Effect of COVID-19 on Indian Manufacturing Sector and Opportunities for Future Growth

Introduction

While the 2019-20 novel coronavirus pandemic has had several economic effects around the world due to various reasons, one of the major reasons comes from China being the world’s manufacturing hub. As the virus spread across China, which was the origin of this outbreak, factories across the country have shut down and logistics has been severely affected. As a lion’s share of many of the manufactured goods used around the world come from China, this meant reduced availability of goods around the world due to reduced production in the country and delayed arrivals due to logistics issues.

This has also affected India as many of the products consumed by customers as well as several raw materials, intermediates and components used by businesses in the country come from China. As a result, while the country’s authorities have done a phenomenal job in containing the spread of the virus within the country, the country’s economy has been hit as severely as other countries where the virus has spread a lot more. Most of India’s manufacturing units concentrate on making finished products for customers, whereas raw materials, components and intermediates are imported, and as a result, these units could not function either.

However, this pandemic has provided a major opportunity for India to increase its manufacturing capabilities as companies would look for production opportunities outside China. The manufacturing industry is also a massive job provider. It is estimated that every new job in the manufacturing sector has a multiplier effect and create 2-3 new jobs in the service sector [1]. This is invaluable for a country like India, which not only has an unemployment rate of 7.78% [2], but a high disguised unemployment rate especially in the primary sector and a large number of people working in a role they are overqualified for. Apart from this, India’s massive young population means that a million people enter the workforce every month and they all need new jobs. Therefore, India should grab this opportunity to bolster its manufacturing sector by both hands. However, in order to do this, India will need to make some policy changes that makes the country more business-friendly so that businesses pick India over other countries as their next manufacturing destination.

Pharmaceutical and Chemical Sector

India has often been labelled as the pharmacy of the developing world. This is because India is the largest producer of cheap generic drugs globally as well as one of the leading producers of low-cost vaccines. The Indian pharmaceutical industry was valued at $36.7 billion in 2018 and was expected to grow at a huge CAGR of 22.4% to reach $55 billion in 2020 [3].

However, the ongoing COVID-19 pandemic has severely affected the Indian pharmaceutical industry. This is because Indian pharmaceutical companies import several intermediates and active pharmaceutical ingredients (APIs) from China, which was the origin of the pandemic. While things are now improving in India’s eastern neighbour as the number of new cases is declining, leading to the re-opening of factories and restarting of production of these products, Indian pharma companies now have to rely on inventory and are in some cases, forced to reduce production. This can have long-term consequences as Indian pharma can lose out on market share to companies that are less dependent on Chinese intermediates and APIs.

Nine of India’s nineteen major pharma manufacturers have their own API manufacturing facilities, and only one of these companies produces intermediates [4]. In such a scenario, one of India’s best performing industries is heavily exposed to external factors not under its control for production. It is reported that around 70% of the country’s total API requirement is met by imports from China, which is the world’s leading manufacturer of APIs.

This can provide a massive opportunity for industries upstream of the pharmaceutical industry, such as the biotechnology industry, specialty chemical industry, petrochemical industry as well as the agriculture and agricultural products industry, the latter in case the active compound or an intermediate is sourced from a plant. At the same time, it also makes it necessary for pharmaceutical companies to backward integrate and set up more facilities for the manufacturing of APIs and intermediates. The benefits for companies upstream of the pharmaceutical industry such as the specialty chemical industry are immense, as they have ready buyers in the country who would purchase their products in large quantities and the cost to transport the goods would be minimal.

However, there are several challenges in this process. Building a large plant for performing chemical reactions is one that requires high initial capital expenditure and is also heavily regulated. Apart from that, India has major challenges when it comes to doing business that affect all businesses alike. This includes the large amount of red tape as a result of which businesses need to follow several procedures before they can begin operations, as a result of which India performs poorly in the Ease of Business index.

The Indian pharmaceutical industry has not only given the country significant revenues through exports but also brought the country goodwill, as millions of lives were saved around the world thanks to affordable medicine developed by Indian pharma companies. The best example is of Cipla developing their own combination of HIV antiretrovirals which would cost $1 a day [5], thereby making it affordable for several patients in sub-Saharan Africa which was the epicentre of the disease. In order to consolidate India’s position and reputation as the pharmacy of the developing world, the government will now have to incentivise production of chemicals and compounds across the entire pharmaceutical value chain in order to ensure the steady production of life-saving drugs by Indian pharma companies at affordable prices.

