Briefing

Punjab Needs a Rs 10,000 cr High-Value Crop Diversification Package over Five Years, says Ag Economist

Agricultural economist Ashok Gulati, who was Chairman of the Commission on Agricultural Costs and Prices (CACP) during Manmohan Singh Government II, says Punjab must diversify out of low-value cereals into high-value crops like horticulture and livestock farming to get out of the rut of minimum support prices and earn higher incomes, sustainably.

In an article in the Indian Express, he says, Punjab needs a Rs 10,000 cr fund spread over five years, contributed by the Centre and the state, to fund the transition.

He says in terms of agri-GDP per hectare of gross cropped area (which is the area available for planting multiplied by the number of crops taken in a year), Punjab has the 11th place.  Andhra Pradesh, Tamil Nadu and Kerala, he says, add more value per hectare because they have diversified into poultry, dairy, fruits, vegetables, spices and fisheries. Even West Bengal and Himachal Pradesh do better than Punjab on this score.

Gulati says this is despite almost 99 percent of Punjab’s agriculture being irrigated, which insulates it against weather risks. Its fertiliser consumption at 212 kg per hectare is higher than the national average of 135 kg/ha. So productivity of wheat and rice are high: five tonnes/ha and four tonnes/ha respectively against the all-India average of 3.5 tonnes/ha and 2.6 tonnes/ha.

Punjab’s farming families are 1.09 million or less than 1 percent of the country’s total of 146.45 million. The state’s budget provision for subsidised (free) power in 2020-21 is Rs 8,275 cr. The centre’s fertiliser subsidy for the state was about Rs 5,000 cr in 2018-2019. In other words, each farming family gets Rs 1.22 lakh in subsidies – the highest in the country. (Their income is also the highest at Rs 23,133 per month or Rs 2.77 lakh per year, as per Nabard, the agriculture development refinance bank).

The state’s per capita income (not just of farming persons) was the highest in the country from 1966 to the early 2000s. In 2018-19, it was 13th in the list. There are several reasons for this including inadequate industrialisation and an underdeveloped services (IT, financial services) sector. While these need attention, high agricultural growth through crop diversification and promotion of processing can help reverse much of the slide.

(Photo: Punjab farmers protesting at Singhu border. Photo by Vivian Fernandes)

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