Prabhu Pingali

Anaka Aiyar

Mathew Abraham

Andaleeb Rahman

PALGRAVE STUDIES IN

AGRICULTURAL ECONOMICS

AND FOOD POLICY

Transforming

Food Systems for a

Rising India

Palgrave Studies in Agricultural Economics

and Food Policy

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PrabhuPingali • AnakaAiyar

MathewAbraham • AndaleebRahman

Transforming Food

Systems for a Rising

India

Palgrave Studies in Agricultural Economics and Food Policy

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PrabhuPingali

Tata-Cornell Institute for Agriculture

and Nutrition

Cornell University

Ithaca, NY, USA

MathewAbraham

Tata-Cornell Institute for Agriculture

and Nutrition

Cornell University

Ithaca, NY, USA

AnakaAiyar

Tata-Cornell Institute for Agriculture

and Nutrition

Cornell University

Ithaca, NY, USA

AndaleebRahman

Tata-Cornell Institute for Agriculture

and Nutrition

Cornell University

Ithaca, NY, USA

India poses some of the greatest puzzles in the world for agricultural econ-

omists and food policy analysts. How does a country with some of the

most selective universities in the world, and home to some of the planet’s

most technologically advanced companies, nonetheless have an agriculture

sector still surprisingly dependent on smallholders practicing rain-fed cul-

tivation using decades- or centuries-old methods? How is it that some of

the world’s wealthiest families live among the largest number of under-

nourished people in the world? How can some of the most logistically

sophisticated supply chains in the world coexist alongside agricultural

input and output value chains that routinely fail poorer farmers? These and

similar juxtapositions make the food systems of India especially fascinating

and complex.

The study of India’s food systems is valuable not just for educational

purposes, however. The prospective human well-being impacts of solutions

to the various obstacles that impede India’s various food sub-systems hold

enormous promise. For the past several years, the Tata-Cornell Institute

for Agriculture and Nutrition (TCI), led by Professor Prabhu Pingali, has

been at the forefront of eld-based, multi-disciplinary, rigorous scientic

research to unpack the complexity of India’s food systems and to identify

and evaluate prospective solutions. This volume shares with readers the

fruit of ndings by TCI and its collaborators, along with what seem the

blueprints for many years’ efforts by them and dedicated others.

Professor Pingali and his co-authors, Drs. Anaka Aiyar, Mathew

Abraham and Andaleeb Rahman, use a Food Systems Approach (FSA) to

frame a fascinating exploration of the multiple mechanisms that leave a

Foreword

vi FOREWORD

tragically large number of Indians malnourished. The integrative FSA lens

helps Pingali etal. weave together compelling evidence as to how a highly

successful agricultural research and extension system’s intense focus on

staple cereals—especially rice and wheat—has led over time to nutrient

imbalances in the food system that contribute to both obesity/overweight

and micronutrient (i.e., mineral and vitamin) deciencies without fully

resolving the undernourishment challenge. They likewise explain how lag-

ging smallholder productivity growth interacts with poor sanitation and

lack of access to clean drinking water to compound the nutrient composi-

tion of India’s food systems and lead to widespread malnutrition amidst

plenty. They clearly explain how dramatic urbanization compels changing

institutions, structures and technologies in farming and in post-harvest

value chains, and how climate change is increasingly exerting similar pres-

sures. And social institutions and cultural customs, not least of which the

evolving roles women play in rural India, feature prominently throughout

the volume. At a time when the term “intersectionality” has grown popu-

lar in political discussions, Pingali et al. illustrate the concept’s power

when applied to the study of food systems in which biophysical, commer-

cial, cultural, demographic, economic and sociopolitical forces all intersect.

The diversity of experiences among India’s states—many the size of

independent nations elsewhere in the world in terms of both land mass

and population—mirrors what one observes within global regions such as

Latin America, Africa or Southeast Asia. Indeed, that immense diversity

poses a signicant challenge to studying India; one always risks misleading

homogenization. The authors skillfully navigate between general descrip-

tions of national-level policies and phenomena and much more local,

state-level assessments of specic experiences. Pingali et al.’s diagnostic

assessment of appropriate goals and agendas for specic sub-national-scale

food systems avoids the sorts of vacuous statements that so often charac-

terize one-size-ts-all descriptions. Their analyses emphasize nuanced dif-

ferences among the vast nation’s sub-populations.

The careful analyses in this volume merit attention because the Indian

case is of global importance. Furthermore, the dramatic structural transfor-

mation India has been undergoing for the past half century offers instructive

lessons for the rest of the low- and middle-income world. Pingali etal.’s

systematic, FSA-based diagnostic method as well as their conclusions deserve

careful consideration by those working on similar challenges elsewhere in

the globe. The context of this book may be distinctively Indian, but many

of the challenges the authors describe and the prospective solutions they

advance are remarkably general.

vii FOREWORD

It is a great pleasure to include Prabhu Pingali, Anaka Aiyar, Mathew

Abraham and Andaleeb Rahman’s outstanding book in the Palgrave

Studies in Agricultural Economics and Food Policy series. I recommend it

enthusiastically to all students of India, of the process of international

development, of food systems and human health and nutrition outcomes,

and of thoughtful, multidisciplinary research.

Cornell University, Ithaca, NY, USA ChristopherB.Barrett

Over the past several decades, India has witnessed consistently high eco-

nomic growth rates, often among the fastest in the developing world. The

country has made signicant gains in reducing poverty levels, and its urban

middle class is projected to rise rapidly, both in terms of size and income

levels. Despite positive economic growth trends, the country continues to

struggle with malnutrition manifested in terms of high rates of child stunt-

ing and wasting that are substantially higher than other countries with

similar economic growth experience and at similar stages of structural

transformation. Even while India struggles to address the undernutrition

problem, emerging trends in overweight and obesity portend to a future

public health crisis in non-communicable diseases.

India’s food and agriculture policy have historically focused on enhanc-

ing supplies and access to staple grains, especially rice and wheat, and

thereby have had considerable success in reducing the incidence of hunger

in the country. While it is true that millions still suffer from hunger, imag-

ine what the situation would have been if the country did not invest in

productivity improvement for the major staples through the Green

Revolution. However, the laser focus on enhancing rice and wheat sup-

plies may have inadvertently resulted in the crowding out of the more

nutritious grains, such as millets and other coarse cereals, and pulses.

Staple-grain-focused policies may have also created disincentives for farm-

ers to diversify their production systems in response to rising market

demand for non-staple food, such as fruit, vegetables and livestockprod-

ucts. The imbalance in protein, vitamin and micronutrient supply in the

food system is a major cause of the high incidence of malnutrition in India.

PreFace

x PREFACE

Poor sanitation, lack of access to clean drinking water and low levels of

women’s empowerment are other proximate reasons for the persistence of

malnutrition in India.

This book provides a detailed assessment of the major paradoxes of the

Indian growth story, one in which we see the simultaneous existence of

regional inequality, rural and urban food insecurity, intractable malnutri-

tion problems and the growing incidence of overweight and obesity. We

examine the nexus of economic development, agricultural production and

nutrition through the lens of a “Food Systems Approach (FSA)”. Central

to our vision for a robust food system is a future wherenutrition-secure

individuals have the capability and the opportunity to improve their health

through greateraccess to abalancedand healthydiet. In order to imple-

ment a holistic approach towards economic welfare and nutrition security,

we link the goals for agricultural development, health and nutrition and

economic development with each other. We bring together the latest data

and scientic evidence from the country to map out the current state of

food systems and nutrition outcomes. We place India within the context

of other developing country experiences and highlight India’s status as an

outlier in terms of the persistence of high level of stunting while following

the global trends in overweight and obesity. We discuss the policy and

institutional interventions needed for promoting a nutrition-sensitive

food system and the multi-sectoral strategies needed for simultaneously

addressing the chronic undernutrition and emerging over-nutrition prob-

lems in India.

