drip irrigation systems were also The project’s design was guided by the promoted. Table 7.7 suggests that gross Sustainable Livelihood Approach (SLA) cropped area and cropping intensity has encompassing effective strategies for liveli- improved in the project watersheds. hood improvement and leading to positive 2. Impact on Agriculture: A number of livelihood outcomes. Vulnerability con- agricultural strategies which have evolved in response to climate shock text, which is an integral part of the SLA can be seen as adaptation. Examples of and include shocks, adverse trends and these are: seasonality over which the community or the project had no control, was recognized l Choice of crops that consume less by the project design. Although, at the design water (mostly low yielding local stage, the project outputs were not planned varieties) to aid adaptation to climate change in the l Adjustment of crop management project areas, these ultimately contributed to practices for upland/fragile land facilitating adaptation. Table 7.6 compares situations by deep furrow plough- the five outputs on their potential for aiding ing to better capture moisture over climate change adaptation. prolonged dry spells

Table 7.6: Programme outputs and their potential for climate change

Outputs Comment 1. The poorest are organized and are able to plan and implement 1. Where social capital is raised, communities are more resilient and better participatory livelihoods-focused development effectively. equipped to handle climate shocks effectively. 2. The livelihood asset base for the poorest is enhanced and diversified in 2. An enhanced and diversified asset base, especially for natural and financial 290 micro-watersheds. assets, should permit increased adaptability and reduced vulnerability. 3. Government, PRI and NGOs work together to implement 3. Better convergence and pooling of ideas and resources will strengthen the participatory, livelihood-focused development effectively. capacity of stakeholders to deal with climate stress and encourage building on each other’s strengths. 4. Policy and practice constraints to livelihoods are reduced in the 4. Policy issues that all have a direct bearing on reducing climate stress. areas of Non-Timber Forest Produce, migration, land rights, disaster preparedness and gender issues. 5. Project approaches are replicable elsewhere in the Kalahandi, 5. Approaches proven helpful in reducing climate stress can be identified Bolangir, Bargarh and Koraput region in Orissa. and scaled up. Source: WORLP (2009).

Table 7.7 Changes in land use and its impact

Project input Changes Adaptive action and impact Soil and water conservation Aat land has become cultivable More wasteland becomes cultivable, benefiting the poor in upper reaches more resilience to dry spells and drought Excavation of farm ponds, Better water availability for Decline in grazing radius and pressure on fodder but better animal health water bodies livestock decline in livestock loss Source: WORLP (2009). 120 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

l Reduction of the area of crops 3. Socio-Economic Impacts: The project planned—remaining seeds due to has made substantial investments in reduction in area cropped may be capacity building of the target group, used for feeding livestock or could which translates into an increase in be exchanged for other goods the social capital of the community. l Adjustment of cropping systems— Greater social capital is likely to increase short duration varieties planted resilience and enhance people’s capacity l Re-use of drainage water for vege- to cope, as well as providing quicker, table crops and kitchen gardens better informed and more appropriate responses to stress situations, including The project has attempted to facilitate climate variability and change. changes in cropping systems as well as crop- WORLP has organized around ping patterns, and this has helped people to 65,000 women in approximately 5,000 adapt to climate stress, especially drought. SHGs with improved savings and All interventions were accompanied by a linkage to the banks. The increased large-scale community sensitization de- number and strength of SHGs has sig- signed to promote appropriate agricultural nificantly improved stock of social activities. capital within the project. This has an Table 7.8 indicates some of the impacts immediate impact on reducing people’s on cropping systems that have resulted vulnerability, cushioning the effects of from project interventions on the NRM climate-related shocks, and ensuring front. ability to cope. Through exposure to

Table 7.8: Positive impacts of nrm interventions on agriculture-based livelihoods

