Farmers need more than MSP

There is a ‘make believe’ campaign that Indian farmers are no longer interested in farming. According to a government survey, farmers instead would like to send their children to work in cities after getting educated. Increasing farm debts, numbers of reported cases of suicides and rise in farmer protests are cited as evidence of declining viability of farming and growing unrest in the community. While there is no denial of the fact that Indian farms can no longer support the ever-increasing population living in rural areas, and people need to diversify their livelihoods, the proposition that farming will no longer be a major occupation and a source of livelihood for the future population of our country is untenable.

Is solar farming a solution?

Farmers are looking to farm and need innovative solutions. However, some of the solutions put forward to help them do so are impractical. Take solar power. There is a new-found love among some civil society groups for ‘solar power’. They think that growing crops would no longer be profitable for farmers, and instead those who own wells should now also start producing electricity. The proposition is that they could run their wells using solar energy and sell the surplus energy to the utilities, and government should offer capital subsidy for solar PV  (photovoltaic) systems.

Currently, the government gives a subsidy of up to 85 per cent in some cases as the cost comes to around Rs 1 lac for a solar PV system having a peak power generation capacity of 1 KWp, which is sufficient to replace a connected load of 0.50 KW in the existing power distribution system. If the farmer has a 5-HP (3.75 KW) electric pump, it will be replaced by a 10-HP solar PV system, and for which the capital subsidy would be Rs 6.37 lac.

The proposition is that farmers could run their wells using solar energy and sell the surplus energy to the utilities, and government should offer capital subsidy for solar PV systems. It is then assumed that the farmer would then stop buying electricity from the utility and would start supplying the surplus electricity to the utility. However, the condition to make this model work is that the utility should purchase this power at a price 10-12 times higher than the price at which it now offers electricity to the same farmer (50 paise per KWhr) on the ground that it is clean power. With 16 million such pumps, the government will have to spend Rs 10.2 lac crore, while the full cost of production and supply of electricity in agriculture is less than Rs 60,000 crore per year. This becomes a recipe for ruining government finances and emptying our coffers. A lion’s share of this money would end up with the rich farmers who would go for solar PV systems.

Further, the farmers would not be able to run his/her motor as and when needed using a solar PV system. The availability of solar energy required to produce the electricity for running the pump is uncertain, especially during monsoon and winter due to cloud cover and poor sunlight, respectively. The minimum requirement for the farmer to make his energy production system self-sufficient is to have large capacity batteries, which are prohibitively expensive. If not, he would have to depend on the power supply from the grid.

As a result, the solar route is expensive, indirect and non-workable. A large capital subsidy for solar PV systems will put a huge burden on the exchequer and offering a tariff much higher than the average cost of electricity generation from conventional sources to solar farmers will drive the power utilities to bankruptcy. It will also lead to further depletion of groundwater as the farmers do not incur any cost of running the pumps.

Handling the water crisis

While there is no escape from meteorological droughts, we can work to reduce their impacts on agriculture. The widespread distress among farmers today is because they do not have adequate access to water to save their crops during droughts. We need to reckon with the fact that in water-scarce regions, there is a steady shift towards high-value fruits, vegetables, flowers and spices, most of which are also highly sensitive to weather change and water stress.

In order to find water, heavy investments are made by farmers in drilling bore wells in hard rock areas. The high incidence of well failures which results in crop loss due to water stress is a major cause of farm distress. We need to have an infrastructure to supply water to the semi-arid and arid dry lands so that the farmers could take the risk to grow high value crops. They should also be incentivised to improve water use efficiency.

Agriculture is still ‘gambling with the monsoon’ in India, more so in the semi-arid hard rock areas where wells are a major irrigation source. Recent research shows that investments in water use efficiency improvement technologies such as drips and mulching in arid and semi-arid regions would yield high social return for many row crops. The water transfer projects would also produce high returns, if we consider the societal cost of losing hundreds of thousands of precious lives every year and the economic loss incurred by our farmers during droughts. But, we need to charge for this expensive water volumetrically to achieve water use efficiency. The farmers would be more than willing to pay for this water if we can assure them of reliable supply.

Having said this, it must be noted that there are no magical solutions to the problems facing Indian agriculture. We have to face the fact that in arid and semi-arid regions, demand for water far exceeds availability. While irrigation of water supply has to be increased and its reliability improved, water use efficiency in crop production should also be enhanced. We should not ruin the farm economy by trying to make whimsical ideas work.

The writer is Executive Director of Institute for Resource Analysis and Policy. He is the author of six books and five edited volumes on water, energy and agriculture. Views are personal.