This book is a major output of the Tata-Cornell Institute for Agriculture

and Nutrition (TCI) at Cornell University. It draws on and builds upon

the policy analysis and learnings at TCI during its rst ve years. TCI was

established with a generous gift given to Cornell University by the Tata

Trusts, a philanthropic branch of the Tata Group. The endowment was

made possible by the vision of Mr. Ratan Tata, the former chairman of

India’s Tata Group and a Cornell alumnus from the class of 1962. TCI is

a long-term research initiative focused on solving problems of poverty,

malnutrition and rural development in India. It is specically focused on

understanding and addressing the malnutrition conundrum using a multi-

sectoral and multi-disciplinary approach. TCI’s research and projects in

India consider the factors that inuence both a household’s ability to

access food—such as income, employment and the ability to afford safe,

high-quality and diverse foods in sufcient quantities—and the individu-

al’s ability to absorb and utilize his or her share of the household’s total

xi PREFACE

food/nutrient basket, which could differ depending on the individual’s

age, gender, level of empowerment, household dynamics, cultural prac-

tices or even physiological life stage (e.g., pregnancy and infancy require

different diets and care practices).

We are grateful to the TCI team for their support in bringing this book

together. We are particularly thankful to the TCI scholars for the stimulat-

ing discussions during the weekly research group meetings and to Bhaskar

Mittra, Jessica Ames, Kiera Crowley and Mary Catherine French for their

support, advice and assistance during various stages of writing the book.

We hope the research and policy prescriptions presented in this book

will be useful to food and agricultural policy analysts and nutrition and

development practitioners and policy makers. While the book is focused

on India, we believe the book’s takeaways are applicable to other develop-

ing countries facing similar persistence of malnutrition and the emerging

concerns of rising NCDs. We hope you enjoy reading the book.

Ithaca, NY, USA PrabhuPingali

AnakaAiyar

MathewAbraham

AndaleebRahman

The original version of the book was revised: The Author biographies has been

updated.

xiii

author BiograPhies

PrabhuPingali is Professor of Applied Economics and Founding Director

of the Tata-Cornell Institute for Agriculture and Nutrition (TCI) at Cornell

University.

AnakaAiyar is Post-Doctoral Associate with the Tata-Cornell Institute for

Agriculture and Nutrition (TCI), Cornell University.

MathewAbraham is Assistant Director of the Tata-Cornell Institute for

Agriculture and Nutrition (TCI), Cornell University.

AndaleebRahman is Post-Doctoral Associate at the Tata-Cornell Institute

for Agriculture and Nutrition (TCI), Cornell University.

contents

1 Indian Food Systems towards 2050: Challenges and

Opportunities 1

2 Economic Growth, Agriculture and Food Systems:

Explaining Regional Diversity 15

3 Rural Livelihood Challenges: Moving out of Agriculture 47

4 Diet Diversity and the Declining Importance of Staple

Grains

5 The Nutrition Transfor

mation: From Undernutrition to

Obesity

6 Reimagining Safety Net Programs 135

7 Enabling Smallholder Prosperity through

Commercialization and Diversication 165

8 Linking Farms to Markets: Reducing T

ransaction Costs

and Enhancing Bargaining Power

193

9 Agricultural Technology for Increasing Competitiveness

of Small Holders 215

xvi CONTENTS

10 Managing Climate Change Risks in Food Systems 241

11 The Way Forward: Food Systems for Enabling Rural

Prosperity and Nutrition Security 277

References 313

Index 361

xvii

AEZ Agro-ecological Zones

APMC Agriculture Produce Marketing Committee

BNI Biological Nitrication Inhibition

CA Conservation Agriculture

CAGR Compounded Annual Growth Rate

CCT Conditional Cash Transfer

CF Contract Farming

CIMMYT International Maize and Wheat Improvement Center

CMERI Central Mechanical Engineering Research Institute

CPB Conventional Plant-Breeding

CSA Climate Smart Agriculture

DALYS Disability Adjusted Life Years

DBT Direct Benet Transfer

FAO Food and Agriculture Organization of the United Nations

FCI Food Corporation of India

FCP Food Chain Partnership

FDI Foreign Direct Investment

FFV Fresh Fruits and Vegetables

FPOs Farmer Producer Organizations

FPS Fair Price Shops

FSA Food Systems Approach

GDP Gross Domestic Product

GEAC Genetic Engineering Approval Committee

GHG Greenhouse Gases

GM Genetically Modied

GMO Genetically Modied Organism

GOI Government of India

aBBreviations

xviii ABBREVIATIONS

GR Green Revolution

HIV Human Immunodeciency Virus

HYV High-Yielding Varieties

IBSC Institutional Biosafety Committees

ICAR Indian Council of Agricultural Research

ICDS Integrated Child Development Scheme

ICEX Indian Commodity Exchange Limited

ICT Information and Communication Technologies

IDA Iron Deciency Anemia

IRRI International Rice Research Institute

ISFM Integrated Soil Fertility Management

ITC Indian Tobacco Company

JLG Joint Liability Groups

KCC Kisan Credit Card

LGP Length of Growing Periods

LMIC Low- and Medium-Income Countries

MCX Multi Commodity Exchange

MDMS Mid-Day Meal Scheme

MGNREGA Mahatma Gandhi National Rural Employment Guarantee Act

MNC Multi-National Companies

MSP Minimum Support Price

NABARD National Bank for Agriculture and Rural Development

NAFED National Agricultural Cooperative Marketing Federation

NBSS&LUP National Bureau of Soil Survey and Land Use Planning

NCD Non-communicable Disease

NCDEX National Commodity & Derivatives Exchange

NFHS National Family Health Survey

NFSA National Food Security Act

NHPS National Health Protection Scheme

NMCE National Multi-Commodity Exchange of India Ltd.

NSEL National Spot Exchange Limited

NSS National Sample Survey

PC Producer Companies

PDIL Projects and Development India Ltd.

PDS Public Distribution System

PMGSY Pradhan Mantri Gram Sadak Yojana

R&D Research and Development

R2R Rural to Rural

R2U Rural to Urban

ReMS Rashtriya eMarket Services Pvt. Ltd.

