Agriculture Summit 2006: Reforms for Empowering the Farmer
October 18-19, 2006, Vigyan Bhavan, New Delhi

Inaugural Address by Dr Manmohan Singh, Hon'ble Prime Minister of India

I am happy that 1½ years after the 1st Agriculture Summit, we are meeting again to review the status of implementation of policies necessary for the development of our agriculture sector. I compliment the organizers for not only conceiving of this event but sustaining this interest in agricultural development. In the 2½ years that our government has been in office, we have given the highest priority to the agriculture sector. I have often spoken of offering “a New Deal for Rural India” and of the need for a “Second Green Revolution”. It is a matter of satisfaction that in this period, we have moved on a wide range of fronts to deal with the backlog of neglect of Indian agriculture in recent years.

Ladies and Gentlemen,

We cannot deny the fact that there is a crisis in agriculture in many regions of the country. The more I travel to interior areas and the more I meet farmers there, I get the feeling that in many parts of the country, agriculture is being carried out in adverse conditions. The problems may be attributable to a wide range of causes, but the end result is that there are large tracts where farmers seem to be in acute distress. It is also a fact that in many other parts, agriculture is seeing a major transformation for the better and the farmers in these parts are reaping the benefits of technology, irrigation, better infrastructure, improved marketing facilities and advanced risk management strategies. It is this duality that we need to tackle.

How do we address the needs of subsistence farmers who can barely manage a living out of agriculture while we address the needs of farmers who are ready to take on the world in quality, productivity and efficiency? There are no uniform answers for these challenges nor are there any readymade solutions which we can pull out of the hat. What is needed is a sustained effort spread over a few years so that subsistence farmers can be pulled out of their marginal existence while advanced farmers are propelled onto the global platform. This is the real challenge for agriculture in the next decade.

Ladies and Gentlemen,

When we review our agricultural situation, it is clear that there are four deficits we need to bridge. These four deficits are (i) the public investment and credit deficit; (ii) the infrastructure deficit; (iii) the market economy deficit; and (iv) the knowledge deficit. Taken together they are responsible for the development deficit in the agrarian and rural economy.

It will be the endeavour of our Government to bridge each of these deficits. We are committed to ensuring that our farmers have access to adequate and affordable credit. Many steps have been taken in this direction. More is due to come. We have initiated programmes and projects to provide adequate and affordable infrastructure in rural areas. We are investing in irrigation and rural drinking water to meet the water needs of our farmers and rural households. We are improving the functioning of agricultural markets so that the efficiencies that arise out of an integrated common market with efficient intermediation can accrue to farmers as additional income. We are committed to increasing the productivity of our farms through the infusion of knowledge, modern science and technology.

Ladies and Gentlemen,

Our Government has succeeded in arresting the decline in public investment in the agricultural sector. We have also increased the availability of credit at reasonable rates to farmers. Short-term crop loans are now available at a 7% rate of interest for which we are providing subsidized refinance from NABARD. While we had planned to double institutional agriculture credit in three years’ time, we have in fact been able to meet this target in almost two years. To improve the reach of institutional credit, the cooperative credit system is being revived through a Rs. 13,000 crores package.

However, we need more thinking on the credit front. While the financial system should do more for the credit needs of farmers, we need to raise some questions. What do farmers need - a lower rate of interest or reliable access to credit at reasonable rates? Is our existing institutional framework adequate for meeting the requirements of our farmers who are a diverse lot? Do we need to create new institutional structures such as SHGs, micro-finance institutions, etc., to provide improved and reliable access to credit? Or do we need to bring in money lenders under some form of regulation? It is necessary that we find answers to these questions in the near future. Last year, I had sought suggestions on measures to improve the institutional framework for providing long term capital for investment in agriculture. I am afraid that we have not made much progress in this regard. I request you to apply your collective minds to this again.

Ladies and Gentlemen,

To address the situation of agricultural distress, a package has been put in place for some districts in Maharashtra, Andhra Pradesh, Karnataka and Kerala. An Expert Group has also been set up to look into the problems of agricultural indebtedness in its totality and suggest measures for providing relief to farmers across the country. We are setting up the National Rainfed Area Authority to promote knowledge based interventions covering all aspects of agriculture in rainfed areas. I hope this body would be able to enhance the effectiveness and efficiency of existing government programmes, and bridge the knowledge deficit in rainfed agriculture.

While we have attempted to bring about a qualitative improvement in agricultural research and extension systems, I must admit that we need to do much more to improve the reach and effectiveness of rural extension services. These services were an important part of the foundation of Green Revolution. Their neglect must be reversed as part of our effort to narrow the knowledge gap in agriculture. We need greater application of technology to improve farming of many crops, particularly in dryland areas. A renewed thrust has to be given to research in dryland farming, with a focus on farming systems as a whole.

Our flagship programme, Bharat Nirman, is aimed at addressing the rural infrastructure deficit. Bharat Nirman, along with the Backward Regions Grant Fund, will improve rural infrastructure and provide greater irrigation. I am confident that we will be able to ensure a perceptible increase in public and private investment in these two critical areas which will certainly have a positive impact on the conditions under which agriculture is practiced.

Irrigation does require greater investment. We are making all out efforts to achieve a quantum leap in investments in irrigation. States too are trying their best. However, we must think of ways of incentivising greater investment in irrigation – both public and private. We also need to shift from a focus on yield per acre to yield per unit of water consumed to improve efficiency in water use.

Ladies and Gentlemen,

Another important challenge before us is to increase the real incomes of farmers. As leaders of industry you should be more aware of this need than most. You know very well that there is a strong correlation between agrarian prosperity and demand for manufactured goods and modern services across the country. This visible correlation tells us that the route to sustaining high economy-wide growth rates has to be through accelerated agricultural development.

One aspect of such development will be improved returns to investment for farmers. This we cannot grudge the farming community. We need to recognize that they need better returns for their efforts. This may hurt the middle class to a small extent, but it benefits the farmer. We need a balanced approach where we provide for the food security of the poorest sections without compromising the returns to farmers. While the Government will do whatever is necessary to keep prices under check, and ensure moderate rates of inflation, we cannot sacrifice the interests of the farming community. Our strategy for agricultural development must be based on improving the real incomes and the quality of life of the farming community.

Ladies and Gentlemen,

I note from your agenda that you will be addressing many of these issues. It is important that each and every one of our State Governments also become partners in our collective endeavours as it is the State Governments which are charged with implementation of any agricultural strategies that are evolved. I would also like your Summit to consider the recommendations of the National Commission on Farmers. They have given a comprehensive report covering a wide range of issues.

Ladies and Gentlemen,

The challenges in agriculture are complex. What we need is a focused, inter-sectoral approach to these challenges, covering all dimensions, so that we can achieve the required growth rates in a short time span. We need viable and credible strategies for the more backward of our regions, dryland areas, specific crops and specific categories of farmers.

I do believe that the time has come for us to adopt a fundamentally new perspective on rural development and agriculture. This perspective must recognize the need for ending the rural-urban divide in each of the deficits I have mentioned. While a large number of people will continue to migrate from rural areas to urban areas, and while urbanization will continue apace, our rural economy must retain its people and ensure a remunerative livelihood for them. A balanced development of urban and rural economies is vital for sustainable development and social and political stability.

So far our approach to rural development and agriculture has been incremental, we have only tried to do more and do things better. We have not sought a paradigm shift in agrarian policy and agrarian development. I sincerely hope that in the future, we can strike out afresh in agriculture, seeking new pathways for rural prosperity. I hope your Summit contributes to this process.

Thank you.