Agriculture in Punjab: Caught in throes of multiple woes

Agriculture in Punjab: Caught in throes of multiple woes

- in Analysis, Rural Economy, Special Post

Agrarian crisis in Punjab has adopted a political hue like any other state of the country, but the pitiability of small and marginal farmers, who are said to be about 65 per cent of nearly 18.5 lakh farm families, is much more acute than their counterparts in other parts of the country. Punjab is not only a major contributor to the country’s wheat, paddy and maize pool, but also the cauldron of farmer suicides. With only 1.53 per cent of India’s geographical area, Punjab had been annually contributing 60 per cent rice and 45 per cent wheat to the central pool of the country during 1975–2007. It is currently contributing 29 per cent of rice and 45 per cent of wheat to the Central pool.

However, loan waiver or no waiver, farmers including tenant farmers continue to commit suicide, which means that their problems are yet to be properly diagnosed by the policy makers, comprising bureaucrats, planners, bankers and of course political leaders. Only recently Punjab government announced Rs 9,500 crore loan waiver package, which will benefit nearly 10.25 lakh farmers. It is an insignificant amount if compared to the total farm debt outstanding of nearly Rs 74,000 crore. If the state government decides for remunerative prices for farm produces as per the recommendations of M S Swaminathan Commission, then annual burden on the state exchequer calculated to be around Rs 8,237 crore if the wheat is procured at the rate of Rs 1,805 per quintal against the estimated input cost of Rs 1,203 per quintal. At present, the government procures wheat at the rate Rs 1,625 per quintal.


All said and done, Punjab can afford to cough up Rs 8,237 crore per annum for the betterment of farmers, who are the backbone of the state’s economy and a principal guarantor to India’s food security. The state government can easily collect, say Rs 10,000 crore per annum, by levying extra cess on residential properties or taxing the rich by increasing the tax on petroleum products. According to the report of Prof RS Ghuman Committee, Punjab’s farmers suffered a loss of Rs 62,000 crore on account of poor minimum support price (MSP) during 1972 to 2007, a loss for which farmers were never compensated.

Notwithstanding the fact that since Punjab has been faced with agrarian crisis. There is weak linkage between agriculture and industry, and almost nil efforts to make agriculture profitable. The state government should think of agriculture income protection scheme and incentive-based policies for crop diversification. At present, policies are anti-diversification. Since 1986 people in Punjab have been talking of diversification but in vain, as the state remains addicted to wheat and rice cultivation. More public investment in agriculture has also become the need of the hour along with an emphasis on agro-based food processing industry. Initiatives should be made for the Second Green Revolution. Punjab should have agro export zones for potatoes, tomatoes, onions and other vegetables.

There is always mismatch between the implementation and policy announcements. The government claims to have various schemes to support farmers, but rarely tells the people their positive impact on the state’s farmers. Interest free crop loan of Rs 50,000 per crop to small and marginal farmers having land holding up to 5 acres of land, insurance cover to approximately 11 lakh farmers under the Bhagat Puran Singh Sehat Bima Yojana, Farmers Provident Fund-cum-Pension Scheme where government will make a matching annual contribution and the beneficiary will pay an annual contribution for at least 10 years, Kisan Vikas Chamber in Mohali to act as a voice of the farmers for flagging the issues related to development of agriculture and allied farming sectors,Farm Extension Services and Paddy Straw Challenge Fund —there is a phalanx of schemes always raring to help the farmers, but in vain.

Let me quote former Punjab Finance Minister Parminder Singh Dhindsa from his Budget speech for 2013-14 financial year, which he made on the floor of the House on March 20, 2013: “About two thirds of farm families are under debt in the state and the total farm debt is estimated to be Rs 35,000 crore. The debt waiver scheme of the Government of India announced in 2008-09 did not benefit the state much as there were few defaulters in the state…..4,688 cases of farm suicides have been reported during the year 2000-10.” He also revealed that free power was supplied to the farmers, which incurred the cost of Rs 5,511 crore during 2012-13. If the government stops free power to farmers, their problems will become more severe.