RSBY Rashtriya Swasthya Bima Yojana

SAU State Agricultural Universities

xix ABBREVIATIONS

SDG Sustainable Development Goals

SEWA Self-Employed Women’s Association

SFAC Small Farmers’ Agribusiness Consortium

SPMRM Shyama Prasad Mukherji Rurban Mission

SSA Sub-Saharan Africa

ST Structural Transformation

U2R Urban to Rural

U2U Urban to Urban

UBI Universal Basic Income

UCX Universal Commodity Exchange

UIDAI Unique Identication Authority of India

UP Uttar Pradesh

USDA United States Department of Agriculture

VC Vertical Coordination

WTO World Trade Organization

xxi

Fig. 1.1 The multi-sectoral approach for food system transformation 3

Fig. 2.1 International comparisons in GDP per capita (PPP in constant

2011 international $) 17

Fig. 2.2 Growth of urban areas 18

Fig. 2.3 Subnational structural transformation in India (1960–2017) 18

Fig. 2.4 Indian policy priorities over time 19

Fig. 2.5 Global comparison of agricultural employment share 20

Fig. 2.6 Migration patterns over time 22

Fig. 2.7 Agriculture wage differentials by state classications 35

Fig. 2.8 Growing participation of women in agriculture 38

Fig. 3.1 Change in the agricultural workforce 50

Fig. 3.2 Labor share by state classication 51

Fig. 3.3 Nature of work: main and marginal workers (in %) 51

Fig. 4.1 Share of monthly expenditures on various food items 76

Fig. 4.2 Expenditure elasticity for food items by household class 77

Fig. 4.3 District-level association between share of expenditure on

non-cereals to cereals and poverty levels in rural India 78

Fig. 4.4 Projected share of urban population 81

Fig. 4.5 Wholesale Price Index (WPI) for food items 85

Fig. 5.1 Percentage point changes in the triple burden of malnutrition

in India 94

Fig. 5.2 International comparisons in the share of malnutrition

(2015–16) 96

Fig. 5.3 Share of stunted children under 5years (2015–16) 97

Fig. 5.4 Percentage change in the undernutrition in children under ve

by state classication 98

Fig. 5.5 Percentage change in anemia prevalence by state classications 98

List oF Figures

xxii LIST OF FIGURES

Fig. 5.6 Percentage change in obesity incidence by state classications 100

Fig. 5.7 Relationship between the risk of diabetes and over-nutrition in

adults 100

Fig. 5.8 Intra-household burden of undernutrition share by state

classications 102

Fig. 5.9 Intra-household burden of anemia by state classication 102

Fig. 5.10 Pathways to better nutrition 103

Fig. 5.11 Urban household dietary-spending patterns in India (2011–12) 106

Fig. 5.12 Relationship between diarrhea prevalence and lack of sanitation 115

Fig. 5.13 District-level association between urbanization and obesity 117

Fig. 6.1 Budget expenditures on major safety nets (in Rs. ’00 billion) 140

Fig. 6.2 Coverage and expansion of major social safety net programs 140

Fig. 7.1 Change in area under production (’000 hectares) of rice

between 1960s and 2000s 169

Fig. 7.2 Change in area under production (’000 hectares) of wheat

between 1960s and 2000s 169

Fig. 7.3 Change in area under production (’000 hectares) of pulses

between 1960s and 2000s 170

Fig. 7.4 Per capita availability of cereals, coarse grains and pulses in

India (1951–2015) 171

Fig. 7.5 Percentage of indebtedness of different landholding sizes from

different sources of credit (2014) 176

Fig. 7.6 Institutional credit to the agricultural sector (2000–01 to

2015–16) 176

Fig. 8.1 Structure of agricultural markets 195

Fig. 8.2 Functioning of the electronic portal (ReMS model) in India 203

Fig. 9.1 Relationship between yield and area under irrigation in

selected crops in India (2015–16) 222

Fig. 9.2 Global variations in yield 223

Fig. 9.3 Yield trends in selected crops in India from 1950–51 to

2016–17 225

Fig. 10.1 Temperature (degree Celsius) and rainfall (mm) change 243

Fig. 10.2 Pathways: Impact of climate change on food systems 245

Fig. 10.3 Share of CO

(total) emissions by country in 2014 260

Fig. 10.4 Emission by sectors 261

Fig. 10.5 Overview of GHG emissions in India 262

xxiii

Table 2.1 Employment transition during structural transformation 21

Table 2.2 Classication of states 26

Table 2.3 Per capita growth over time 29

Table 2.4 Migration patterns over time 33

Table 6.1 Description of major safety net programs in India 139

Table 6.2 Targeting of PDS and MGNREGS (in %) 143

Table 7.1 Factors inuencing costs at the farm level for commodities

and products 174

Table 7.2 Percentage share of agricultural loan (accounts and amounts)

and KCC in 2016in various states/regions 177

Table 7.3 Changing share of private and public sectors in agricultural

inputs (1991–2009) 180

Table 8.1 Characteristics inuencing the marketing of commodities and

high- value products 197

Table 8.2 Coordination costs and effects at the rm level 202

Table 8.3 Cost and incentives of rm FPO linkages 207

Table 9.1 Classication of land degradation in India by regions (in

’000hectares) 219

Table 9.2 Stages of production and marketing and type and source of

information 228

Table 10.1 Climate change impacts on yields in India 248

Table 10.2 Regional impacts of climate change between 1970 and 2014 257

List oF taBLes

xxiv LIST OF TABLES

Table 11.1 Policies for enabling nutrition security and rural prosperity 279

Table 11.2 Policies for enabling diversication and commercialization of

farm systems 283

Table 11.3 Policies for reducing the triple burden of malnutrition 289

Table 11.4 Policies for creating economic opportunities for catch-up

growth 296

1© The Author(s) 2019

P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_1

CHAPTER 1

Indian Food Systems towards 2050:

Challenges andOpportunities

1.1 Motivation

The Green Revolution in the 1970s followed by the liberalization of the

Indian economy in the 1990s has been credited with shepherding India onto

a path of high growth. Over the last decade, increases in per capita incomes,

greater urbanization rates, increase in literacy rates, population growth and

poverty reduction have characterized this high growth process. While agricul-

tural development has brought about income generating opportunities to

some in the farming sector, in a small farm dominant country like India, poor

infrastructure and a lack of institutional support have excluded many small-

holders from beneting from the growth process. At the macro level, the

growth process has been highly inequitable, beneting some states more than

others. At the consumer end, increases in income and income generating

opportunities continue to coexist with poverty and poor health outcomes.

The latter is reected in the simultaneous prevalence of undernourishment,

over-nutrition and micronutrient deciencies in the country. These conun-

drums reect the major paradoxes of the Indian growth story, where we see

the simultaneous existence of regional inequality, rural and urban food inse-

curity and the growing incidence of a triple burden of malnutrition.

Aside from tackling these challenges, looking ahead to 2050 and

beyond, we see important trends of unequal growth and climate change

challenges threatening India’s ability to sustainably and equitably manage

an economic and nutrition transformation. Current regional inequality in

economic development is a major challenge due to differences in initial

resource endowments and nationalized policies that has placed states on

different structural transformation pathways. Some states today resemble

poor countries in sub-Saharan Africa, while rapidly developing states

resemble counterparts in Latin America. Continuing down this policy

pathway will have negative implications, for both national political stability

and economic development as we look ahead. Boosting agricultural pro-

ductivity is critical for economic growth and development in India.

Agricultural production, however, affects and is affected by climate

change. Productivity growth inuenced by increasing demand for higher

value agricultural produce will lead to increased greenhouse gas emissions

and water and soil degradation, accentuating production risks in agricul-

ture. Through its negative impact on food availability, access, nutrition

and affordability, climate change will reduce the effectiveness of policies

aimed at increasing food and nutrition security for the future. Feeding a

growing population that is both richer and more urban has signicant

implications for future food systems. Linking urban food demand with

rural prosperity, while ensuring environmental sustainability will be essen-

tial to ensure both urban and rural food security.

1.2 approach

Much of the prior literature has reected on the importance of either the

development of the agricultural sector, the role of economic growth or the

importance of food security for ensuring greater and more equitable eco-

nomic development. Even works that look at the intersection of these

groups focus only on increasing production as a means to increase eco-

nomic growth or focus on managing consumption as a means for improv-

ing health and productivity. They do not evaluate the intersectionality of

these domains and their spillovers on the economic, ecological or health

systems within the country. Thus, we see the existence of policies that

increase productivity in agriculture at the expense of the environment,

policies that increase economic growth while also increasing regional

inequality and hurting small farmers, and top-down policies that aim to

reduce undernutrition without any discussion on how to tackle growing

obesity. These policy recommendations remain palliative at best, often

treating the symptoms but not the core problems in the economy. Most of

these approaches have also not considered the implications of the chang-

ing economic, demographic and climatic landscape of the future.

P. PINGALI ET AL.

With a view to address the current challenges in the Indian development

paradox and in light of the future challenges faced by the country, this book

looks at the nexus of economic development, agricultural production and

nutrition through the lens of a “food systems approach (FSA)”. A tradi-

tional FSA looks for opportunities to strengthen the linkages between agri-

cultural production and consumption with the aim to strengthen nutrition

access for individuals and households. The motivation of our FSA model is

to expand both opportunities to strengthen nutrition access and to enhance

capabilities of individuals so that they can access new opportunities in ways

to increase their welfare. Creation of new opportunities and capabilities for

increasing farm production and productivity, reducing malnutrition and

improving labor productivity and facilitating greater structural transforma-

tion that is also inequality reducing are the main goals of the approach.

In order to implement a holistic approach towards welfare development

and nutrition security, we link the goals for agricultural development, health

and nutrition and economic development with each other (Fig. 1.1). We

bring together the latest data and scientic evidence from the country to map

out the current state of food systems. In this book we (1) highlight the nature

of food system challenges in India, (2) provide goals and set a food systems

Fig. 1.1 The multi-sectoral approach for food system transformation

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

agenda for the future for different subnational units in India based on their

current structural transformation experience and (3) emphasize policy and

institutional interventions that are needed to address these challenges.

