Stimulus good for sustenance, but supply chains need more for resilience

PDS and agriculture markets need reforms to develop superior food quality systems, writes Ajay Kakra.

The government today announced the second set of stimulus measures targeted at the migrant workers, small farmers and the impoverished, as part of its nine major packages. The aim is to create an impact going well beyond the immediate Covid-19 situation and creating long-term resilience for the small and marginal farming community. 

India is currently about to enter the fourth phase of nationwide lockdown and no sector has been able to withstand its devastating impact. About 85% of Indian farmers are small or marginal, who already grapple with many issues in practicing agriculture like access to quality inputs and knowledge, dependence on monsoon, lack of marketing infrastructure and affordable finance. The Covid–19 situation has amplified the problems. Due to lack of market access and disruptions in the supply chains, the crop losses have shot up to record highs. Agriculture labour shortage has led to human drudgery at farm level and inability to harvest produce. All this has also led to a shortfall of working capital in the agrarian supply chain. Almost all stakeholders are facing working a capital crunch in varying levels. Given these conditions, infusion of capital and creation of liquidity for the farmers had to be the first priority of the government. 

The two packages for small-hold farmers relate to these areas only. The first package is related to the working capital fund assistance by NABARD and the second is related to Kisan Credit Card (KCC) facility. The government announced an emergency fund support of Rs 30,000 crores for working capital refinance through NABARD with an immediate effect. This is an additional support to Rs 90,000 crore of working capital support usually dispersed by NABARD. This comes as a respite to the farmers and FPOs to support the post-harvest management activities for the rabi harvest and for the preparatory activities for the upcoming kharif season. Also, efforts have been made to improve the outreach of the fund by mobilising 33 state cooperative banks, 351 district cooperative banks and 43 regional rural banks to benefit about 3 crore farmers. 

The aid will help infuse the requisite funds to address the liquidity crunch prevailing in the sector. This is specifically imperative for completion of post-harvest activities of the rabi crop. But the most important strand of implementation lies in timely and effective access to the post-harvest facilities including aggregation, grading, packing and sorting centres. Also, well scheduled planning for the availability of agri-inputs for kharif season including seed/planting material, fertilisers, pesticides and most importantly farm labour and machinery becomes the most vital component of execution of this funding support.

The second aid comes as Rs 2 lakh crore package for concessional credit through Kisan Credit Card which will be extended to about 2.5 crore farmers. In just last two months, 25 lakh new Kisan credit cards have been issued for marginal farmers with a sanctioned loan worth Rs 25000 crores. Comprehensive coverage has also been ensured by including fisherman and farmers involved in animal husbandry under the scheme. The move is likely to promote digital payments and make short term loans more accessible. 

Most importantly, the move is likely to bolster India’s technology-driven development, which also holds true for the announcement on national portability of ration cards. One Nation One Ration card scheme will especially be beneficial for the inter-state migrants where they will be able to leverage the benefit in any state without worrying about their identification. The coverage amounts to about 67 crore beneficiaries in 23 states, which amounts to about 83% of the PDS supplied population. Thus, it becomes even more important to improve the PDS’s resilience with localisation of supply chains. Innovative mechanisms like introduction of processed foods and doorstep delivery in a contact less supply system are opportunities that still need to be capitalised on.

While the above measures will surely help the agriculture sector gain strength, we still have a long way to go to make our supply chains disaster resilient. It may require long-term measures in basic systems like Agricultural Produce Market Committee (APMC), Public Distribution System, electronic marketing of agricultural produce, developing superior food quality systems, enabling direct marketing and above all increasing farmers profitability. 

Increasing efforts in this direction will one day place India right on top of the global agriculture and food map and go a long way in realising the Prime Minister’s vison of an Atmanirbhar Bharat.

(The writer is Leader, Food and Agrilculture, PwC India. The views expressed are personal.)