Nationally, the total area under rice cultivation has gone up to 376.77 lakh hectares, which keeps fluctuating. Higher area coverage is being reported from West Bengal, Bihar, Jharkhand, Uttar Pradesh, Madhya Pradesh and Tamil Nadu. The areas under rice cultivation in Punjab, Haryana, and Rajasthan have been stagnated over the years. In fact, Punjab and Haryana, which are major producers of rice and wheat in the country, have over exploited the cultivable land with production getting stagnated and inputs cost going up steeply.

The oil seeds cultivation too has picked up, but in the states like Maharashtra, Madhya Pradesh, Rajasthan and Uttar Pradesh. The coarse cereals cultivation area has also expanded in Andhra Pradesh, Madhya Pradesh, Jharkhand and Jammu & Kashmir. The cotton cultivation is also picking up in Gujarat, Rajasthan, Maharashtra, Haryana, Madhya Pradesh and Andhra Pradesh. In his Budget speech for 2013-14, then Finance Minister Dhindsa had admitted that “efforts of the state to diversify its agriculture have met with limited success. The Citrus Council and the support from the National Horticulture Mission (NHM) have resulted in increase in the area under horticulture crops from 47,000 hectare in 2005 to 71,000 hectare in 2012, but still there is a long way to go.”


The consumption of urea in Punjab is quite high along with other fertilisers. Since fertiliser prices have gone up manifold in the recent past, farmers, in particular small and medium land holders, are a worried lot. Planning Commission of India in May 2012 had estimated that ‘fertiliser consumption at 237 kg per hectare in Punjab, which was almost 1.76 times higher than the national average of 135 kg per hectare.’ There are various ways to reduce the cost on fertilisers use. One of these is the adoption of a suitable blend of organic and inorganic sources of nutrients, based on soil tests. The increasing use of urea has led to the erosion of soil fertility in the state so much that the input costs have gone up, but not the output. Agriculture in Punjab is growing at the rate of less than four per cent, while in Gujarat agricultural growth has gone up to nine per cent. At present, the subsidy policy is heavily tilted in favour of urea, also responsible for the nutrient’s injudicious and unabated use. India’s urea output is around 21 million tonne per annum, while the demand is 26 million tonne. The deficit is met through imports.

Then Finance Minister Parminder Singh Dhindsa in his Budget speech for 2013-14 had said: “Intensive farming regime in the state has been at a huge cost in terms of depleted water table and degradation of soils……At present, the alarming depleting ground water in central Punjab, the soil degradation due to erosion in Shivalik foothills and the water-logged and salted soils in south-western Punjab are important focussed areas in the state. Early plantation has been banned and efforts are being made to shift from paddy to alternate crops.” Needless to say, the
state’s farm economy is highly mechanised with almost 18 per cent of the country’s tractors being in Punjab.

No one will deny the fact that the pace of initiating effective measures remains slow. The government does not seem to be very serious about the basic problems being faced by the state’s industry and agriculture. What is missing exactly is the focus. The state has identified areas of concern and should concentrate on them to enter a new industrial order. Punjab cannot go for heavy industries nor can discard agriculture. The government can certainly ensure services sector grows faster. There is a need to put adequate attention to manufacturing sector. Farmers should be motivated to adopt fisheries and commercial dairy farming at a large scale. As the things stand today, one finds difficult to make a prediction if Punjab’s agriculture will ever achieve the growth rate of 8 per cent to nine per cent. The allied sector like fisheries would play a vital role in the long run in propping not only agriculture but also the state’s entire economy to a good extent. It will not be out of context to promote farm entrepreneurship. The people still hesitate to be entrepreneurs. There is a need to promote entrepreneurship among youths, which will set a kind of domestic industrial revolution. If they can be successful farmers and businessmen, then why not good entrepreneurs!

It is worth mentioning that traditionally, Punjab has never been a rice producing and consuming region. In the pre-independence Punjab, only 9 per cent irrigated area was under paddy in 1939 (Government of Punjab 1964). Paddy accounted for only 6 per cent of the cropped area in 1960–61 which increased to 69 per cent in 2012–13. The share of area under paddy in kharif cereals increased from 33 per cent in 1961 to 96 per cent in 2013. Out of the total irrigated area of 2,020 thousand hectares in 1960–61, 58 per cent was under canal irrigation. It declined to 27 per cent in 2014 (Government of Punjab 2015). The area under canal irrigation reached at its plateau (1,660 thousand hectares) in 1990–91, thereafter it started declining.