The book will be organized along the lines of the food systems frame-

work provided in Fig.1.1. We rst dive into the question about who the

new rural and urban consumer of the future would be. We identify their

dietary needs and preferences, health challenges and how consumer mar-

kets would evolve to meet these changing requirements. We then take a

deep dive into challenges for farming in India. We study the farmer, their

input usage patterns, institutional challenges in adopting new farming

practices and challenges in accessing markets to sell non-staple agricultural

products. We highlight issues of access that fall out of intra-household

inequalities or social institutions that affect nutrition access. We then travel

along the agricultural supply chain and identify the transaction costs and

bottlenecks that have prevented a free ow of foods from the farm to the

plate. We also identify institutional failures that have prevented market

signals from transforming the agricultural landscape away from staple

grain production in the country. We identify the challenges for imple-

menting acceptable food quality and food safety standards. Side by side

with these insights, we also provide data and evidence on the current food

systems challenges from external forces such as the overuse of the environ-

ment and the projections from climate change. We study the role of

research and development, new technologies, subnational unit-focused

policy and the growth of the knowledge and digital economy in mitigating

these production and price risks. The book not only aims to inform policy

makers on proper actions and respective consequences for future food

systems, it also provides researchers new and exciting avenues to conduct

research on nutrition security. Additionally, by providing a fresh and holis-

tic perspective on the challenges for the future, and an overview of the

policies that are available towards ensuring greater food security, this work

aims to increase citizen awareness and engagement in developing food

systems of the future.

1.3 Key taKeaways froMtheBooK

1. The differential growth experience of Indian states can be explained by

their initial investments in agricultural productivity growth and their

subsequent focus on robust non-agricultural employment growth. (Chap. 2)

P. PINGALI ET AL.

While India’s overall GDP growth rate has been consistently high for

the past few decades, there are signicant inter-state disparities in growth

performance. In Chap. 2, we compare Indian states with countries, in

terms of the per capita GDP, and we nd that some of the poorest states

in India have per capita GDP levels that are comparable to some of the

poorest countries in sub-Saharan Africa. On the other hand, the most

progressive states in India have per capita GDP levels that are comparable

to the emerging economies of Southeast Asia and Latin America. These

stark differences in the regional growth experience are also reected in

other indicators such as nutrition or poverty. For example, undernutrition

in Madhya Pradesh continues to remain a key nutrition challenge, but in

Kerala, rising obesity has brought the problem of over-nutrition into

focus. Similarly, while rural poverty in Punjab has reduced due to agricul-

tural development, in Orissa, low agricultural productivity and the lack of

alternate employment opportunities has resulted in high rural poverty lev-

els. Indian states have also experienced different levels of structural trans-

formation; less than 20% of the population remains in agriculture in the

high-income states, while that gure is over 40% in the lagging states.

Based on their overall economic performance, in Chap. 2, we group

Indian states into three categories—agriculture-led states, urbanizing

states and lagging states—and attempt to explain their growth performance

over the past 60 years. The categories are based on three outcomes of

economic development; these are state GDP per capita, the share of agri-

culture in GDP and urbanization rate. Both in the agriculture-led states

and urbanizing states, agricultural growth, kickstarted by the Green

Revolution, played a crucial role in catalyzing economic growth. However,

states such as Punjab and Andhra Pradesh continue to focus on agriculture

with a concentration on staple grain production and consequently have

seen a slowdown in their prospects for further income growth. On the

other hand, urbanizing states such as Gujarat and Maharashtra started

with investments in agriculture as an engine of growth but then reinvested

their agricultural incomes in developing vibrant industrial and commercial

sectors. Lagging states

such as Bihar and Odisha were bypassed by the

Green Revolution due to poor agro-climatic and infrastructural constraints

and continue to be on a low growth trajectory. Prospects for future growth

in the lagging states are still linked to agriculture, but perhaps in looking

beyond staple grains, and towards meeting the rising demand for food

diversity elsewhere in the country by enhancing the productivity of coarse

cereals, pulses and high-value crops and livestock.

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

2. Meeting the growing urban demand for food and other agricultural

products and non-farm employment provides new growth opportunities

for rural economies; the challenge is to ensure that it is inclusive of the

poor. (Chap. 3)

As India grows through a rapid process of urbanization, both with the

expansion of the mega-cities as well as the smaller cities and district towns,

the food policy challenge will increasingly become one of sustainably feed-

ing the cities. Provisioning the cities is the new growth opportunity for

rural areas and could lead to accelerated rural transformation. Through

organized upstream and downstream network of activities, the urban fac-

ingagribusiness, value chains could absorb surplus agricultural labor and

provide them with jobs, especially for the youth and women. Employment

in logistics, like aggregation, storage, processing and so on, at the agri-

business upstream and food-related services such as restaurants at the

downstream could potentially be leveraged as the channel of employment

generation.

Such inclusive transformation of rural spaces—by including those

who are left out regarding access to non-farm employment—is essen-

tial to remove rural poverty. One of the channels for propelling stagnant

agricultural growth is to strengthen the rural-urban continuum which

provides ample opportunities to the small farmers and other rural popula-

tion with greater opportunities to share in the fruits of urban economic

growth. Indian policies have not focused on the small towns and the mid-

dle spaces to create job opportunities. Recognizing these newer urban

settlements and then providing them with urban amenities could be a

springboard for non-farm diversication. The benets of local economies

can be realized through the creation of urban-rural clusters that supply

goods and services both for consumption and for agricultural production

in households. While urbanization and changing employment patterns

offer opportunities for a more diversied food system, the challenge lies in

ensuring these transformations are smooth and contribute to sustainable

poverty reduction.

3. Diet transition

and the rising demand for food diversity is not matched

with a commensurate rise in the supply of non-staple foods leading to

poor access to more nutritious food. (Chap. 4)

P. PINGALI ET AL.

Diet transition is an important outcome of the structural transformation

process. Chapter 4 discusses the two stages of dietary transition with struc-

tural transformation. In the rst stage, economic growth and rise in per

capita income induce diet diversication. Consumer preferences move

away from quantity to quality, substituting traditional staples with non-

staples, such as fruit, vegetables and livestock products. In the second stage,

the effects of globalization of the economy are reected in an increase in

the consumption of processed food which are rich in proteins, sugars and

fats. This diet transition in India is increasingly evident. Chapter 4 provides

data on the diet transition in India, specically the declining share of staple

grains—rice and wheat—in household diets across all income groups in

urban as well as rural populations, though the degree of transition varies

considerably. At the same time, we observe the rise in the diversity of food

groups consumed, such as fruit, vegetables and livestock products.

However, it is clear that access to food diversity is not equitable and that

the poor are signicantly disadvantaged in this regard.

With a clear shift away from cereals, it is important to ensure other

nutritive food items are available at affordable prices. It is clear, however,

that the supply of non-staple foods has not matched the rising demand as

manifested in the rising and volatile relative prices of these foods. Without

access to nutritive substitutes, dietary diversity would suffer. Protein-rich

items such as pulses and animal-based protein items have seen an increase

in the prices as well as its volatility, primarily driven by greater demand for

these products. Similarly, the highly seasonal supply of fruits and vegeta-

bles and lack of storage infrastructure to smoothen prices makes access to

nutritious food at affordable prices a challenge for consumers, especially

the poor. At the same time, access to processed foods has increased signi-

cantly, even in rural areas, and often at prices that are substantially below

those of more nutritious fresh food and pulses. Chapter 5 provides data

that shows that India may be tripping into a rising over-nutrition and obe-

sity problem, even as it tries to solve the undernutrition problem, due to

poor access and affordability of nutrition-rich diets.

4. While progr

ess is being made on undernutrition, the emerging nutri-

tion transition towards over-nutrition and the rising incidence of non-

communicable diseases requires a move away from policies that promote

calorie sufciency to ones that promote food system diversity. (Chap. 5)

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

Similar to the experience of other countries that have undergone greater

structural transformation, India has made progress towards reducing hun-

ger and reducing undernutrition while witnessing signicant economic

growth. Over the last three decades, the country has managed to reduce

undernutrition by at least ten percentage points across all individual

groups. On the other hand, obesity and NCD rates are rising among

urban and rural populations, albeit at a slower rate in the latter. Chapter 5

argues that increased dietary diversity is associated with lower prevalence

of hidden hunger and higher nutrient adequacy ratios for individuals. It

also presents the case that the lack of diet diversity and excessive carbohy-

drates and sugar consumption is associated with higher risk of obe-

sity and NCDs.