Electronics Sector

India is the second largest manufacturer of mobile phones in the world, behind China. This happened due to the massive jump in the number of manufacturing units for smartphones and allied products from 3 in 2014 to 268 in 2018. The low labour cost and abundant skilled labour has attracted several mobile phone companies such as Samsung and Xiaomi to set up shop in India. 82% of smartphones used in India are manufactured domestically. The Ministry of Electronics and Information Technology has set an ambitious target of $400 billion turnover in electronics manufacturing and producing one billion mobile handsets by 2025 [6].

However, this apparent strength in the manufacturing of mobile phones, this industry has been massively affected by the outbreak of COVID-19 in China. This is because while mobile phones are produced in the country, 87 per cent of the components are imported. Of these imported components, nearly three quarters comes from China [7]. For certain components like mobile phone display, nearly 90 per cent of it is imported from China. In most Indian manufacturing units, these components are imported and assembled to form the finished product. As a result, Indian mobile phone production is in dire straits as components are not arriving from China. This led to increase in price of many mobile phones and more delayed launches. This problem is not limited to mobile phones only, but also for other electronic gadgets such as laptops, set top boxes, printers and inverters. As important components such as printed circuit boards are primarily produced in China, manufacturing of all electronic appliances in the country were affected. Raw materials like aluminium and copper are also sourced from China [8].

One of the challenges of the electronics industry is that innovations happen at a rapid pace which makes components that are barely a few years old obsolete. This means that either Indian manufacturers will have to improve their R&D capabilities to industry standards or that industry leaders in electronics components will have to open manufacturing units in India, with the latter appearing more likely. In order to attract such companies to start manufacturing in India, not only should the ease of doing business in the form of reduced red tape be improved, but also the logistics sector as many of the raw materials like aluminium and copper need to be imported. A strong aluminium and copper recycling industry can also be built around the electronics industry in order to reduce the dependence on imported metal.

Mobile phones and other electronics items are extremely complex and require the assembly of hundreds, if not thousands, of components. India’s massive population and increasing digital penetration means that many of these products will eventually be used as finished products within the country. With the final assembly of mobile phones and other electronics goods happening in this country due to its large population, anyone who decides to manufacture electronics components will find a massive demand. Incentivising companies to produce electronics components in the country will lead to a huge increase in the number of manufacturing units and a significant jump in the number of jobs available to India’s young population.

Automobile Sector

India is the world’s fourth largest automobile market as well as the fourth largest automobile producer. Over 26 million automobiles were sold in FY19 while over 30 million automobiles were sold in the country [9]. This number includes all kinds of motorised vehicles including two-wheelers, three-wheelers, passenger cars and commercial vehicles.

However, not only do many motor vehicles companies, but also several Indian original equipment manufacturers (OEMs) source some of their components from China. 27 per cent of India’s auto component imports come from China. This number increases for more high value-add and customised components as commoditised components have alternate suppliers [10]. Passenger vehicles, two-wheelers and commercial vehicles were affected by the closing down of Chinese factories. Vehicles like tractors have high localisation levels and are therefore, less dependent on imports. The components that OEMs source include magnets, fuel injunction pumps, turbo chargers, LEDs, steering system components, air bag components, electronic components and electric vehicle components.

The coronavirus outbreak happened around the same time Indian OEMs were transitioning to BS-VI emission standards. Various new components, which were to be sourced from China, were required for transitioning into the new emission norms. The new emission norms would have increased costs and this along with the already reduced demand has led to a decrease in production which has now been amplified by the delay in arrival of components from China.

While there has been a slight decrease in automobile demand in the last one year due to lesser economic growth, this is expected to change in the longer term. Furthermore, with governments across the world including India planning on having only electric vehicles on the streets in ten years’ time, vehicles that run on fuel will have to be replaced with electric vehicles. India’s economic growth in the long term will lead to an increase in disposable income, and with that comes increased automobile sales.

