A technology-enabled development agenda towards a future-ready India.
India has two facets. One, an urban, tech-savvy India in big cities with tall buildings—35% of the population. The other of rural India, which produces our food and houses 65% of the population. The latter holds the spirit of Bharat, the land that our Constitution extols.
Unfortunately, because Bharat lacks 21st-century readiness, there is a wide income disparity between the two. A vast majority lack quality wage and employment prospects in rural India. As a result, 43% of India’s workforce (per World Bank data) depends on agriculture, which contributes only 17.6% to GVA, with low 3% YoY growth. Pre-Covid, industry and services contributed 27.4% and 55% respectively to GVA, and have higher growth potential. Accordingly, mean agri-income is Rs 56,000, compared to Rs 1.6 lakh for industry and Rs 2.2 lakh for services. The ratio is 1:3:4, resulting in high income inequity.
An overwhelming majority of rural India is perpetually dependent on subsidies and government help, even 70 years post-Independence. We must invest in making Bharat future-ready and our people secure with increased income.
NEW DEAL FOR AGRICULTURISTS
MARKET PRICES: By reducing the scope of the Essential Commodities Act and dismantling APMCs, PM Modi is actively empowering our farmers. After decades of restricted selling and repressed pricing, farmers are at last free to sell at market prices. The FPO model (Farmer Producer Organisations), where farmers aggregate their produce to sell as a collective is yielding results. However, selling directly to market requires grading, sorting, quality control, efficient harvesting, access to markets and supply chains, and the ability to realise competitive prices. Here, technology and real-time information platforms are foremost enablers.
AGRI-TECH PLATFORMS: Over the last 5-7 years in Bengaluru and other cities, 500+ agri-tech companies have formulated and validated tech-enabled strategies for farmer empowerment. These platforms encompass real-time market intelligence, post-harvest intervention and storage capabilities, price forecasting, D2C offerings, competitive financing and insurance, and market linkages. Their use has resulted in 20%-25% more income for farmers, instant payment via COD and UPI, low wastage, and other significant benefits. GOI can consider an Rs 5,000 crore fund under NABARD as part of Atma Nirbhar Bharat Abhiyan (ANBA) to invest in 1,000+ agri-tech companies that develop platforms and tech-enabled strategies to connect farmers all across India to markets and supply chains. These platforms will prove significant in realising Prime Minister Narendra Modi’s vision of doubling farmer income by 2022.
DIFFERENTIATED AGRI-STRATEGIES: Cereal production contribution towards total agri-value is reducing while the output of fisheries, milk production, animal husbandry, and fruits and vegetables via horticulture is increasing. Farmers can diversify their products to increase income, mitigate risk, and access export markets. This will require training on multiple crop inputs, growth cycles, supply chains, farm management, quality assessment, and other crucial factors. It is no longer viable to have one agri-policy for a whole state or even a district. Each taluk must have a differentiated plan based on climate and crop conditions, storage facilities, and market linkages, and every farmer must be empowered to pursue a differentiated strategy.
RETURNING MIGRANTS AND EXCESS AGRI-LABOUR: An estimated 7.2 crore migrants had left labour-surplus states like Uttar Pradesh, Bihar, West Bengal and Rajasthan, due to insufficient opportunities to sustain such large populations. They have emigrated to Delhi and the developed states of the south and west in search of work. Due to surplus labour availability and lack of focused skills development, they have earned meagre wages for many years in the hope of sending Rs 5,000 every month to their families.
For the first time, due to the Covid-lockdown, we see a reverse migration to the heartland states. Now is the time to roll out a future-readiness investment agenda that takes advantage of the reverse migration. It is also estimated that 25% of the workforce in agriculture might be sufficient, and the excess labour (from 43%) be systematically moved to other sectors at the rate of at least 2% per year.