Given this close relationship between dietary diversity of households

and nutrition outcomes, ensuring that households can access diverse foods

requires interventions at two levels. First is to ensure that there is greater

availability of food diversity within the local system. The second set of

interventions would need to improve the affordability of these diets.

Effective food policy, hence, becomes tantamount to a nutrition sensitive

food system which enables transition towards a healthier diet. Policy

debates around food security in India have mainly focused upon ensuring

adequate access to calories through a continued focus on staple grain pro-

duction. However, trends around dietary changes and nutrition transition

provide a compelling case for questioning the existing paradigm and open

up conversations around access to a good quality and balanced diet. Focus

on staples has affected incentives to develop markets for non-staples, thus

affecting their supply and increasing price uncertainty. Creating new

opportunities for the food system diversication, to cater to changing con-

sumer demand, should thus become a focus for policy makers. Chapter 5

also presents the multi-sectoral pathways towards improved nutrition out-

comes, such as access to clean drinking water and sanitation, gender

empowerment and behavior change and so on.

5. The objectives and design of India’s safety net programs, whether food

or cash based, need to evolve with economic growth and the changing

nutritional needs of the mar

ginalized populations. (Chap. 6)

Safety nets have been an essential part of the poverty reduction policies

in India by contributing to risk management and reducing vulnerability

for a large section of the population. Chapter 6 argues for the future role

P. PINGALI ET AL.

of safety nets to be more transformational rather than vulnerability reduc-

ing. Overall effectiveness of safety nets would depend to a large extent on

how they are combined with structural reforms and long-term interven-

tions to increase human capabilities and address structural poverty through

that. Synergies between agriculture and safety nets, therefore, become

essential. Public work, life-cycle based food assistance programs need to be

dovetailed into the local agrarian economy.

Regarding the future of safety nets, it is essential to take into account

the changing nature of the economic structure, demographic changing,

and future livelihood patterns. Urbanization, especially, poses a challenge

as well as opportunity in restructuring the safety net architecture. Current

policies have not taken into account the fact that India would be more

urban than rural by 2050. Most of the existing food-based policies have a

greater rural presence. Public works program Mahatma Gandhi National

Rural Employment Guarantee Act (MGNREGA) has only been designed

for the rural areas, assuming rural employment is the only concern. With

rising urbanization, urban informality and unemployment in urban areas,

especially among the educated, raise important challenges for the food

systems going ahead.

In the case of food-based safety nets, innovations are limited by the

modalities of grain procurement. To supply rice and wheat through Public

Distribution System (PDS), a massive food grain procurement structure

has come about which incentivizes only staples and other more nutritive

food products are crowded out. Not only consumers are at a disadvantage

due to restricted choice, but the idea of a nutrition-sensitive food system

is undermined. It is therefore essential to break the staple grain procure-

ment-storage-distribution interlocked channel. But these interlocked

incentives are deeply mired into India’s rural political economy. It is one

of the major hurdles to India’s food system.

6. Promoting small farm commercialization and diversication serves

the dual objectives of enhancing farm incomes while improving the sup-

ply and access to food system diversity. (Chap. 7)

The rising demand for diversied agricultural products has brought

about opportunities and challenges for the Indian agricultural sector. The

opportunities come from increasing demand for diversied and higher

value crops that can improve agricultural incomes and improved access to

a varied food basket at the household level. Commercialization of small-

holders’ farms is an essential pathway to improved rural incomes and better

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

access to diversied and nutritious food. The major challenges, however,

are problems associated with the supply side conditions such as poor access

to markets, credit, purchased inputs, technology and extension services

that have hindered commercialization and made income opportunities

inaccessible to many small farm producers. Rising rural wages due to

growth in non-farm employment opportunities add to the challenges of

commercializing small farms.

Chapter 7 assesses the major institutional innovations associated

with mitigating some of the transaction costs associated with market

entry and resolving problems associated with achieving economies of

scale. Aggregation models such as producer organizations and coopera-

tives, where smallholders organize themselves in groups to jointly access

resources and market their produce, have shown to reduce transaction

costs and benet from the resulting economies of scale. Lagging regions

of Eastern and Northeastern India are a particular challenge regarding

small farm commercialization. With investments in markets and agricul-

tural infrastructure, such as irrigation, warehouses and cold storage facili-

ties, and a supportive policy environment, such as promoting contract

farming, it is possible for these regions to leap frog from the current sub-

sistence systems to commercial operations that are focused on supplying

urban demand for food diversity.

7. Effective

aggregation models, such as producer groups, can help reduce

the high transaction costs of small farms accessing urban food value

chains, especially for fresh food. (Chap. 8)

With increasing demand for quality and high-value agricultural produce,

alternative value chains and newer marketing platforms have emerged.

Vertical coordination (VC) by which retailers form direct linkages with

farms, bypassing traditional markets, has been growing in India’s more pro-

gressive states. Newer marketing platforms where farmers can participate in

online auctions and trading such as eNAM and Rashtriya eMarket Services

Pvt. Ltd (ReMS) in Karnataka and warehousing

platforms such as the

National Commodity & Derivatives Exchange (NCDEX) eMarkets Limited

to hedging price risks can be viable alternatives to existing traditional mar-

kets. VC can be more relevant for perishable crops and farmers in regions

with good linkages to market (agriculture-led growth states), while futures

and warehousing platforms can be useful for non-perishable commodities

and can emerge in low potential areas such as those in lagging states.

P. PINGALI ET AL.

Institutional interventions, such as Farmer Producer Organizations

(FPOs) and cooperatives, can offset scale disadvantages faced by small

farms in supplying to the modern value chains as well as access to elec-

tronic markets and futures trading platforms. By reducing the risk associ-

ated with the adoption of new crop technologies and reducing transaction

costs in market access, these interventions could help in farm diversica-

tion as well as better price realizations in the output market.

In Chap. 8, we highlight some recommendations that differ by the

stage of development a particular state is in. In the lagging states with low

agricultural productivity, FPOs have the potential to enable greater com-

mercialization, enabling greater yields. Linkages to output markets will

help incentivize the production of pulses and coarse grains, given their

comparative advantage. In agriculture-led states and urbanizing states,

alternative models such as contract farming are more likely to succeed

since farms in these areas are already highly commercialized. Enabling

conditions for contract farming through mechanisms to enforce contracts

and allowing retailers and processors to transact directly with farmers,

especially in the cash crops, could be the way forward. Here, aggregation

models can help reduce organization costs of engaging with a more sig-

nicant number of small farms and reduce contracting costs that often

exclude small farm contracts. Policy measures to nancially support FPO

emergence and extend nancial and insurance-based services, linking them

to information and extension services and enabling market linkages by

improving connectivity, will further incentivize group formation and

establish linkages across the value chain.

8. Technology will continue to play a vital role in enhancing smallholder

productivity and competitiveness, but it’s time to look beyond

staple

grains, and take a holistic view of the technological options for promot-

ing a diverse food system. (Chap. 9)

Technology in the past has played a critical role in enabling food security

in the developing world. The Green Revolution helped in increasing yields

of wheat and rice, making many countries like India self-sufcient in these

grains. One main reason the Green Revolution was successfully imple-

mented was that it was a public sector intervention that was scale-neutral,

allowing small and marginal producers to adopt them. The limitation of

these technologies was that they were focused on the main staple grains—

rice and wheat—and to regions where irrigation resources were available,

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

leading to interregional and intercrop disparities. The impact these tech-

nologies had on the environment because of poor management was also

high, leading to depletion of water tables and land degradation.