In such a scenario, it would be extremely beneficial to the country if the entire value chain of the automobile sector is made in India. A company planning to produce auto components that are currently not produced in India will have several Indian OEMs willing to buy from them. However, in order to convince leading auto component manufacturers to set up shop in India, there should be provisions by the government to provide land where a manufacturing unit can be built and ensure that operations can be started without any excessive regulation and procedures.

Conclusion

A pandemic like COVID-19 is naturally expected to damage the economy the world over, as governments across various continents have issued lockdowns. However, it is necessary to ensure that Indian businesses are less exposed to disasters happening elsewhere, as that would minimise problems related to production. As China is getting back up with no local cases reported on March 19, factories are restarting operations and that is great news for Indian businesses since they were exposed to China and depended on Chinese factories for their raw materials. But as the disease is wreaking havoc in Europe and the United States, Indian businesses are worried about the reduced demand in these markets.

On the raw material side, the solutions involve developing more raw material in India and getting into relationships with multiple sellers from many different parts of the world, so that even if one important seller is affected due to a disease outbreak or any other disaster in that part of the world, a production unit in India will suffer less as it can procure raw material from a seller elsewhere. On the market side, the development of India as a market should be a long-term objective. As India’s disposable income increases, Indians will consume more than what they do now. This will only happen when more Indians have jobs that utilise their skills and growing the manufacturing sector would lead to this in the longer term.

It has been seen that coronavirus has especially affected those manufacturing industries that India is relatively stronger at such as pharmaceuticals, electronics and automobiles. This is because while the country does well in producing the eventual finished product, it does so by importing an intermediate or a component from China, and therefore, production has been affected by the unavailability of raw material.

This calls for the government to develop a new manufacturing strategy where not only finished goods are made in India, but also the entire value chain so that the country’s production units are not exposed to setbacks happening in other countries. In the case of pharmaceutical industry, that would include the active pharmaceutical ingredients and intermediates. In the case of electronics and automobile industry, that would include all the various components that need to be assembled in order to produce a functional gadget or vehicle. The production of these several new products in these value chains will lead to several new jobs that would reduce the unemployment level of the country. For those sectors in which India is not a strong manufacturing player, the country should ensure that in a strategy to develop manufacturing in that sector in India, the entire value chain is built and not just the final product.

This can be done by developing special economic zones catering to particular industries, in which the entire value chain will be manufactured. This will be extremely attractive to companies planning to set up new manufacturing units due to the ready availability of raw material and buyers of their finished goods.

References

Authored by: Abheek Dasgupta, Associate

Contact details:

abheek.dasgupta@intueriglobal.com

About Intueri: Intueri Consulting is a management consulting firm with nearly 100 man-years of experience in managing organizational challenges, including managing firms and clients through some of history’s biggest crisis periods such as the 1997 Asian Financial Crisis, 9/11 led crisis, 2007-08 global financial crisis. This vast repository of organizational management experience, accrued by senior management, over decades of managing large multinational firms and clients enables Intueri to develop effective, efficient crisis management strategies and provides it with a unique perspective into events and decisions that take into consideration all important aspects of a firm, including assessment of primary, secondary and even tertiary order potential effects on the firm on account of implementation of strategies. Intueri has been helping organisations enter new areas within the chemical sector in order to diversify their product mix with the help of existing players who are looking to buy something they need or to sell something that they make. The firm has consultants with extensive domain knowledge both in the chemical and pharmaceutical sector.

Research Paper: Connecting Rural Dots Touching Lives

The Structural Shift from traditional farm sector to allied farm and non-farm sectors in Rural India focussing West Bengal

Rural economy of India

India is the world’s second largest agrarian economy accounting for 7.4% of total global agricultural output. It is also the world’s 3rd largest producer of food. A bumper harvest of winter crops and higher production in livestock and fisheries sectors aided a 5.3% growth in agriculture GDP in the first quarter of 2018-19, up from 3% in the same period last year. Production of rice, wheat, coarse cereals and pulses registered growth rates of 15%, 1.2%, 15.6% and 17.3%, respectively, during the Rabi or winter season in the agricultural crop year of 2018-19. About 45% of the gross value added or GVA in the agriculture sector was contributed by livestock, forestry and fisheries, which registered a combined growth rate of 8.1% in the first quarter of 2018-19. Agriculture GDP grew at 3.4% in 2017-18, lower than 6.3% in the previous year.

