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Agrarian distress in India: Possible solutions

Author

Listed:
  • Barendra Kumar Bhoi

    (Indira Gandhi Institute of Development Research)

  • C.L. Dadhich

    (Indian Society of Agricultural Economics)

Abstract

Agrarian distress in India, built-up over time, has further deteriorated recently. At the height of the farm output, Indian farmers are a disappointed lot. Despite spectacular rise in agricultural production, they continue to languish in poverty. The underlying reasons for agrarian distress in India are: a) unviable agriculture; b) ineffective Minimum Support Prices (MSP) system; c) adverse terms of trade; d) rural indebtedness; and e) inefficient value chain in agriculture. There is a need to provide medium term solutions to the problem so that sub-optimal solution like loan waiver can be avoided. Among available solutions, government procurement operation covering all major crops may not be feasible, while price-hedging mechanism through derivative instruments like forward/future trading in farm products is yet to be popular among farmers. There is a great potential to protect farmers from distress sale through a composite insurance scheme, which can cover risks arising out of both crop failure and market failure. The value chain of agricultural products needs to be completely revamped to integrate farmers directly to the ultimate consumers. Long-term solution of the agrarian distress lies in improving farm productivity by a series of measures like mass irrigation programme through inter-linking of rivers, diversification of agriculture, smart farming by using latest technology. A scheme of exit route for distress farmers may go a long way in alleviating the situation.

Suggested Citation

  • Barendra Kumar Bhoi & C.L. Dadhich, 2019. "Agrarian distress in India: Possible solutions," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2019-017, Indira Gandhi Institute of Development Research, Mumbai, India.
    • Handle: RePEc:ind:igiwpp:2019-017
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    File URL: http://www.igidr.ac.in/pdf/publication/WP-2019-017.pdf
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    Citations

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    Cited by:

    1. Chattopadhyay, Apurba Kumar & Kundu, Raj Kumar, 2023. "Transition from Agriculture to Non-Agriculture Occupations in West Bengal, India: Causes and Way Forward," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 20(2), December.
    2. Choithani, Chetan & van Duijne, Robbin Jan & Nijman, Jan, 2021. "Changing livelihoods at India’s rural–urban transition," World Development, Elsevier, vol. 146(C).
    3. Bagchi, Niladri Sekhar & Mishra, Pulak & Behera, Bhagirath, 2021. "Value chain development for linking land-constrained farmers to markets: Experience from two selected villages of West Bengal, India," Land Use Policy, Elsevier, vol. 104(C).

    More about this item

    Keywords

    Agrarian distress; crop insurance; minimum support price; inefficient value chain; smart farming; farm productivity;
    All these keywords.

    JEL classification:

    • Q10 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - General
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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