Diversification in Punjab-Haryana

A recently introduced scheme by the Centre and the Punjab government aimed at diversifying agriculture away from paddy cultivation, offers an incentive of Rs 17,500 per hectare to farmers to switch to less water-intensive crops. Despite this initiative, there are concerns about its effectiveness due to existing subsidies favoring paddy and the need for additional policy measures to ensure successful implementation.

Scheme Overview and Challenges

• Incentive Details: The scheme offers Rs 17,500 per hectare to farmers shifting from paddy to alternative crops, covering up to five hectares. The funding is shared between the Centre and Punjab government, totaling Rs 289.87 crore for 2024-25. While this is a positive step, further efforts are needed to achieve sustainable agriculture.
• Challenges in Haryana: Haryana has a similar scheme, but results have been lackluster due to a significant profitability gap between paddy and alternative crops like pulses and oilseeds. The current incentive of Rs 17,500 per hectare is insufficient compared to the subsidies farmers receive for paddy, which exceed Rs 38,000 per hectare.
• Need for Long-Term Policy: For effective diversification, the incentive should be operational for at least five years. The current policy does not specify if the Rs 17,500 is an annual amount or a one-time incentive, which could impact farmers’ willingness to switch crops if the support is not sustained.

Policy Recommendations and Support

• Reorienting Subsidy Policy: To make diversification more attractive, the incentive should match or exceed the existing paddy subsidies, ideally around Rs 35,000 per hectare. This adjustment would not increase state or central budgets but would involve reallocating existing subsidies from power and fertilisers.
• Ensuring Procurement at MSP: Farmers need assurance of procurement at Minimum Support Prices (MSP) for alternative crops. The Centre should involve NAFED in guaranteeing the MSP for pulses and oilseeds to reduce market risk and make crop diversification more feasible.
• Additional Support Measures: The scheme could be complemented by redirecting funds from paddy procurement to support other crops. Transitioning away from paddy could release substantial funds, which could be used to stabilize MSPs for alternative crops and support market-oriented approaches for high-value crops.

Environmental and Economic Benefits

• Environmental Impact: Diversifying crops will reduce groundwater depletion, greenhouse gas emissions, and soil degradation. Paddy cultivation requires extensive irrigation and contributes to environmental issues like stubble burning, while alternative crops need significantly less water and have lower emissions.
• Economic Opportunities: Successful diversification could open opportunities for carbon credits and high-value horticulture exports. Engaging Farmer Producer Organisations and developing logistics for export markets, particularly in West Asia, could enhance economic benefits for farmers.
• Collaborative Efforts Required: A successful transition will require coordinated efforts between the Centre and the state governments of Punjab and Haryana. This collaboration should focus on both policy adjustments and practical support mechanisms to ensure the scheme’s effectiveness and sustainability.

Practice Question

Q. Critically evaluate the new scheme introduced by the Centre and the Punjab government to incentivize crop diversification away from paddy cultivation. What additional measures are necessary to ensure its success, and how can these measures address the existing challenges in Punjab and Haryana?