Rural transformation-an essential part of structural transformation-entails greater interaction along the rural-urban spaces, thereby promoting agricultural productivity and greater marketable surpluses. Over time, from predominance of farm sector, non-farm activities have gained importance. Alongside, with agriculture being commercialized, a large share of the country expected to be urban by 2050. Declining contribution of agriculture to the national income from 18.2% in 2014-15 to 16.5% in 2019-20, reflecting
the development process and the structural transformation taking place in the economy. This further has given rise to growth of agricultural allied sectors, non-farm activities and even self-employment opportunities and rural tourism.

As part of allied sectors-Animal Husbandry, Dairying andFisheries activities, along with agriculture,continue to be an integral part of human life.Livestock income has become an important secondary source of income for millions of rural families and has assumed an important role in achieving the goal of doubling farmers’ income. Livestock sector has grown at a compound annual growth rate of 7.9 per cent during last five years.

Milk Production and its growth rate is depicted below:

India continues to be the largest producer of milk in the world. Milk production in the country was 187.7 million tonnes in 2018-19 and registered a growth rate of 6.5 per cent over the previous year. Egg production in the country, which was 95217 million numbers in 2017-18, increased to 103318 million
numbers in 2018-19.

Fisheries, another important source of food, nutrition, employment and income in India. The sector provides livelihood to about 16 million fishers and fish farmers at the primary level and almost twice the number along the value chain.The sector has been showing a steady growth in the total GVA and accounts for 6.58 per cent of GDP from agriculture, forestry and fishing. The fish production in India has registered an average annual growth rate of more than 7 per cent in the recent years. The sector has been one of the major
contributors of foreign exchange earnings with India being one of the leading seafood exporting nations in the world.The total fish production in the country stood at 13.42 million metric tonnes (provisional) during 2018-19. Of this, the marine fisheries contributed 3.71 million metric tonnes and the inland fisheries
contributed 9.71 million metric tonnes.

Fish Production over the last five years for Major Producing States (in ‘000 Tonnes) is depicted below. West Bengal is the second highest in fish production after Andhra Pradesh.

With this natural process of development in shifting activities to non-farm in rural India, it is crucial to take note of the thrust areas which have emerged as newer sources of income, employment, alleviating poverty and thus creating sustainable living.

Rural India-Focusing on Non-farm Activities

The Rural Non-Farm Sector (RNFS) encompasses all non-agriculture activities: mining and quarrying, household and non-household manufacturing, processing, weaving, artisans, craftsmen, etc.As per the tenth agricultural census, the average size of agriculture landholding declined to 1.08 hectare in 2015-16 from 1.15 hectare in 2010-11. This explains the rise of employment in non-farm sector. It is observed that 64% of rural employment is in the agriculture sector, while the share of agriculture in rural output is 39%.
Hence, reducing the dependence of rural masses on agriculture as a source of income will help improve the overall income of the rural population.

Another identified means of rural livelihood generation and sustainable living is through Self Help Groups and Self Employment. The National Bank for Agriculture and Rural Development’s (NABARD) Development Policy Department defines Self Help Group (SHG) as-“Voluntary organization of people operating within a frame work of rules and regulations for common economic and social objectives with an approach of participatory decision-making and sharing of benefits in an equitable manner”.

SHGs may be registered or unregistered groups of micro entrepreneurs, preferably having homogenous social and economic background, who choose to come together to mutually support each other and find ways to improve their living conditions.

Challenges in Rural Non-Farm Sectors
  • Infrastructure: The most significant bottleneck is the quantity, quality and reliable of infrastructure.
  • Regulatory restriction on small sectors:

1. In the initial stages, capital investment restrictions were imposed to protect the small-scale sector, from predation by large industry.

2. Reservation of products for the sector was initiated to create a domestic market and quantities restrictions imposed to protect them from competition from imports.

3. Capital investment limits have discouraged economies of scale, and concessions offered to small industry have created adverse incentives against re-investment. Reservation of products for the small-scale sector has gradually reduced in significance.