LABOUR-INTENSIVE INDUSTRIES: Most industries are located near India’s few urban areas; instead, they must be located closer to labour-surplus regions. Census 2011 shows India has 7,933 census towns. We can pick 5,000 of these all over India, especially in the labour-surplus heartlands, and locate/relocate industries nearby. Uttar Pradesh Chief Minister Yogi Adityanath promised that none of the returning labour has to seek out jobs again, and labour-intensive manufacturing is a comprehensive way to fulfil this promise. Many returning migrants have skills, participated in large projects and lived in urban India. We can tap into this unexpected resource and enable them to become the nuclei of great revival and growth.
SPECIAL ECONOMIC ZONE MODEL: Of India’s 725 districts, 400 could be classified as new SEZs, where labour-intensive industries from a defined list can be incentivised to set up. Flatted factories are a quick way to build and launch industries to tap into labour. With this model, Ranchi has today become a centre for garment manufacturing, with workers travelling from the nearby 10-30 km to access viable employment opportunities there. A new set of incentives and cash investment are required to set this up all over India. The FICCI Skills Committee has provided an in-depth analysis of commodity-based clusters which can help.
SKILLS DEVELOPMENT: GOI has a Rs 3,000 crore annual budget for skills development. In light of the migrant crisis, we suggest expanding the yearly budget to Rs 15,000 crore. There is a need to analyse the level of skills in labour-surplus states, impart skills for labour-intensive manufacturing and other sectors, and allocate the skills efficiently to work projects. Electronic platforms like Better Place that link skilled labour to markets will be crucial to manage such an extensive skilling program. This drive will lead to the most comprehensive skills development and economic empowerment program in the world.
ENCOURAGE ENTREPRENEURSHIP: Many of the returning migrants have been part of cottage industries, large construction projects, manufacturing product lines, sales operations, and other aspects of business. If those with an entrepreneurial mindset get capital from banks or the government via MUDRA and other schemes, they can set up enterprises in their hometowns and villages. They could utilise their connections in large cities for market and distribution efforts. It is suggested that Rs 1 lakh crore be set aside as part of ANBA to provide at least Rs 1 lakh to approximately one crore entrepreneurs. There will be some failures, but the successes could change the face of economic empowerment in the heartlands.
The migrant crisis and pandemic are throwing open new opportunities to create the largest entrepreneurship and upskilling drive in the world. This will create the impetus for India’s long-marginalised “poor” to believe in their own skills and indeed be Atma Nirbhar.
TECHNOLOGY IS THE DIFFERENTIATOR CONNECTIVITY: In a vital first step, 1.4 lakh gram panchayats have been enabled with optic fibre connectivity during NDA-I. GOI can incentivise telcos to accelerate 4G networking across India to cater to banking needs like credit and deposits, and connecting farmers, artisans, and other rural producers to markets, distribution and supply chains instantaneously.
NEXT-GEN EMPOWERMENT: An extensive technology training program for children of farmers, artisans, etc., is required. Many of these children have learnt the family business and intimately know the pain of being unable to market goods to the end consumer and procure market prices for the same. The Deshpande Foundation in North Karnataka has successfully taught many children of farmers and artisans the use of technology in the Hubli-Dharwad area. The children are now utilising technology and connectivity to do business online and push for their family’s success. This model can easily be implemented across rural, labour-surplus areas to empower the next generation.
Recently, all our hearts went out to a young woman in Karnataka who posted a video about surplus onion production on their farm. Middlemen were offering a price much lower than what they had spent to grow it. The video caught the attention of Chief Minister Yediyurappa, who immediately deployed officials to facilitate competitive selling in Bengaluru. The woman’s entrepreneurial skills enabled her family to procure market prices and highlight the plight of onion growers in the region.
In conclusion, Bharat needs a New Deal. This technology-enabled 21st-century readiness plan will empower our farmers, rural workers, artisans, migrant labour and others to drive their future and strive for success. Too long has India’s vast population been reduced to day-to-day subsistence and reliance on subsidies. It is time to break out of that cycle, unlock our nation’s true potential and take Atma Nirbhar to its logical conclusion.
T.V. Mohandas Pai is Chairman, Aarin Capital Partners and Nisha Holla is Technology Fellow, C-CAMP.