Intervention/Cause Impact Water harvesting structures and • Crop yields (rice in particular) increased by 50–80% with the conversion seepage through bunds of uplands (Aat lands) to lowlands (Bahal lands) Increased moisture regimes • Soil moisture regime improved, leading to changes in crop variety—little more yield in aat land • Yield low in short-duration varieties; improved soil moisture regime allows longer duration varieties in aat and mal • Improved crop husbandry Field bunding • Erosion has reduced in almost all visited watersheds barring untreated areas • Improved soil moisture, yield of other crops (maize, groundnut, gurji) increased by 20–30% Crop diversification • For aat and mal local varieties were perceived to be drought and pest resistant and HYV seeds were not available anyway. Farmers accepted the trade-off between high drought and pest resistance and low yield. Some HYVs were introduced in Berna, leading to 25–30% yield increase • Farmers are adapting to a favourable situation created by improving soil moisture. 11,945 farmers brought under crop diversification, enhancing their adaptive capacity • Cotton picked up with yield increase from 3–4 q/ha to 10–12 q/ha • Rice being replaced with crops like gurji, groundnut and cotton to the extent of 30–80% Increased groundwater recharge • Flourishing of home gardens • Backyard farming • Use of micro-irrigation tools in lieu of the traditional Picot system for water lifting Post harvest • Onion clusters have been developed in all lands except aat (620 acres in Rabi in Bolangir) and low-cost storage (layered) has been introduced to reduce distress selling Source: WORLP (2009). Climate Change and Agriculture 121

participatory planning processes, the 4. Coping Capacity and Strategies: The pro- groups manage common property ject area is characterized by dryland and resources more efficiently, and are bet- smallholder agriculture. Drought is the ter prepared for crises as compared to main manifestation of climate stress areas where such groups are either non- that affects this group. Improved coping existent or weak. capacity of the marginal farmers was one The project not only helped com- of the key intended project outcomes. munities in improving livelihood asset The Impact Assessment found that the base but also facilitated diversifica- project has had a very positive effect in tion of livelihoods. Diversification this regard. of livelihoods explains the reported reduction in poverty. The main benefits Enhanced agricultural production, were apparent in the off-farm or non- greater diversification of livelihood activ- farm categories. These ensured im- ities and better access to consumption credit proved capacity—particularly of the were outlined as the key factors behind this very poorest—to cope better during improved capacity to cope with drought. climate stress conditions such as dry Almost 44 per cent of marginal farmers attributed this to increase in agricultural spells and drought. production, 35 per cent to diversification of Non-land based activities, such as livelihoods and 28 per cent to consumption mushroom cultivation, apiary, sericul- credit. ture, collection and processing of Non- Table 7.9 summarizes the key successes Timber Forest Produce (NTFP), petty in the WORLP related to climate change business, agro-processing and market adaptation in agriculture. value addition, skill upgradation of village artisans, retailing Public Dis- tribution System (PDS) commodities, 7.12. Conclusions production of grafts and/or seedlings, The chapter has provided an understand- processing and marketing of home ing of agriculture and climate change in made products and preparation of raw India and how these affect each other. While drugs from medicinal plant parts, have knowledge on climate-change effects on all successfully been undertaken by indi- agriculture is increasing, there is still a dearth viduals or groups after necessary skill of micro-level studies that can provide bet- improvement. The Revolving Fund that ter understanding. What is certain is that has been provided by the project has been climate change will affect agriculture and able to reduce dependence on single- agriculture-related livelihoods. activity livelihoods, thereby ensuring Various scenarios have been modelled, significant livelihood diversification. and these identify various regions within

Table 7.9: Key successes in worlp related to climate change adaptation in agriculture

Main features of WORLP Indicators of adaptation success • Establishing community institutions and training • Capacity building on various agricultural and conservation aspects • Undertaking soil and water conservation activities, • Ecosystem improvement, improved water availability water harvesting and erosion control for irrigation/domestic consumption, improved land productivity • Undertaking plantation of trees and grasses • Increased availability of fodder/fuelwood and stable ecosystems • Supporting micro-credit and facilitating off- and • Improved and diversified livelihoods non-farm activities Source: WORLP (2009). 122 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a