Chapter 9 makes the case that technology remains critical in the face on

the new food security challenges India will face, as it seeks to meet the

demand for quantity as well as quality and food system diversity. First- and

second-generation GM technologies hold promise in improving returns

to farming through reduced cost of production and increasing resilience

and the nutritive value of crops. Crop improvement technologies are a

priority for the more nutritious crops, especially coarse cereals, such as

millets, and pulses. Yield improvements coupled with the effective man-

agement of resources (nutrient, water, natural resources) are essential to

improve efciency and achieve sustainable intensication.

Unlike Green Revolution technologies which were public sector gener-

ated, technological innovations today are generated in the private sector

and hence pose challenges of access for small farms. This is true for crop

production and post-harvest technologies. Institutional interventions that

enable public sector access to private sector innovations and to adapt them

to small farm conditions are crucial. Farm aggregation models could also

help small farms access modern technologies for enhancing the productiv-

ity of non-staple crops and livestock.

9. Climate change can have signicant adverse impacts on

agricultural

productivity, rural incomes and welfare; in addition, it can pose seri-

ous risks to the nutritive value of the food system since it can have a

disproportionately higher effect on non-staple foods. (Chap. 10)

The impact of rising temperatures on the major staples, such as rice and

wheat, is well studied. Declining productivity of these crops can be

expected with rising temperatures. However, less well understood is the

impact of climate change on crops that are important to the poor, such as

millets and sorghum. Also, less studied are the impacts of climate change

on a more nutritious food system, such as its impacts on the productivity

of fruit, vegetables, pulses and livestock products. Given the lack of tech-

nologies currently available to safeguard productivity and the lack of infor-

mation about climate impacts on these foods, vulnerability of non-staple

crop production becomes a major food security concern for the future.

Safeguarding the production of these crops and livestock will be important

to the goal of achieving nutrition security. Climate change can also have

P. PINGALI ET AL.

adverse impacts on production systems in the rain-fed areas, particularly

those in the semi-arid and the arid fringe areas. Higher temperatures could

drive some of these areas out of crop and livestock production activities,

especially where irrigation infrastructure is not well established.

Chapter 10 argues that continuing down the current path of develop-

ment without integrating adaptation and mitigation strategies will have

serious negative repercussions on food security within the country. Side by

side with adaptation strategies, integrating mitigation strategies that

reduce overall carbon foot print will contribute to the global goals of

GHG mitigation and help reduce global food systems risks. Policies to

encourage investments in clean energy sources, climate-smart infrastruc-

ture, preservation and conservation of biodiversity and groundwater man-

agement processes have been important steps taken in this direction by the

government of India as well as individual state governments. It is also

important that these policies not only operate at the level of strategy but

that progress and goals can be measured and tracked.

As we look ahead, climate policies for the future should allow diversi-

cation of the food system in ways that enhance the environment while

improving the nutrition content of foods produced and ensuring equity in

access. In order to truly create a food system that ensures nutrition secu-

rity of all individuals, climate change risks must not be understated, and

appropriate actions towards its mitigation need to be adopted.

10. Food and agricultural policy need to transition from a focus on

quantity to emphasize quality, diversity and safety; it should also

leverage multi-sectoral synergies with economic growth, improved

access to clean drinking water and sanitation and behavior change

for promoting improved diets. (Chap. 11)

This book brings agricultural sector-led developmental approach to the

center of policy formulation to ensure nutrition security and rural prosperity

for greater welfare. India’s recent history has shown that smallholder agri-

cultural productivity growth kickstarted overall economic growth, rural

poverty reduction and structural transformation of the economy. However,

the predominant focus of agricultural policy on the productivity growth of

the major staples—rice and wheat—resulted in signicant interregional

growth disparities and poor nutrition outcomes. While these policies

played an important role in ensuring calorie sufciency across the country

and thereby led to substantial reduction in the incidence of hunger, they

INDIAN FOOD SYSTEMS TOWARDS 2050: CHALLENGES ANDOPPORTUNITIES

tended to inhibit diversication of the food systems and hence the overall

supply of micronutrient-rich food. In order to make substantial progress in

tackling the problem of malnutrition, both micronutrient malnutrition

and the emerging problem of obesity, India’s food and agricultural policy

needs to move towards promoting food system diversity. This would

require clear strategies for diversication of production systems in order to

improve the access and affordability of nutritious food, such as fresh fruit,

vegetables, pulses and livestock products, and it would also require strate-

gies for promoting individual diet diversity.

In addition, the quality of health and hygiene environment also plays a

major role in reducing malnutrition. Poor hygiene environments increase

disease burden and sickness and affect nutrient absorption. Improving

water and sanitation infrastructures is essential to reduce the spread of

disease, especially waterborne diseases. Behavior change programs that

promote healthy diets and seek to improve household health environment

by encouraging water storage practices, encouraging hand washing before

water use and after toilet use and encouraging cleanliness in the surround-

ing environment have been effective in reducing malnutrition around the

world. Finally, interventions that increase education of girl children and

women, delay child marriages, provide households information on eco-

nomic opportunities for women and increase safety at workplaces have

been known to impact both nutrition outcomes for women and their chil-

dren. Research has shown that women’s empowerment leads to positive

nutrition and health outcomes, especially for young children.

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P. PINGALI ET AL.

15© The Author(s) 2019

P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_2

CHAPTER 2

Economic Growth, Agriculture andFood

Systems: Explaining Regional Diversity

2.1 IntroductIon

The Green Revolution of the 1960s transformed India from a net importer

of food to a self-sufcient agricultural giant. This agriculture-led growth

of the 1970s, along with liberalization policies of the 1990s, has been

credited with catalyzing the country’s remarkable growth in the last two

decades. In 2017, India became the sixth largest economy in the world,

beating France and closely tied with the UK.Agricultural growth in the

country has come to be associated with green paddy elds and overowing

storehouses of surplus grains. Economic development has created globally

competitive companies and metropolises. The global face of the Indian

labor force is both cosmopolitan and high skilled. Increasing incomes per

capita of individuals, as represented by the growing size of the Indian

middle class, has brought with it both reduction in overall poverty and a

decrease in hunger and undernutrition across the country. On the global

platform, India has emerged as a thought leader in discussions related to

climate change, poverty and development and international trade. This

economic progress of the country has come about due to its structural

transformation

(ST) from a subsistence agriculture-based economy to

Structural transformation is a process of economic development during which an econ-

omy reallocates economic activities across its agriculture, industry and service sectors

(Herrendorf, Rogerson, & Valentinyi, 2013). ST is characterized by the declining share of

the agricultural sector and a declining share of agricultural employment (P.Pingali, 2007a)

one that has a modernizing agricultural system over the last ve decades.

In line with the predictions of ST theory, India has also seen a decline in

agricultural share in GDP, an increase in labor productivity, growth in

urbanization and a reduction in poverty during this time.

Discussing India’s growth success as if it is a pan-India phenomenon

overshadows the disparate experiences in its subnational growth process

(U.Kumar & Subramanian, 2012; Kurian, 2000; Panagariya, Chakraborty, &

Rao, 2014; P.Pingali & Aiyar, 2018). After growing by 1–2% between the

1960s and 1980s, India began to grow by 3–4% year on year in the post-

liberalization era and around 6–7% over the last one and a half decades. A

back of the envelop calculation suggests that there have been at least half

of the Indian states that doubled incomes in the rst 35 years after

dependence and then in approximately half the time doubled their

incomes again. In other states, state GDP increased by less than double

over the entire period (1960–2017). Even though doubling incomes

within 60years is impressive in and of itself, these divergent development

experiences across states have created disparities in their development out-

comes. The outcome of this regional disparity is reected in Fig.2.1. While

India leads the South Asia experience for growth, some states such as Bihar

and Uttar Pradesh have worse economic outcomes compared to some

countries in sub-

Saharan Africa. Other states such as Delhi and Goa are

comparable to countries in Latin America. These stark differences in the

regional growth experience are also reected in other indicators such as

nutrition or poverty. For example, undernutrition in Madhya Pradesh con-

tinues to remain a key nutrition challenge, but in Kerala, rising obesity has

brought the problem of over-nutrition into focus. Similarly, while rural

poverty in Punjab has reduced due to agricultural development, in Orissa,

even as the value added of agriculture and agricultural productivity increases. This phenom-

enon is driven by either (1) faster growth of value added in other sectors, industry or services,

which drives changes in employment patterns (Chenery, 1960), or (2) through agriculture-

led productivity growth which itself can stimulate demand for non-agricultural products and

non-agricultural employment (B.B. F.Johnston & Mellor, 1961). Both of these growth

strategies increase rental incomes from factors of production whose productivity has increased

through this process. This creates a virtuous cycle of economic growth. Over time, ST pro-

cesses have come to be associated with greater economic growth, increase in productivity of

factors of production, a reduction in the share of the agricultural sector in GDP, increase in

the rates of urban-led growth, increase in incomes, poverty reduction, better nutritional

security and greater diet diversity (Chenery, 1960; Pingali, Ricketts, & Sahn, 2015; P.C.

