Editorial 1 : Opening up the field
Context: How to help Haryana and Punjab move away from paddy to less water-guzzling crops?
New initiatives and limitations
- Centre government and Punjab government started a new scheme to diversify agriculture and help farmers shift away from paddy.
- It gives them an incentive of Rs 17,500 per hectare to shift to less water-guzzling crops in the kharif season. Covering up to five hectares for the beneficiary, the scheme is funded in a 60:40 ratio by the Centre and Punjab government.
- Haryana has a similar scheme in place. But the results have not been very encouraging because the profitability gap between paddy and its major substitute crops — pulses, oilseeds, millets, maize — is much more than Rs 17,500/ha being offered.
- Regardless this is a step in the right direction. A lot more will have to be done to make agriculture sustainable in these states.
Re-orient subsidy policy
- Paddy farmers in Punjab received Rs 38,973/ha in 2023-24 as subsidy in power, canal water, and fertiliser consumption. This makes paddy much more profitable than competing crops.
- The minimum amount needed to shift away from it would have to be double the amount offered now i.e. Rs 35,000/ha.
- However, this will not be an extra burden on the state exchequer as this is roughly the savings that the government(s) will make in their power subsidy bills and fertiliser subsidy bill.
- Thus, re-orienting the subsidy policy is needed for more crop-neutral incentive structure.
Procurement policy
- Punjab and Haryana have assured procurement of paddy by the state agencies on behalf of the Food Corporation of India (FCI).
- However, there is no such guarantee for other crops like pulses or oilseeds.
- NAFED needs to ensure effective procurement of pulses and oilseeds at MSP so that the market risk for the farmers growing these is minimised.
- Purchasing alternative crops at MSP to provide a reliable market to farmers who choose crop diversification is not going to cost the government extra.
Benefits of diversifying away from paddy
- Save soil from degradation
- Save groundwater depletion
- Paddy requires a minimum of 20-25 irrigations compared to less than four irrigations for pulses, oilseeds and millets.
- Reduce greenhouse gas (GHG) emissions
- Paddy cultivation leads to GHG emissions of 5 tonnes CO2 eq per hectare.
- Rice stubble burning is a major contributor to pollution.
- Promote much-needed crop biodiversity
Other benefits and way forward
- Diversification could also potentially earn farmers up to 4 carbon credits per hectare. This can open up the doors for developing carbon markets in the country.
- A market-oriented cluster-based approach for high-value horticulture crops could also be prioritised.
- Farmer Producer Organisations could be engaged in aggregating, assaying, grading, packaging, and branding for export markets.
- Logistics facilities will have to be created with a value chain approach to high-income export markets.
Cooperative federalism: All this is doable provided the Centre and the governments of Punjab and Haryana join hands.
Editorial 2 : Slow, but steady
Context: India’s GDP growth
Current Status
- The Indian economy grew at a five quarter-low of 6.7% in April-June 2024.
- The growth is lower than RBI’s expectation of 7.1%.
Reasons for reduced growth
- Subdued government spending.
- Sluggish growth of the farm sector and parts of the services economy.
- The agricultural sector grew at 2%, due to the impact of heatwaves.
Manufacturing and Service Sector
- The manufacturing sector grew at 7%, down from 8.9% in the fourth quarter of the last year.
- Construction continues to exhibit strong momentum. Steel production has been healthy, though cement output has moderated.
- Within the services sector, the financial, real estate and professional services segment grew at a relatively faster pace than trade, hotels, transport and communication.
Expenditure Side
- Private consumption has picked up pace. Spending grew at 7.4%.
- Consumer durables grew at 10.4 per cent in the first quarter, while the non-durables segment registered a minor decline.
- Investment activity grew by 7.5%.
Prediction for coming quarters
- There is the possibility that some segments will bounce back over the next few quarters, providing a fillip to the broader economy.
- A good monsoon should help spur the agriculture sector’s performance, which bodes well for rural consumption.
- An increase in output would have a moderating influence on prices.
- A pick-up in government spending in the subsequent quarters will provide a boost to economic activities.
Conclusion: India’s GDP growth dipped in the first quarter. But agriculture and government spending are likely to pick up, provide a boost to economic activity.
- Central government capital expenditure declined by 35%, therefore the momentum has been driven by households and/or private firms.
- Overall government spending had been subdued due to the general elections — the Centre’s expenditure was, 7.7% lower than last year in the first quarter.