In July, two interesting things happened that can help Indian farmers to a large extent in augmenting their incomes. First, the Union Finance Minister (FM) in her maiden budget speech asked why the annadata (farmer) cannot become the urjadata (producer of solar power). Second, in Parliament, the agriculture minister for state, responding to a question on the prime minister’s promise of doubling farmers’ income (DFI) by 2022, admitted that the existing set of policies cannot double farmers’ real incomes by 2022.
I welcome and appreciate this honesty, although the prime minister may still be optimistic about fulfilling his dream of doubling farmers’ income by 2022. I have been saying this for the last two years through this newspaper column that it is almost impossible to attain this goal by 2022 with the set of policies that the government has adopted. They will not achieve even half the target. The remaining four years till 2022-23 require real incomes of farmers to go up by 13-15 per cent per annum. But, as they say, nothing is impossible in this world, so here is my single suggestion to move in that direction.
But, before that, let us quickly recapitulate the debate on this slogan of doubling farmers’ income given by the PM in Bareilly in February 2016. The PM said it is his “dream” to double farmers’ income by 2022. It was followed by the setting up of a committee headed by Ashok Dalwai in April 2016. The Committee clarified real incomes will need to be doubled over seven years (over a base income of 2015-16), which requires a growth rate of 10.4 per cent per year. The Committee submitted its final report in September 2018. It comprises of 14 volumes (almost 3,000 pages) and 619 recommendations. These volumes contain a wealth of information, but I doubt any government can implement 619 recommendations even in five years. My humble submission to our friend Ashok Dalwai and his team is that they will do a great national service if they bring out a summary of 14 volumes in 20-25 pages, and prioritise just five to 10 recommendations from a laundry list of 619.
But, let us get back to the FM’s statement on the annadata becoming the urjadata. This one policy has the potential to double farmers incomes within a year or two. How? Here are the details.
The PM has also set a target of producing 100 GW of solar power by 2022. He wants the country to be one of the frontrunners in the International Solar Alliance for clean energy. So far, the model that has been adopted to develop solar power is inviting bids from large business players. And big players did enter, ranging from Mahindra and Mahindra to the Adanis and so on. Some of them, who entered early into power purchase agreements (PPA) with state governments, had to burn their hands when the costs came down and state governments forced them to revise the costs of PPA downwards, upsetting their economic calculations. But this model of generating solar power was not very inclusive. The land is locked for solar panels for almost 25 years, and the benefits go only to a few investors.
The alternative model is to help farmers produce solar power on their lands, making annadata an urjadata. After all, farmers occupy the largest chunks of land in this country. This model will be much more inclusive and can help augment their incomes significantly. There are two variants of this: One, replace all pump-sets, especially diesel ones, with solar pumps and the excess power generated through solar panels can be purchased by state governments at a price that gives the farmer a good margin over his cost of producing solar power. Second, encourage farmers to grow “solar trees” on their lands at a height of about 10-12 feet in a manner that enough sunlight keeps coming to plants below. Under this variant, the farmer can keep growing two irrigated crops as he has been doing, but the solar tree generates a lot of excess power that can be purchased by the state government. The power generated under the second variant is multiple times more than under the first variant, and therefore the income augmentation can also be several times more than under the first variant.
At ICRIER, we did a global survey on this and found that it is being practised in many countries from Japan to China to Germany, and India is ripe for this. The problem is of mobilising enough capital to instal these solar trees. In one acre you can have 500 solar trees in such a manner that even tractors can move through those and farmers can keep growing their normal two crops. It does not impact their productivity as there is ample sunlight coming from the sides for photosynthesis. The second pre-condition is that the state should be ready to do the power purchase agreement.
The current LG of Delhi, Anil Baijal, got excited about this idea and wanted to implement it in Delhi’s agri-belt as a demonstration plot. After several meetings with him and his team, the Delhi government actually announced a policy to that effect. As per their calculations, 500 trees can be put on an acre of farmer’s land; the investment in solar panels (trees) will be done by other business people. The only thing that the farmer has to assure is that for 25 years he will not convert his land to other uses. The economic calculations suggest that farmers can be given Rs one lakh/acre per annum as net income, with a six per cent increase every year for the next 25 years. This can easily double their income. He does not have to mobilise capital for solar panels. That is done by other business, who also make profit in the process.
Given that power consumption per hectare in Indian agriculture is still very low (see graph), this holds great promise for several poorer states. Can the Modi government unleash this revolution of solar power and double farmers’ income?
The writer is Infosys Chair professor for Agriculture at ICRIER