Timmer, 1988; P.C. Timmer & Akkus, 2008; P.Webb & Block, 2013).

P. PINGALI ET AL.

it remains high and spatially determined. Similarly, measures such as night

light intensity—which capture economic activity and levels of urbaniza-

tion—suggest higher development in the south and northwest areas of the

country compared to others (Fig.2.2).

In this chapter, we propose two major arguments to explain the regional

divergence in growth. The rst argument builds on the idea that states in

India have structurally transformed differentially based on their comparative

advantages. In Fig.2.3, we see that each state in India has started its process

of ST at different levels in the 1960s as well as transformed over time at a

different pace. Absolute advantages in returns to land, labor and capital

played a major role in determining the level at which states started in the

development process. However, comparative advantages led to states bene-

ting differentially from national growth policies. Between the 1950s and

2000s, national growth policies supported either heavy industry develop-

ment, the development of the agricultural sector, the

development of small-

scale industries or the service sector (Fig.2.4). As a consequence, investments

made by states in developing “within state” comparative advantages created

new avenues for growth. Along with serendipitous changes in aggregate

demand, driven by either changes in the local or global economy, these state

5,000

10,000

15,000

20,000

25,000

BIHAR

UTTAR PRADESH

WEST BENGAL

MADHYA PRADESH

JHARKHAND

Sub-Saharan Africa

ODISHA

CHHATTISGARH

RAJASTHAN

South Asia

India

ANDHRA PRADESH

PUNJAB

KARNATAKA

GUJARAT

TAMIL NADU

HIMACHAL PRADESH

KERALA

MAHARASHTRA

UTTARAKHAND

HARYANA

East Asia and the Pacific

DELHI

Latin America

GOA

Fig. 2.1 International comparisons in GDP per capita (PPP in constant 2011

international $). Source: National Accounts Statistics & World Bank DataBank

(2015–16); based on authors calculations

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

Agri Share in State GDP (NET)

7.5 8.5 9.5 10.5 11.5 12.5 13.

Log (NET) State Dom Product per Capita

Fig. 2.3 Subnational structural transformation in India (1960–2017). Source:

National Accounts Statistics; based on authors calculations

Fig. 2.2 Growth of urban areas. Source: AidGeo Data; based on authors

calculations

P. PINGALI ET AL.

policies in concert with the national policies led to a divergence in the

regional growth experience (Bhalla & Singh, 1997; Kurian, 2000; Ghosh,

2006; Bhattacharya & Sakthivel, 2004).

The second argument is embedded in the concept of labor market fric-

tions. In this chapter, we argue that high search and entry costs into urban

and non-agricultural labor markets have prevented a smooth outmigra-

tion of underemployed labor from the agricultural sector to the non-

agricultural sector

. During the ST process, economic growth is theorized

to be accompanied by a reduction in the share of people employed in

agriculture. As unemployed individuals migrate towards new opportuni-

ties in the non-

agricultural sector, labor pr

oductivity in agriculture and

hence returns to agriculture are expected to increase. However, in India,

the decline in the share of agriculture in GDP has not been associated

with a commensurate decline in agricultural employment share in total

employment. Compared to countries with similar experiences in ST such

as the Philippines and Nigeria, agricultural employment share continues

to remain high (Fig.2.5). This fact is further reiterated in Table2.1. Here

we see that agricultural share in total employment has nearly halved from

1991 to 2011, decreasing from 57% to 28%. However, states have been

transitioning at different paces. Less than 20% of the population remains

engaged in agriculture in Goa and Kerala, but in states like Mizoram and

Andhra Pradesh, slightly more than 40% of employment still comes from

the agricultural sector. In spite of urban wages growing faster than rural

1950s–60s

Capital-

intensive

industry

development

policies, import

substitution

policies

1960s–70s

Green

Revolution

Small-scale

industries focus

1980s–90s

Modernization

and

diversification of

agricultural sector

Partial

deregulation of

the economy

1990s–2000s

Liberalization,

deregulation

Rise of the

market

economy

2000s

onwards

Global

integration,

High-skilled

sector growth

Fig. 2.4 Indian policy priorities over time

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

wages (Bhagat, 2017; Kone, Liu, Mattoo, Ozden, & Sharma, 2016;

Munshi, 2011; P. Pingali, 2007b, 2015), census records indicate that

rural to rural migration patterns dominate migration streams and many

individuals continue to work as agricultural laborers (Fig. 2.6). This

implies that labor markets have not been able to employ surplus underem-

ployed labor from the agricultural sector and agricultural labor productiv-

ity continues to remain low with vast differences by region.

In order to illuminate the above mechanisms that have impacted regional

diversity in growth, in this chapter, we forward evidence from the literature

from India. We show that regional comparative advantages (or the lack of

it) in resource availability may have beneted some regions over others. In

combination with the growth of local and global demand for goods and

services, these comparative advantages in inputs have exacerbated subna-

tional divergence in the growth experience. Second, we discuss various

labor market frictions that have inhibited a smooth transition of labor from

agricultural to the non-agricultural sectors. We show that rural to rural

migration in the agricultural sector can be explained by the difference in

Nigeria

Philippines

Zambia

India

0 20 40 60 80

100

Agricultural Share in Employment

0 50,000 100,000

150,000

GDP per capita, PPP (constant 2011 international $)

Fig. 2.5 Global comparison of agricultural employment share. Source: National

Accounts Statistics & World Bank DataBank (2015–16); based on authors

calculations

P. PINGALI ET AL.

Table 2.1 Employment transition during structural transformation

Year The share of agricultural employment in total employment

<20% 20–30% 30–40% 40–50% >50% Country

average

(%)

1991 Goa Kerala Gujarat,

Haryana,

West Bengal

Himachal

Pradesh, Punjab,

Assam,

Maharashtra,

Mizoram,

Rajasthan, Tamil

Nadu,

Karnataka,

Manipur, Orissa,

Sikkim,

Arunachal,

Meghalaya,

Andhra Pradesh,

Madhya Pradesh,

Uttar Pradesh,

Nagaland, Bihar

2001 Goa,

Kerala

Assam,

Gujarat,

Haryana,

Himachal

Pradesh, J&K,

Jharkhand,

Manipur,

Orissa, Punjab,

Tripura, West

Bengal

Karnataka,

Madhya

Pradesh,

Maharashtra,

Mizoram,

Rajasthan,

Tamil Nadu,

Uttarakhand,

Andhra

Pradesh,

Arunachal

Pradesh,

Bihar,

Chhattisgarh,

Meghalaya,

Nagaland

2011 Goa,

Kerala

Assam,

Haryana,

Himachal

Pradesh, J&K,

Jharkhand,

Orissa, Punjab,

Sikkim,

Uttarakhand,

UP, TN,

Tripura, West

Bengal

Arunachal

Pradesh, Bihar,

Chhattisgarh,

Gujarat,

Karnataka,

Manipur,

Meghalaya,

Nagaland,

Madhya

Pradesh,

Maharashtra,

Rajasthan

Andhra

Pradesh,

Mizoram

Source: Author’s calculations based on census data

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

agricultural productivity across states. Low rural to urban migration, more

characteristic of the agricultural to non-agricultural migration, has been

slower due to poor access to appropriate skills, in addition to geographical

challenges that migration poses.