4. The decision of the government to put all the reserved items in the open general license category from April 2005 meant free import of such items at the prevailing tariff rate.

5. With the latter slated to come down over time to around 20 per cent as per the WTO norms, this will effectively signal the end of protection for the small-scale industry.

  • Education and Awareness: High levels of illiteracy in rural India have hampered the growth of the rural non-farm sector.
  • Migration of skilled laborers from rural to urban regions also creates shortfall of workforce in the rural small-scale industries.
Government initiatives supporting non-farm activities
  • The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), 2005: It provides one hundred days of guaranteed wage employment in every financial year to every household whose adult members volunteer to do unskilled manual work.
  • Deendayal Upadhay Grameen Kaushal Yojana: It is implemented by the Ministry of Rural Development to drive the national agenda for inclusive growth, by developing skills and productive capacity of the rural youth from poor families. It funds training projects benchmarked to global standards, with an emphasis on placement, retention, career progression and foreign placement.
  • DeenDayalAntyodayaYaojana-NRLM: It seeks to seeks to alleviate rural poverty through building sustainable community institutions of the poor.
  • Aajeevika Grameen Express Yojana (AGEY): It is related to operating road transport service in backward areas by the SHGs which provide an additional avenue of livelihood for SHGs.
  • Pradhan Mantri Mudra Yojana (PMMY): Under this scheme collateral free loans are provided by Banks, Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs) to small/micro business enterprises in the non-agricultural sector to individuals to enable them to set up or expand their business activities.
SHGs and Ses

Currently there are 57,42,515 registered Self-Help Groups in India of which 86,974 have less than 5 members in their groups. In West Bengal there are 7,89,731 registered SHGs of which, 19,733 have less than 5 members in the groups. Typically, a SHG consists of 5-20 members. However, there are a few SHGs that have less than 5 members.SHGs are usually formed by NGOs and other agencies, such as micro-finance companies, and financial support is provided by banks. In certain cases, banks take the lead towards formation of SHGs and also provide required financial support.

Major roles of SHGs
  • SHGs facilitate members to become self-reliant and self-dependent,
  • SHGs aid the economically weak and marginalized people, especially women, realize their entrepreneurial and business management skills through training and access to capital,
  • Provides collateral free loan with terms decided by the group at market driven rates,
  • SHGs help reduce vulnerability of the poor during times of crisis (sickness, death etc) and promote economic self-reliance and SHGs also facilitate community coherence

Specific to SHGs, the Central Government has support initiatives such as:

  • Multiple programs facilitate bank linkages for SHGs. The Self-Help Group – Bank Linkage Programme (SHG-BLP) is a key program that has evolved to be a cost-effective mechanism for providing financial services to the marginalized people. This is now the world’s largest microfinance programme (in terms of client base and outreach) that link SHGs to formal banking institutions.

  • The SHGs that follow the Panchsutras of the DAY NRLM, viz., conduct regular group meetings, practice regular savings within the group, regular internal lending based on the demand of members, timely repayment of loan and maintenance of proper books of accounts are considered to be good SHGs and over years have proved themselves to be good customers of Banks.

Thus, the SHGs play a key role towards livelihood generationand thereby facilitates eradication of rural as well as urban poverty. One of the major reasons for rural poverty in our country is low access to credit and financial services. The SHGs enable poverty alleviation by providing financial support to the members through micro credit.

Allied Farm and Non-Farm Sectors of West Bengal

West Bengal is a predominantly agrarian state withagriculture contributing 18.8% to the state’s GSDP in2014-15.As the rural economy of West Bengal is very vibrant comprising of 2.7 percent of India’s geographical area but supporting nearly 8 percent of its population,it has resulted in high population
density and a low average landholding size (0.77 Ha per household). Among an estimated 71.23 lakh rural households, 96 percent are small and marginal farmers.Increasing population pressure with a low percapita landholding base has resulted in diversification of earning activities outside the farm sector.

