Why in the News?

The Central Government is considering a new scheme with an outlay of Rs 50,000 crore to incentivize states to adopt agricultural reforms.

What’s in Today’s Article?

• Challenges Faced by Agriculture Sector in India
• Proposal Made by NITI Aayog for Agricultural Reforms

Problems Faced by the Agriculture Sector in India:

• Access to Credit & Finance:
  • Small farmers struggle to get affordable loans, limiting their ability to buy modern equipment, quality seeds, and fertilizers, which affects their productivity.
• Small Landholdings:
  • Many farmers have small, fragmented plots, making it hard to use modern farming techniques and reducing productivity.
• Outdated Farming Practices:
  • Many farmers still use traditional methods due to limited information and resistance to change, hindering the adoption of advanced techniques.
• Water Scarcity & Irrigation:
  • Dependence on monsoon rains makes agriculture vulnerable to droughts and inconsistent rainfall.
  • Access to irrigation and water management is crucial, especially in areas with limited water resources.
• Soil Degradation & Erosion:
  • Use of chemical fertilizers and pesticides, along with poor land use practices, degrades soil quality, leading to reduced fertility and productivity.
• Inadequate Agricultural Infrastructure:
  • Lack of storage, cold chain facilities, good rural roads, and market access leads to post-harvest losses and higher production costs, limiting farmers' ability to get fair prices.
• Market Volatility & Price Fluctuations:
  • Farmers face unstable prices due to weak market links and lack of price information, making them vulnerable to exploitation and uncertain returns.
• Climate Change & Natural Disasters:
  • Predictable weather, climate change, and natural disasters like floods and droughts cause crop losses and increased risks for farmers.
• Limited Access to Technology & Research:
  • Farmers have limited access to modern technologies and research, hindering the adoption of innovative practices. They need better knowledge, training, and affordable technology solutions.
• Lack of Farmers’ Empowerment:
  • Farmers often lack a voice in policy-making, leading to initiatives that may not address their specific challenges effectively.

About NITI Aayog’s Proposal:

• Proposal by NITI Aayog: Background
  • Nearly three years after repealing its three farm laws in November 2021, the Union government is planning a new scheme with a budget of Rs 50,000 crore to encourage states to adopt agricultural reforms.
  • This initiative will provide central funding for states to implement reforms in agriculture marketing, contract farming, and land leasing.
  • The idea for this scheme was presented by NITI Aayog officials to the Prime Minister’s Office.
  • The presentation, titled “India’s Amrit Kaal: Mobilising the nation to sustain fast growth,” covered various economic sectors.
  • Officials from the Ministry of Agriculture and NITI Aayog are discussing this scheme as part of their broader efforts to implement significant farm sector reforms during India’s 'Amrit Kaal,' a period from 2022 to 2047.
• Various reform measures under consideration
  • Other reforms under consideration include passing the long-pending Seed Bill and increasing public investment in agriculture to 5% of Agriculture GVA (Gross Value Addition).
    • This proposal revisits an idea suggested by the 15^th Finance Commission in its 2020-21 report, which recommended performance-based incentives for states implementing agricultural reforms.
  • States could receive financial rewards if they adopted the Model Agricultural Produce and Livestock Marketing Act (2017), the Model Agricultural Produce and Livestock Contract Farming Act (2018), and the Model Agricultural Land Leasing Act (2016).
  • The 15^th Finance Commission believed these reforms were essential to liberalize agricultural markets, promote competition, and attract private sector investment.
  • However, after the central government passed the three farm laws in 2020, the Commission revised its recommendations.
  • The Commission’s 2021-26 report emphasized four key areas for performance-based incentives:
    • Land lease reforms,
    • Sustainable water use in agriculture,
    • Export promotion, and
    • Contributing to Atmanirbhar Bharat.
    • It had proposed Rs 45,000 crore for states undertaking agricultural reforms during this period.