Reforms Will Make Rationalization Of Farm Schemes More Efficient

The government’s decision to rationalize all centrally sponsored schemes (CSSs) under the Ministry of Agriculture into two umbrella schemes has come at the right time. The farm sector, while critical for the growth of the entire economy, remains a laggard, employing about half of the working population but contributing less than one-fifth to the gross domestic product (GDP). The premise is that the two umbrella schemes, Pradhan Mantri Rashtriya Krishi Vikas Yojana (PM-RKVY) and Krishonnati Yojana (KY), will promote sustainable agriculture and address the issues of food security and agricultural self-sufficiency, respectively.

It’s a reasonable premise but then everything depends on their execution. By this rationalization, the Centre intends to avoid duplication, ensure convergence and provide flexibility to states. It also hopes to face the new challenges of nutrition security, sustainability, climate resilience, value chain development, and private sector participation. The central government hopes that states will be able to draw a comprehensive strategic plan that suits their respective requirements for agriculture.

Also, the Centre is of the view that in PM-RKVY, state governments have the flexibility to re-allocate funds from one component to another based on their specific requirements. All these need to be supported and they may involve various changes across legislations, rules and regulations. While PM-RKVY and Krishonnati Yojana provide critical support to farmers, economic reforms are the sine qua non of the transformation of agriculture. The removal of restrictions on agricultural markets, including creation of a unified national market, can give farmers better price realization and reduce the role of intermediaries. Agricultural subsidies ought to be rationalized as well so that the focus is more on outcomes and efficiency than on blanket support.

This will ensure that resources are properly directed besides reducing the burden on the taxpayer given that subsidies also deplete the public exchequer. Investments in rural infrastructure, particularly in roads, storage, and irrigation, are also essential to reduce post-harvest losses and improve market access. The promotion of agro-industrial linkages through public-private partnerships is also imperative. Further, agri-tech startups, which can create new opportunities for farmers, must be encouraged and supported.

Technology-driven interventions, such as precision farming, digitization, and blockchain, can enhance supply chain transparency and boost productivity. All these things sound very good but their integration into the farm sector presupposes some judiciousness and commitment on the part of states—and this is where the shoe pinches. State governments often prioritise short-term populist measures like farm loan waivers and freebies over agricultural reforms. Such populist measures burden state finances, diverting funds from long-term investments in critical areas like irrigation, infrastructure and technology adoption. The worst features of populism can be reined in only if there is a political consensus among all parties on the subject.

They must agree to avoid indulging in competitive populism. Without such an understanding (even if it is tacit), they will continue with these tactics for electoral gains, thus perpetuating a cycle of inefficiency. PM-RKVY and Krishonnati Yojana are valuable schemes that aim to transform Indian agriculture. However, their success depends on robust economic reforms that address the deep-rooted challenges in the sector. Comprehensive reforms in market structures, subsidies and rural infrastructure are essential to unlock the full potential of these schemes and ensure sustainable agricultural growth in India.