Allied sectors such as animal husbandry, fisheries, food process and horticulture and SHGs and SEs have been growing rapidly. The significance of the livestock sector in the economy of our State can be attributed from its contribution of 4.41% to the total SDP and 18.6% of the agricultural SDP. It is pertinent to highlight that employment opportunities in traditional agriculture sector are shrinking rapidly and there is virtually no scope for employment of rural unskilled youths in capital intensive industrial units. On the other hand,
demands for milk, meat, egg & other livestock related products are growing exponentially due to population explosion, high GDP growth, growing urbanization and change in the food habits of the middle & upper strata of the society. Animal Husbandry and Dairy sectors therefore have the seminal potential to open up new vistas for large scale employment generation.

Similarly, West Bengal is endowed with fishery resources, water bodies and most congenial aqua climate for fish farming making the fisheries sector one of the crucial industries of the State. 40% of water bodies (brackish waters) in West Bengal are used for cultivation of shrimps majorly Vannemei type of shrimps.The annual estimated fish production in the State in 2015-16 was at 16.71 lakh ton as compared to 14.72 lakh ton during 2011-12 (registering a growth of 13.5%). Shrimp production in 2015-16 has been 1.18 lakh ton compared to 1.06 lakh ton in 2011-12. West Bengal contributes around 21-23% to India’s fish production.

Agro and food processing industries form a very important part of the state’s economy. The West Bengal government is setting up a number of policies and plans to focus on the selected areas like vegetables, fruits, fisheries, rice, poultry, dairy and floriculture.entrepreneurship for processing of fruits, vegetables & horticulture items etc. The State Govt. is encouraging the farmers for mechanization through the use of modern agriculture implements and machines form timely farm operation and reduction in the cost of production.

In the state, the main processed products in the Fruits and vegetables category are jams, jellies, pickles, sauce, canned sliced fruits and squash. Agro Food parks are being developed in the state with the intention of providing support to small & medium entrepreneurs by assisting them financially in setting up capital intensive facilities like cold storages, warehouses, quality control labs, effluent treatment plants etc.

Also, as an alternative means of livelihood generation, SHGs and SEs have flourished in West Bengal. Various Departments under the Government of West Bengal have formulated schemes and policies to enable livelihood generation, facilitate Self-Employment (SE) and support activities of SHGs. The support includes providing skill building trainings to SHGs and Ses.

The Department of SHG & SE, Government of West Bengal also provides multiple platforms through which SHGs & SEs can market their products. The Department organizes district level as well as state level fairs and exhibitions for SHGs and SEs, such as Sobola Mela and also facilitates participation of SHGs & SEs in the annual India International Trade Fair and exhibitions. Other Departments under the Government of West Bengal also organize fairs that allow SHGs and SEs to market and sale their products.

The SHGs & SEs produce several handloom and handicraft products, artifacts, cane and bamboo products, metallic products, imitation ornaments, incense sticks, handmade paper bags and others. They are also engaged in floriculture, organic farming, embroidery works (such as Zari and Zardouzi works), kantha stitch works, terracotta works, dokra art and several others.

However, the SHGs & SEs often experience challenges in terms of marketing their products, competing with organized enterprises (MSMEs and large industries) and contending with popular brands. In this respect as well, the Government has taken initiatives to promote products and help market them such as Karmatirtha is a flagship programme of the West Bengal Government. Training-cum-Marketing Complexes are being set up in districts and sub-divisional headquarters to facilitate training of SHGs for Skill Development and marketing of their products and SHGs receive skill development support to market their products from the Government under the scheme. Also, the West Bengal Swarojgar Corporation Limited (WBSCL) has opened two marketing outlets at Bhawanipur, Kolkata & Purulia District Magistrate Office. One Common Facility Centre at Diamond Harbour, South 24 Parganas has also been set up, where SHGs are able to process, produce & sell different products under one umbrella.

Conclusion and Policy Suggestions

Coupled with the Government initiatives, organizations such as NABARD too play an eminent role in shaping the rural economy today. Policy interventions by the Centre and State Governments mostly remain sub utilised creating institutional challenges. The most important issue however is to channelize
the assistance schemes to the farmers’ doorstep through appropriate institutional arrangements. In such context therefore, often collaboration with suitable partners could help reap better results.

