Indian agriculture is at the crossroads. The unpredictable weather and lackluster government policies have made dependence on agriculture a losing proposition. Agriculture needs massive investments and needs it now. The newly formed UPA Government has promised to put agriculture and rural development in the spotlight. With the Common Minimum Program at the backdrop, the Government has announced some measures in order to revitalize this sector. How would these measures work on the ground and most importantly, would these measures make agriculture sustainable and globally competitive?

When Union Finance Minister Palaniappan Chidambaram recently attended the formal opening of an Indo-Japanese automobile plant in India’s Silicon Valley, he was a relieved man. His happiness was not so much on account of gaining the confidence of global business houses nor due to the strides made by the high-flying Indian software industry. The reason was the positive signs from the monsoon. “The monsoon concerns have faded and I hope improved rains would aid the farm sector, which underpins the country’s fast-growing economy,” he said. Basing on his analysis of the improved conditions he went on to predict a growth rate between 6.4% and 7.4% for the current fiscal.

One of the very important necessities of any business—credit and the credit delivery mechanisms—have not changed over time or say have not adapted to the requirements of the farming community. Lack of adequate credit, need for collaterals, laborious documentation and the long time taken by the banks—all these mean the farmers have no option
but to go to the moneylenders for credit who charge exorbitant interest rates (interestingly the government has not regulated the interest rates charged by these unscrupulous lenders). This high rate of borrowings does not make sound business sense for Indian agriculture. Unable to repay the loans and bear the torture from the moneylenders, some farmers seem to find death an easier way out. There have been reports of farmers’ suicides from across the country and surely there might be many that go unreported.