The number of tube wells in Punjab increased from 192 thousand in 1970–71 to 1,385 thousand in 2013–14. Additionally, about 417 thousand applications for new tube well connections were pending with the Punjab State Power Corporation Limited (PSPCL) on 31 March 2014 (Government of Punjab 2015). The per hectare tube well intensity, in terms of net sown area, increased from 0.047 in 1970–71 to 0.334 in 2013–14. In 2000–01, the share of tube well irrigated area increased to 76 per cent (3,074 thousand hectares) and thereafter, its share remained around 73 per cent. Not only the area under irrigation—and that too under tube well irrigation—increased but irrigation intensity also increased from 54 per cent in 1960–61 to 99 per cent in 2011.


In a majority of the districts, the draft of groundwater varies between 1.6 and 2.8 times of the recharge. Due to over-draft of groundwater and downward trend of average annual rainfall (from 652 mm during 1986–96 to 496 during 2009–13), the water table in 11 districts (out of 22) of Punjab has declined between 5.5 metres (Amritsar) and 18.41 metres (Fatehgarh Sahib) during 1996–2014. The number of over-exploited blocks increased from 53 (45 per cent) in 1984 to 110 (80 per cent) in 2011. Significantly, the area with water table depth of 20 metres or more increased from 0.4 per cent in 1990 to 50.5 per cent in 2010 in the above-mentioned districts (Government of Punjab 2013). The flooding method of irrigation, especially the puddling method for paddy plantation) and keeping water standing for months together has been largely responsible for such a grim situation.

The net deficit of groundwater for future irrigation development in Punjab increased from 8.01 million hectare feet in 2004 to 12.02 million hectare feet in 2011 (CGWB 2013). The quality of groundwater is totally unfit for consumption in nearly 24 per cent of the area and is marginally fit for human and crop consumption in about 22 per cent of the area. The mean depth of tube wells in central Punjab increased from 49 feet in 1960–70 to 128 feet in 2013, which has led to an increase in both the recurring and non-recurring costs of abstracting subsoil water leading to an additional financial burden on the farmers.


India is no longer an isolated economy. It is effectively wedded to the global market and economic order—advertently or inadvertently. WTO has been maintaining consistent pressure on India for capping the MSP for Indian farmers as well as the need to limit input subsidies being given for fertilisers, seed, pesticides and irrigation. The developed countries, including US, EU, Canada, and Australia are against giving India any permanent waiver. Treating MSP as an agricultural subsidy, the rich countries have accused India of exceeding the 10 per cent limit— called de-minimis level, which was imposed way back in 1986-88. According to a study, the average farm subsidy a farmer in India gets is Rs1,000 per month. America on the other hand provides an average monthly farm subsidy of Rs2.5-lakh. Agricultural subsidies in the developed countries have increased from US $ 350 billion in 1996 to $ 406 billion in 2011.

As per the Ministerial Decision adopted in Nairobi, developed countries will immediately remove export subsidies, except for a few agriculture products, and developing countries will do so by 2018, with a longer time-frame in some limited cases. Developing countries will retain the flexibility of covering marketing and transport costs for agriculture exports until the end of 2023, while the poorest and food-importing developing countries will enjoy additional time to cut export subsidies. The elimination of export subsidies by developed countries will help the cotton industry in developing countries, including India, to become more competitive.


Time is running out, but a lot good can be done to agriculture in India and in Punjab in particular. There many good thing about Punjab. If one goes by the health indicators, the state is doing much better than all India performance. The crude birth rate per 1000 population in the state is 18.1 as against the national figure of 23.8, while the infant mortality rate is pegged at 44 against the national figure of 58. In terms of Education Development Index (EDI), Punjab is doing far better than Haryana, Bihar, and Rajasthan. Punjab ranks 15th among Indian states on EDI. Literacy rate too in Punjab is much better than many states. The ease of doing business is much better than most of other states in the north India. Atrocities against Dalits are negligible. What is missing is lack of political will power and urge to act proactively.

(The writer is an independent commentator on social-economic and political issues. Views are his personal)

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