Report of the Expert Group on Agricultural Indebtedness

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<strong>Expert</strong> <strong>Group</strong> on Agricultural Indebtednessnutrient depletion, which is a major cause <strong>of</strong> <strong>the</strong> stagnation <strong>of</strong> rice yields. A related seriousproblem emerging out <strong>of</strong> <strong>the</strong> use <strong>of</strong> fertilisers is nitrate contamination <strong>of</strong> groundwater from heavynitrogen applications in rice and wheat crops. Nitrate cannot be removed once it has entered <strong>the</strong>underground water system. O<strong>the</strong>r problems include deficiency <strong>of</strong> trace elements because <strong>of</strong>intensive cultivation. All <strong>the</strong>se factors have combined toge<strong>the</strong>r to reduce soil fertility. Proper croprotation, judicious combination <strong>of</strong> organic and chemical fertilisers and suitable agronomicpractices will be helpful in this regard.Technology Fatigue and Declining Pr<strong>of</strong>itability1.21 The 1990’s have also seen a gradual deceleration in <strong>the</strong> growth rate <strong>of</strong> most cropsspecially rice and wheat. This is happening even when <strong>the</strong> use <strong>of</strong> inputs such as fertilisers is on<strong>the</strong> increase, indicating increasing inefficiency in input use and decreasing pr<strong>of</strong>itability <strong>of</strong> cropproduction. For example, cost <strong>of</strong> cultivation data bring out that <strong>the</strong> pr<strong>of</strong>itability <strong>of</strong> rice cultivation(as measured by <strong>the</strong> rate <strong>of</strong> surplus over cost A2 + family labour) has been declining in recentyears in Haryana and stagnant with wide fluctuations in Punjab. The decline is more prominentfor wheat cultivation. Figures 1.1 and 1.2 give details.1.22 The seed-fertiliser technology seems to have exhausted its potential and is no longer costefficient. A major reason for this is reduced public investment in agricultural research andtechnology. The policy makers are relying more on technology imports ra<strong>the</strong>r than developingindigenous technology.Figure 1.1Rate <strong>of</strong> Surplus over Cost (A2+FL) in Paddy : Punjab and Haryana1601401201008060402001981-821982-831983-841984-851985-861986-871987-881988-891989-901990-911991-921992-931993-941994-951995-961996-971997-981998-991999-002000-012001-02Surplus (%)2002-032003-04PunjabHaryanaNote : Data for Haryana in 1993-94 and 1995-96 were not available.Source : Ministry <strong>of</strong> Agriculture, Comprehensive Scheme for Studying <strong>the</strong> Cost <strong>of</strong> Cultivation <strong>of</strong> Principal Crops inIndia, Various Years.20
<strong>Expert</strong> <strong>Group</strong> on Agricultural IndebtednessFigure 1.2Rate <strong>of</strong> Surplus over Cost (A2+FL) in Wheat: Punjab and HaryanaSurplus (%)2001801601401201008060402001981-821982-831983-841984-851985-861986-871987-881988-891989-901990-911991-921992-931993-941994-951995-961996-971997-981998-991999-002000-012001.022002-032003-04PunjabHaryanaSource : Ministry <strong>of</strong> Agriculture, Comprehensive Scheme for Studying <strong>the</strong> Cost <strong>of</strong> Cultivation <strong>of</strong> Principal Crops inIndia, Various Years.Relative Decline in Living Standards <strong>of</strong> Farmers1.23 Figure 1.3 shows that nominal farm business income per hectare <strong>of</strong> gross croppedarea deflated by Consumer Price Index for Agricultural Labour (CPIAL) showed an improvementin <strong>the</strong> first half <strong>of</strong> 1990s and <strong>the</strong>reafter registered a slowly declining trend with wide fluctuations.This has caused <strong>the</strong> widening <strong>of</strong> disparities between agricultural and non-agricultural incomes.That <strong>the</strong> income from agriculture is increasingly becoming inadequate to meet <strong>the</strong> basicconsumption requirements <strong>of</strong> farm households is clear from Figure 1.4. It is more so formarginal farmers whose incomes fall short <strong>of</strong> <strong>the</strong>ir consumption expenditure. Farm income <strong>of</strong>even medium-size farm households with two to four hectares <strong>of</strong> holdings is inadequate to meet<strong>the</strong>ir consumption needs.21
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Report of the Expert Group on Agricultural Indebtedness

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