Published on 16/03/2018 2:59:30 PM | Source: Prabhudas Lilladher Ltd

Rural Resurgence Day - Rural India on cusp of sustained growth - Prabhudas Lilladher

Posted in Special Event Reports| #Special Report #Prabhudas Lilladher Ltd

We organized “Rural Resurgence Day” to get ground feel of rural economy and impact of recent Govt. initiatives on Agriculture and rural India. The speakers were Mr. Pasha Patel (Chairman state Agriculture Price Commission, Maharashtra), Mr. Pradeep Lokhande (Founder Rural Relations), Mr. Upmanyu Patil (CEO, Sakhi Unique Rural Enterprise), Mr. Sudarshan Suryawanshi (CEO, Agriwatch and ISAP) and Mr. Kishore Shah (Panel Member, sugar Industry expert committee). The discussion reassured our thought process that the rural India led by Education, electrification, road connectivity, cell phone and data revolution increasing rural aspirations. This is in line with our inferences from our visit to KISAN fair in December 2017 near Pune (Click on the Link for Detailed Report). Although certain pockets of agriculture are under pressure due to structural problems, recent resolve of Govt to double farm income doesn’t seem to be a pipe dream and can make rural India a much bigger consumer market over the coming few years.

Key Takeaways are:

* Rural Distress visible in pockets only: Rural Distress is visible in pockets and is not spread across length and breadth of the country. Monsoon failure in rain fed regions and higher initial outlay on Hybrid seeds, fertilizers and other inputs leads to stress in case of crop failures or decline in selling prices.

* Doubling farm income not a pipe dream, but will take time: Given static area under cultivation, increase in farm output/hectare, organic farming and niche crops hold key to improve farm incomes. Crop holding capacity of farmers as against immediate selling at the time of harvesting and fair determination of MSP based on current cost data can improve farm gate prices. Govt needs to undertake crop grading, sorting and effective market interventions in order to prevent extreme price movements in crop prices. Govt has increased import duties in Soybean, sugar and pulses and provided export incentives on Deoiled cake which has increased realisations in pulses and select crops.

* Rural India Changing, demand outlook remains bright: Education, mechanization, improved road connectivity and communication are changing the face of rural India. 81% of rural India has Pucca roads, electrification is 99% and rising. Mobile, internet and TV penetration is increasing rural aspirations on lines of urban India. Bikes, Mobiles and Jeans are new fashion statement in rural India, although it is a huge market for duplicates. More than 6.5mn rural outlets are selling FMCG products and rural youth is spending Rs35-50/month on value added services in mobiles which indicate that the rural India is getting ready to catch up with their urban counterparts in consumption patterns.

Rural and farm Distress visible in pockets only

Rural India houses 2/3rd of population and 58% of which has agriculture as means of their income. Inclusive and accelerated growth targets can’t be achieved with 2/3rd of population being on the fringes. Although farm distress is there for sure, it is in specific pockets and attempts are being made to mitigate risks in agriculture.

* The farm distress is there for sure, however it is not uniform across states and regions. It is a function of availability of irrigation facilities, monsoon distribution, crop price fluctuations and other natural calamities.

* Education, electrification, mechanization, improved connectivity and communication are changing the face of rural India. 81% of rural India has Pucca roads while ~99% of villages are now electrified.

* Several technology start-ups are showing strong interest in Agriculture, there are issues on ground level but can be sorted out by skilling farmers and encouraging entrepreneurship in them. * Farming is changing as outflow on account of hybrid seeds, fertilizers, diesel and other inputs is rising. So any crop failure or price distortion impacts farmers much more than it used to be in the past and leads to distress.

* Farmer dependence on cash crops has been increasing as it fetches better returns. However, Cash crop failures led to greater problems due to higher cost of production vis-à-vis other crops. Inadequate MSP and lack of crop insurance have also contributed to farmer distress and suicides in recent times. According to the panel, mixed use and multiple cropping are good measures to reduce dependence on single crop and thereby reducing risk.

* Concepts like crop insurance has limited benefits due to complexities in the process. Soil health card is being used in very limited number of crops where the realization is higher such as grapes.

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