India that will face diverse impact of climate GoI. (2006b). ‘Economic Survey 2005–2006’. Available change and extreme events caused due to online at http://www.indiabudget.nic.in/es2005- 06/chapt2006/chap813.pdf. Accessed on 27 July climate change. Dryland areas due to its 2010. complete dependence on the nature will be ——— (2007a). ‘Report of the Steering Committee on most affected. This is because in dryland Agriculture and Allied Sectors for Formulation areas the capacity of people to control fac- of the Eleventh Five Year Plan (2007–2012)’, tors of production is much more limited. Planning Commission, Government of India. Available online at http://planningcommission. Several challenges are now faced by the nic.in/aboutus/committee/strgrp11/str11_agriall. State and Civil Society in India vis-à-vis pdf. Accessed on 27 July 2010. climate change and its impact on the farm- ——— (2007b). Report of the Working Group on Natural ing community. The key challenges relate Resources Management Eleventh Five Year Plan (2007–2012), Planning Commission, Volume I: to capacities, scientific knowledge and Synthesis, Government of India. technologies and resources at different ——— (2008). National Action Plan for Climate levels. Technical institutes are gathering Change, Government of India. Available online momentum in keeping abreast with tech- at http://pmindia.nic.in/Pg01-52.pdf. Accessed nologies to work on climate change issues, on 26 July 2010. Gosain, A.K., S. Rao and D. Basuray. (2006). ‘Climate but there is still dearth of innovative tech- Change Impact Assessment on Hydrology of nologies especially at micro-level and their Indian River Basins’, Current Science, 90(3): dissemination to deal with effects of cli- 346–53. mate change. Financial resources in India Guiteras, R. (2007). ‘Impact of Climate Change on Indian Agriculture’, Job Market Paper (Draft). for dealing with climate change do not Available online at http://websv03b.colgate.edu/ seem to be a constraining factor; however, portaldata/imagegallerywww/2050/ImageGallery/ the farmers’ accessibility of these resources, Guiteras%20Paper.pdf. Accessed on 26 July especially related to credit, appears to be a 2010. challenge. Gupta, V. (2005). ‘Climate Change and Domestic Mitigation Efforts’, Economic & Political Weekly, Watershed Development Programmes 40(10): 981–87. and MGNREGS provide opportunities Intergovernmental Panel on Climate Change (IPCC). for climate change adaptation in agricul- (2001a). Synthesis Report: Climate Change 2001. ture. These programmes are in harmony Summary for Policymakers, Wembley, United with the objectives of climate change adap- Kingdom, September 24–29. ——— (2001b). Chapter 11—Asia, Third Assessment tation. The large monetary allocations Report: Climate Change 2001, Core Writing Team, for these programmes have a potential to Murari Lal, Hideo Harasawa and Daniel mitigate adverse effects of climate change Murdiyarso (eds), IPCC, Geneva, Switzerland. to significant extent, especially in India’s ——— (2007). Synthesis Report Contribution of Work- ing Groups I, II and III to the Fourth Assessment dryland areas. Report of the Intergovernmental Panel on Climate Change, Core Writing Team, R.K Pachauri and A. Reisinger (eds), IPCC, Geneva, Switzerland. References Kumar, K.S.K. and J. Parikh. (1998a). ‘Climate Change Garg, N.K. and Q. Hassan. (2007). ‘Alarming Scarcity of Impacts on Indian Agriculture: The Ricardian Water in India’, Current Science, 93(7): 932–41. Approach’, in A. Dinar, R. Mendelsohn et al. Gine, X.R. Townsend and J. Vickery. (2007). ‘Patterns (eds), Measuring the Impact of Climate Change on of Rainfall Insurance Participation in Rural Indian Agriculture, World Bank Technical Paper India’, presentation in World Bank Conference: No. 402, Washington DC, The World Bank. Access to Finance. Available online at http:// ——— (1998b). ‘Climate Change Impacts on Indian siteresources.worldbank.org/INTFR/Resources/ Agriculture: Results from a Crop Modeling Ap- Gine_Townsend_Vickery.ppt. Accessed on proach’, in A. Dinar, R. Mendelsohn et al. (eds), 26 June 2010. Measuring the Impact of Climate Change on Indian GoI. (2006a). Report of the Committee on Technological Agriculture, World Bank Technical Paper No. 402, Innovation and Venture Capital, Planning Com- Washington DC, The World Bank. mission, New Delhi. Available online at http:// Lybbert, T. and D. Sumner. (2010). ‘Agricultural www.planningcommission.nic.in/reports/genrep/ Technologies for Climate Change Mitigation rep_vcr.pdf. Accessed on 26 June 2010. and Adaptation in Developing Countries: Climate Change and Agriculture 123

