Economic Survey Volume 1 Chapter 6 (Latest)

ECONOMIC SURVEY   

VOLUME I

CHAPTER -6

CLIMATE, CLIMATE CHANGE, AND AGRICULTURE

 

THEME

This chapter pursues three objectives – first, to document the effect of changes in climactic patterns on temperature and rainfall. Second, to estimate the effects of fluctuations in weather on agricultural productivity. And finally, to use these short-run estimates in conjunction with predicted changes in climate over the long-run to arrive at estimates of the impact of global warming on Indian agriculture. In the end, some policy implications have been given for Indian agriculture.

 

OVERVIEW

 

Need to focus on agriculture:

  • It accounts for a substantial part of GDP (16%) and employment (49%).
  • Facilitate transition to more productive sectors of the economy- AN IRONY.

 

As per Sir Arthur Lewis- economic development is always and everywhere about getting people out of agriculture.

Agriculture cannot be the permanent source of livelihood due to its productivity level.

Transition requires higher productivity in agriculture to produce greater food supplies, provide rising farm incomes and permit accumulation of human capital.

Long run agricultural performance:

  • Real agricultural growth since 1960 has averaged about 2.8% in India while China’s annual agricultural growth over the long run has exceeded that of India by a substantial 1.5 %
  • The volatility of agricultural growth in India has declined over time (from standard deviation of 6.3 % between 1960 and 2004 to 2.9 % since 2004). But it is higher than that of China where the ups and downs have been virtually eliminated.
  • Contributing factor to the volatility is that agriculture in India continues to be vulnerable to the vagaries of weather because close to 52% (73.2 million hectares net sown area of 141.4 million hectares net sown area)of it is still un-irrigated and rainfed.

 

Issues / Problems Faced by Indian Agriculture:

  • Farm revenues are declining – Although production is increasing, Market prices are falling below MSP.
  • Malthusian Era Might return in Indian Agriculture- Productivity will have to be increased and price and income volatility reduced.
  • Shortage of water and land, deterioration of soil quality
  • climate change induced temperature increase and rainfall variability

 

TEMPORAL AND SPATIAL PATTERNS OF TEMPERATURE AND PRECIPITATION

  • The broad pattern of rising temperatures post 1970s is common to both seasons. The average increase in temperature between the most recent decade and the 1970s is about 0.45 degrees and 0.63 degrees in the Kharif and Rabi seasons respectively.
  • Rainfall for Kharif and Rabi season has declined on average by 26 mm and 33 mm respectively. Annual average rainfall has on average declined by about 86 mm.
  • Increasing frequency of extreme weather outcomes:
  • Rainfall extremities– Proportion of dry days (rainfall less than 0.1 mm per day), as well as wet days (rainfall greater than 80 mm per day) has increased steadily over time.
  • Days with extremely high and low temperatures– Rise in the number of days with extremely high temperatures, and a corresponding decline in the number of days with low temperatures.
  • Temperature increases have been particularly felt in the North-East, Kerala, Tamil Nadu, Kerala, Rajasthan and Gujarat. On the other hand, Punjab, Odisha and Uttar Pradesh have been the least affected.
  • Rainfall deficiencies are more concentrated in UP, North-East, and Kerala, Chattisgarh and Jharkhand. While, there has actually been an increase in precipitation in Gujarat, Odisha and Andhra Pradesh.

Thus, spatially temperature increases and rainfall declines seem to be weakly correlated.

  • Temperature increases have been particularly felt in the North-East, Kerala, Tamil Nadu, Kerala, Rajasthan and Gujarat. On the other hand, Punjab, Odisha and Uttar Pradesh have been the least affected.
  • Rainfall deficiencies are more concentrated in UP, North-East, and Kerala, Chattisgarh and Jharkhand. While, there has actually been an increase in precipitation in Gujarat, Odisha and Andhra Pradesh.

Thus, spatially temperature increases and rainfall declines seem to be weakly correlated.

IMPACT OF WEATHER ON AGRICULTURAL PRODUCTIVITY

The two key findings:

  1. The impact of temperature and rainfall is highly non-linear and felt almost only when temperature increases and rainfall shortfalls are extreme.
  2. Extreme shocks have highly divergent effects between unirrigated (defined as districts where less than 50 percent of cropped area is irrigated) and irrigated areas, almost twice as high in the former compared to the latter.