For instance,

  • Small and efficient Farmers’ Groups (FG) comprising of 10-15 farmers are to be promoted similar to women’s Self-Help Groups in each Gram Panchayet area. Such FGs should be provided with funds in larger quantity and with longer repayment period compared to women SHGs.
  • For effective delivery of the various ongoing assistance and farmers’ welfare schemes, experienced Non-Governmental Organizations and/or specialized professional agencies are to be engaged purely as facilitators for helping the lowly educated farmers in availing various schemes’ benefits.
  • West Bengal is characterised by extensive cultivation of vegetables, most of which are presently not covered under PMFBY. Thus, PMFBY should have much wider coverage in crops across different seasons in States and for West Bengal, effects of Bangla Fasal Bima Yojana (Bengal pulled out of PMFBY in 2019) is yet to be seen compared to the present provisions PMFBY.

  • The assistance schemes for livestock (free distribution of livestock and fodder) needs to be more concentrated towards the Lateritic zone as the households in this zone have a better ongoing practice in livestock maintenance and related activities.
  • Krishi Vigyan Kendras (KVK) in each district need to be funded to set up their own extension units in each block of the district and scale up their successful demonstration projects and create a larger pool of local progressive farmers.
  • Farm insurance scheme- National Crop Insurance Programme (NCIP) / Rashtriya Fasal Bima Karya kram (RFBK):

Based on our research we identified certain areas, addressing which could help achieve greater heights in agriculture as well as allied sectors such as animal husbandry, food processing, dairying and fisheries to provide an assured secondary source of employment and income especially for the small and marginal farmers.

  • Encourage alternative farming and diversification of agriculture– Growing dependence on potato cultivation and inadequate (55%) storage facilities for the same is diverting attention towards opting production of other items like pulses and lowering reliance on potato. Also, 90% of the potato grown are of table variety. There is a need to allow diverse varieties of potato production. This would lower risk of wastage of potato and generate revenues from another shifting crop production as well.
  • Increase farmer income– Facilitate better credit facility and improve infrastructure including transport, cold storage facilities, irrigation, etc. Around 95% farming households are formed by small, marginal and sharecropper farmers. They lack financial support to adopt enhanced farming
    techniques and market their products.
  • Post-harvest management– One of the biggest challenges that lies with perishable agricultural items is that of wastage and crop loss. This is prevented with the help of suitable post-harvest management techniques which provides enough storage, curing, drying and infrastructural
    facilities. Suggesting proper measures of post-harvest operations and cold chain infrastructure to ensure minimum loss of fruits and vegetables would be the focus in this section.
  • Enhanced promotion of agri business– With increasing pressure on farmers and agri business to be more profitable and competitive. This requires better management, decision-making, improving the efficiency of resource use, and strong marketing. In order to enable this, specialised agribusinesses such as extension and advisory services, consulting and input services, marketing
    and trade organisations, and those bringing the benefits of the latest information and communication technology to agriculture and the rural economy is required.
  • Exportability of agricultural items– Given the inherent conducive natural soil, climate and terrain, the production is of superior export quality and in surplus quantities. This provides ample scope to explore the overseas market for exporting items. By identifying suitable markets for such commodities expansion in exports could be further facilitated.

Also, an inclusive approach to provision for agricultural credit has to be undertaken to address the issue of skewness in its regional distribution. While Government measures are in operation aimed at improving productivity and its marketing, efforts of farmers need to be supplemented with better coverage of direct income/investment support. The West Bengal Government has undertaken an effective measure in which payment for government procurement of rice is being directly made to the farmers’ bank accounts. Similar steps are to be further initiated and implemented to create an efficient and smooth ecosystem in terms of income and institutional support reforms to provide healthy living.

Thus, in line with India’s vision of inclusive growth, economic growth is necessary for substantial poverty reduction and for the growth to be sustainable in the long run, it must be broad based across sectors and
inclusive of large part of a country’s labour force. As a key element of inclusive growth, agricultural development is essentially eliminating the macro problems of low agriculture growth, low quality employment growth, low human development, rural-urban divides, gender and socialite qualities, and
regional disparities from a nation. Hence, as inclusive growth considers the pioneer as the Government, policy actions and structural reforms in this sector is broad based yet critical.

In today’s scenario, amidst the challenging global happenings we pause to look at the domestic prevalent factors for a sector which serves as the building block of our nation and State feeding 70% of rural population and 50% of urban population with primary source of livelihood for 58% of India’s population.