Policy Options for Innovation and Technology Impact of Climate Change on Indian Agriculture, Diffusion, ICTSD–IPC Platform on Climate World Bank Technical Paper No. 402, Washington Change, Agriculture and Trade’, Issue Brief DC, The World Bank. No. 6, International Centre for Trade and Shah, M., D. Banerji, P.S. Vijayashankar and Sustainable Development, Geneva, Switzerland P. Ambasta. (1998). India’s Drylands—Tribal and International Food & Agricultural Trade Societies and Development through Environmental Policy Council, Washington DC, USA. Regeneration. New Delhi: Oxford University Mendelsohn, R. and A. Dinar. (1999). ‘Climate Change, Press. Agriculture and Developing Countries: Does Sharma, R. (2009). ‘National Rural Employment Guarantee Adaptation Matter?’, The World Bank Research Act-Building Resilience: Development & Diffusion Observer, 14(2). of Technologies for Sustainable Development’, MoEF. (2004). India’s Initial National Communication presentation. Available online at http://www. to the United Nations Framework Convention on newdelhicctechconference.com/Session6- Climate Change. Executive Summary, Ministry of 23.10.09/DrRitaSharma[CompatibilityMode]. Environment and Forests, Government of India, pdf. Accessed on 26 July 2010. New Delhi. Shiva, V. (2002). ‘Water Wars (Excerpt from the book)’. ——— (2010). India: Greenhouse Gas Emissions 2007, Available online at http://www.thirdworldtraveler. Ministry of Environment and Forests, Gov- com/Vandana_Shiva/Water_Wars_VShiva.html. ernment of India, New Delhi. Accessed on 29 July 2010. Panda, A. (2009). Assessing Vulnerability to Climate Smit, B. and J. Wandel. (2006). ‘Adaptation, Adaptive Change in India, Economic & Political Weekly, Capacity and Vulnerability’, Global Environmental xliv(16): 105–07. Change, 16: 282–92. Rosenzweig, C. and M.L. Parry. (1994). ‘Potential World Bank. (2009). South Asia Climate Change Impact of Climate Change on World Food Supply’, Nature, 367: 133–38. Strategy (Draft). World Bank. Sanghi, A., R. Mendelsohn and A. Dinar. (1998). ‘The Western Orissa Rural Livelihood Programme (WORLP). Climate Sensitivity of Indian Agriculture’, in (2009). Synthesis Report: Effects of Climate Change A. Dinar, R. Mendelsohn et al. (eds), Measuring the in WORLP. Bhubaneshwar: WORLP. 124 Sh a i l e s h Na g a r a n d Ja y e s h Bh a t i a About the Editors and Contributors

The Editors Sankar Datta is the Dean, Livelihood School, Hyderabad and Director, Indian Grameen Services, Hyderabad. Dr Datta has a bachelor’s degree in Agriculture and Animal Husbandry from GB Pant Agriculture University, Pantnagar, a postgraduate diploma in Rural Management from the Institute of Rural Management, Anand and a PhD in Economics from the Sardar Patel University, Gujarat. He worked with MP Oilseeds Cooperative Federation, PRADAN and IIM-Ahmedabad, before joining the faculty of Institute of Rural Management, Anand for five years. Dr Datta has been involved in extending professional services for rural development activities, specially focusing on livelihood promotion, working with micro-enterprises for over two decades.

Vipin Sharma is the CEO, ACCESS Development Services. He is responsible for insti- tutionalization and expansion of the organization as a pan-India resource organization to support livelihoods and microfinance outreach. He has earlier worked in CARE-India as Programme Director, Microfinance, heading CASHE (Credit and Savings for Household Enterprises), CARE’s largest microfinance programme worldwide. Prior to that, he was Executive Director, Rural Non-Farm Development Agency (RUDA), Government of Rajasthan. He holds a BA (Hons) in History from St. Stephen’s College, Delhi University and an MA in History from University of Rajasthan, Jaipur.

The Contributors Reshma Anand, founder of Earthy Goods, is an Economics graduate from University of Delhi and an MBA from Indian Institute of Management, Bangalore. She started her career with Unilever India. Her next assignment was with Development Alternatives, a renowned social enterprise, where she headed marketing, business development and fund raising. In course of her travels to villages across India, Reshma found many resilient entrepreneurs and artisans who make quality products, give fair prices to local farmers and create local employment but face challenge accessing markets on fair terms. She set up Earthy Goods over a year ago to create a network of agricultural producers and bring them to market.