 

Crop impacts – crops grown in rainfed areas – pulses in both kharif and rabi—are vulnerable to weather shocks while the cereals—both rice and wheat—are relatively more immune.

  • Temperature increases have been particularly felt in the North-East, Kerala, Tamil Nadu, Kerala, Rajasthan and Gujarat. Parts of India, for example, Punjab, Odisha and Uttar Pradesh have been the least affected.
  • Increase in precipitation in Gujarat and Odisha and also Andhra Pradesh have been noticed

 

Crop Impacts:

  • 1°C increase in temperature reduces wheat production by 4 to 5%.
  • In the last decade (2004-2014), the impact of rainfall shocks in yields remains unchanged, but the effect of temperature shock increases threefold (relative to the first decade).

 

IMPACT ON FARM REVENUE

  • Once again, largest adverse effects of weather shocks are felt in unirrigated areas.
  • In a year where temperatures are 1°C higher farmer incomes would fall by 6.2% during the kharif season and 6% during rabi in un-irrigated districts.
  • 1°C increase in temperature would reduce agricultural growth by 1.7%, and a 100 mm reduction in rain would reduce growth by 0.35%.
  • Inter-governmental Panel on Climate Change (IPCC), predict that temperatures in India are likely to rise by 3-4° C by the end of the 21st century.
  • Farmer income losses from climate change could be between 15 % and 18 % on average, rising to anywhere between 20 % and 25 % in un-irrigated areas.
  • On one hand, shocks reduce yields but on the other, lower supply should increase local prices. But results indicate that the “supply shock” dominates – reductions in yields lead to reduced revenues.

 

 

ANALYSIS OF LONG RUN

  • A study by the IMF (2017) finds that for emerging market economies a 1 degree Celsius increase in temperature would reduce agricultural growth by 1.7% and a 100 mm reduction in rain would reduce growth by 0.35%
  • Climate change models predict that temperatures in India are likely to rise by 3-4 degree Celsius by the end of the 21th It implies that in the absence of any adaptation by farmers and any change in policy (such as irrigation), farm incomes will be lower by around 12% on an average in the coming years. Unirrigated areas will be the most severely affected, with potential losses amounting to 18% of annual revenue.
  • As per the observed decline in precipitation over the last 3 decades, farm incomes will decline by 12% for kharif crops and 5.4% for Rabi crops.
  • Models of climate change also predict an increase in the variability of rainfall in the long-run, with a simultaneous increase in both the number of dry-days as well as days of very high rainfall. This channel alone would imply a decrease in farm incomes by 1.2 percent.
  • At least 3 main channels through which climate change would impact farm incomes- an increase in average temperatures, a decline in average rainfall and increase in the number of dry-days.
  • Taking into account, correlation among 3 channels, there are stark findings: farmer income losses from climate change could be between 15% and 18% on average, rising to anywhere between 20% and 25% in unirrigated areas.

 

POLICY IMPLICATIONS

  • Need to spread irrigation– against a backdrop of extreme groundwater depletion especially in North India- technologies of drip irrigation, sprinklers and water management –captured in the “more crop per drop” campaign should be accorded greater priority in resource allocation. The power subsidy needs to be replaced by DBT so that power use can be fully costed and water conservation furthered.
  • Need to embrace agricultural science and technology– It will not only be vital in increasing yields but also in increasing reliance to all the pathologies that climate change threatens to bring in its wake: extreme heat and precipitation, pests, and crop disease, especially important for crops such as pulses and soyabean that are most vulnerable.
  • Use of weather based models– such as drones and building on the current crop insurance program (Pradhan Mantri Fasal Bima Yojana) to determine losses and compensate farmers within weeks.

 

Distinctions between two agricultures in India:

Type

Cereals in Northern India

Non-cereals in central, western and southern India

Description

Well-irrigated, input-saddled, price and procurement supported.

Challenge: to change generous support to less damaging support in the form of DBT.

Inadequate irrigation, continued rain dependence, ineffective procurement, insufficient investment in research & technology, high market barriers, challenging non-economic policy

CONCUSIONS

India needs bottom up planning and benevolent-and-strategic top-down planning and reforms. The cooperative federalism model of the GST Council that brings together the Center and States could be promisingly deployed to further agricultural reforms and durably raise farmers’ incomes.