Jayesh Bhatia has 16 years of experience working with national and international research and consulting organization. With degrees from Indian Institute of Forest Management, Bhopal and University of Oxford, he specializes in project and research management, natural resource management, monitoring and evaluation, livelihoods and climate change adaptation. He has been involved in design and delivery of donor-supported projects and programmes. Jayesh was instrumental in establishment of NR Management Consultants (NRMC) India Pvt Ltd in 2004. NRMC India has emerged as a leading consultancy and 126 St a t e o f In d i a ’s Li v e li h o o d s Re p o r t 2010

research organization, working across five core areas of Project Management, Research and Advocacy, Climate Change Adaptation, Training and Capacity Building, and Impact Communication Group.

Pradeep Kumar Mishra is presently heading the Eastern India Regional Centre of The Livelihood School. Previously associated with the Indian Institute of Forest Management, Bhopal, ARAVALI, Jaipur and Soil Conservation Department, Orissa, he has about 13 years of experience in academic and development sectors. He has published on various issues dealing with project appraisal, planning, impact assessment, policy and institutions in the field of natural resource management, livelihood promotion and microfinance. His recent academic contribution has been on integrating organizational and policy elements to economic analysis in the form of an integrated impact assessment model. Pradeep holds a doctorate in Rural Economics from the Institute of Rural Management Anand (IRMA).

Biswa Bandhu Mohanty has worked with NABARD for 28 years in the areas of development finance and rural development, particularly promotion of non-farm sector, microfinance, human resources development, supervision of rural financial institutions, agriculture finan- cing and institutional development. He was Chief General Manager for over eight years and headed important departments. Prior to joining NABARD, Mr Mohanty worked for nine years with Utkal University, Orissa Finance Service, Steel Authority (India) Limited and the Reserve Bank of India. After his retirement from NABARD on 31 March 2010, he has been engaged as a freelance consultant to reputed national and international agencies in his areas of expertise.

Shailesh Nagar works with NR Management Consultants India Pvt Ltd, New Delhi. Shailesh has worked for 13 years at the grassroot level in Uttarakhand and Rajasthan and provided research and consultancy support to different government and donor-aided projects. An alumnus of Indian Institute of Forest Management, Bhopal and University of Cambridge, UK and a Shell–Chevening Scholar, his MPhil thesis at Cambridge was on Biofuel Policy in India. He has published reports and papers on various aspects of Natural Resource Management and Development including voluntary carbon trading in the forestry sector. His current interests are climate change adaptation in forestry and agriculture sector, bioenergy and rural livelihoods.

Trilok Singh Papola, former Director and currently Honorary Professor, Institute for Studies in Industrial Development, New Delhi, is a development economist with over four decades of experience in teaching, research and advisory assignments. He specializes in the areas of labour and employment, development planning, industrial economics, rural and regional development and enterprise development. He has taught at the Universities of Lucknow and Bombay, Indian Institute of Management (Ahmedabad) and University of Cambridge, UK. He was Director, Giri Institute of Development Studies, Lucknow for 10 years (1977–87), Advisor, Planning Commission, Government of India for eight years (1987–95) and Head, Mountain Enterprises and Infrastructure Division at International Centre for Integrated Mountain Development, Kathmandu (1996–2002). Dr Papola has published 14 books and over 100 research papers in reputed journals and edited books. He was a Member (part- time) of the National Commission on Enterprises in Unorganised Sector (2005–09) and is currently a member of the Council on Micro, Small and Medium Enterprises chaired by the Prime Minister. About the Editors and Contributors 127

Suryamani Roul, Vice President, Livelihoods, ACCESS Development Services, has expertise in enterprise and entrepreneurship promotion with intensive exposure to remote areas and tribal communities. He has earlier been Project Director, Sustainable Tribal Empowerment Project, CARE-India, Andhra Pradesh and Project Manager, CREDIT Project under CARE-India’s Small Economic Activities Development (SEAD) Programme supported by DFID’s JFS support with WFP and Rotary Foundation in undivided Bihar (Ranchi). He holds a Bachelors in Economics from Utkal University, a Masters in Analytical and Applied Economics from Utkal University and an MBA from Calcutta University.