2.2 ExplaInIng IntEr-StatE dIvErgEncE

InStructural tranSformatIon

It is a widely recognized fact that the main driver for the ST process in India

was the Green Revolution that began soon after India’s independence.

address concerns of food insecurity, rural poverty and low agricultural sur-

plus, policy makers pushed for a nationally oriented agricultural productiv-

ity growth policy.

Modern high-yielding varieties (HYV) of seeds and

While some may argue that Nehruvian policies on industrial substitution enabled capital

accumulation in the country, it is a well-recognized fact that it was the Green Revolution that

spread technology into the rural heartland of India. This change played a greater role in

poverty reduction, thus stimulating the Indian economy.

It is important to mention that India had already set in place national-level policies for

import substitution industrialization policies in the 1950s. However in the 1960s, a bur-

geoning food decit, high rural poverty and low rates of urbanization and lack of savings and

capital resource accumulation turned policy focus towards development through agriculture.

After the Green Revolution created agricultural surplus and put the economy on the process

for ST, there was a renewed focus on industrial development. This allowed states where

agriculture productivity was still low to invest more in other sectors.

1971 1981 1991 2001 2011

Share of Total Migrants

Rural to Rural Rural to Urban

Urban to Rural

Urban to Urban

Fig. 2.6 Migration patterns over time. Source: V. K. Singh, Kumar, Singh, and

Yadava (2011) and census 2011 migration tables; based on authors calculations

P. PINGALI ET AL.

fertilizer technology were rst introduced in the late 1960s and early 1970s,

in states with high agro-climatic potential and irrigation infrastructure that

were considered highly suitable for agricultural intensication and yield

enhancing technical change (G.S. Bhalla & Singh, 1997; C.H. H.Rao,

1975, 1994; G.S. Bhalla & Tyagi, 1989). Due to their comparative advan-

tages in farming, northwestern states such as Punjab and Haryana and the

southern delta regions in Andhra Pradesh and Tamil Nadu quickly adopted

HYV of wheat and rice and, within a short period, became the leaders of

the Green Revolution, both regarding food production and productivity.

States in the east, such as Bihar and Orissa, that were rich in agricultural

lands lost out due to the poor technology suitability, poor infrastructure

and lack of institutional support (Bajpai & Sachs, 1996; Prahladachar, 1983).

Between the 1980s to the 2000s, greater development and growth

from the agricultural sector was driven by diversication of cropping sys-

tems away from staple food grains to cash crop production and by greater

use of fertilizers as inputs in production (G.S. Bhalla & Singh, 1997).

Some states such as Kerala which did not have a comparative advantage in

staple grain production capitalized on the growing demand for fruit, spices

and rubber from local and global markets, and invested in tropical planta-

tions (M.G. Rao, Shand, & Kalirajan, 1999). Semi-arid zones of Central

India adopted the new crops and varieties of cotton and oil and reoriented

their agricultural systems towards the production of these cash crops.

Agriculture in these states was able to benet from the growth in demand

for cotton and oil seed that occurred post the staple grain revolution. As a

result, these states witnessed a transformation in their agricultural sectors,

while states such as Bihar, UP, MP

and Odisha that continued to remain

focused on staple grain production lost out.

Side by side with the agricultural transformation,

the industrial

(non- agricultural) policies that were instituted in the 1950s began to

In Pingali, Mittra, and Rahman (2017), authors discuss the MP transformation. Over the

last two decades, MP has made tremendous progress towards reforming the agricultural

system by utilizing low labor costs and high cropping area availability. MP is now a major

supplier to the PDS system and has overtaken Punjab and other states in staple grain produc-

tion. However, agricultural productivity, though increasing, continues to remain low.

In this chapter we interchangeably use the concept of the Green Revolution and the

agriculture revolution. Here with the former we mean the introduction of new high-yielding

varieties of wheat and rice, along with innovations in irrigation, water use and fertilizer and

pesticide use that revolutionized agriculture in India. The agriculture revolution refers to the

Green Revolution along with the diversication of cropping systems across the country that

came up in response to changing local and global demand for high-value products such as

tea, coffee, rubber and so on.

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

bear fruit in the 1980s (Aghion, Burgess, Redding, & Zilibotti, 2008;

Bhattacharya & Sakthivel, 2004; S.E. Ghani, Grover, Kerr, & others,

2016; M.Ghosh, 2006; U.Kumar & Subramanian, 2012; Rodrik &

Subramanian, 2004). The direct impact of the Green Revolution had

been twofold. One, it decreased rural poverty, thus stimulating aggre-

gate demand from rural areas (Pingali, 2012). Two, as more agricul-

tural capital and labor surplus was released through rapid increases in

productivity into the industrial sector, returns to industrial investments

began to pay off. For example, during the initial stages of the Green

Revolution, growing needs for construction and power in agriculture

drove demand for manufacturing products. Thus some states which

had not beneted from the Green Revolution refocused their develop-

ment strategies, on their comparative advantage, in developing their

non-agricultural sectors. In Panagariya et al. (2014), authors discuss

that state policies, with regard to urban land ceiling ownership, labor

policies, capital markets, small industry policies and bankruptcy laws,

varied across states. This created distortions to the returns in capital

and labor endowments both across industries and across states. Thus

different types of industries (capital or labor intensive) developed in

some states vis-a-vis others. Given that India was a closed economy

during this time, locally determined demand for goods and services

eventually drove protability across industries. This contributed to

cross-sector differences in growth and thus subnational differential

growth rates as well.

However, by the 1990s, the liberalization of the Indian economy cre-

ated another force of divergence in the structural transformation experi-

ence. Integrating the economy into the global playing eld led to different

trends in non-agricultural growth that varied by sectors and states

(Chakravorty, 2003; S.E. Ghani etal., 2016). In the literature, there were

many reasons attributed to how comparative advantages were created and

altered across states during this time. Existence of poor performing state

monoliths that could not compete in the international markets, divergence

in input factor productivity due to different speeds of tariff deregulation

and a political economy that had supported incumbent rms over others

pre-liberalization were hypothesized to have affected comparative advan-

tages across states (Kurian, 2000; Rodrik & Subramanian, 2004; Aghion

etal., 2008; Kumar & Subramanian, 2012). States that produced goods

with high global demand, using the factor of production in which they

had a comparative advantage, thus saw an increase in their GDPs relative

P. PINGALI ET AL.

to states that did not. For example, the fertilizer industry grew faster in

response to liberalization, but the iron and steel industry slowed down

since local industries were not competitive with global suppliers (Aghion

et al., 2008; U. Kumar & Subramanian, 2012). This led to states like

Gujarat, whose industries were focused on fertilizer production, growing

faster than states like Bihar, which relied on iron and steel production.

Among those who had stimulated their economic growth through agri-

cultural development, states that focused only on the production of crops

for domestic demand were not able to keep pace with those who diversi-

ed their agriculture into export-oriented crops.

The liberalization of the economy and its integration into the world of

internet technology created another wedge in the inter-state development

processes. In some states, globalization of the economy in combination

with comparative advantages created through human capital investments

in the past and reforms in the telecom sector facilitated a service sector

transformation (Amirapu & Subramanian, 2015; Arnold, Javorcik,

Lipscomb, & Mattoo, 2012; Nagaraj, 2009). States like Maharashtra,

Karnataka and Tamil Nadu, which had invested heavily in high-skilled

human capital development as well as in technology infrastructure, greatly

beneted from the technology boom that was driving the growth of the

high-skilled global service sector. This growth process then led to a further

divergence between growth experiences across states. However, this also

leads to further divergence in the intra-state development experience.

Since several Indian states focused on high skill employment as opposed to

labor-intensive job creation, this stalled movement of labor out of rural

areas. The rising disparity incomes between rural and urban areas and the

rise in the informal, low-skilled service sector employment relative to more

formal employment was one of the negative consequences.

2.2.1

Characterizing ST by Development Process Adopted

To capture the disparate structural transformation processes that caused

subnational divergence and hence discuss its implications for food systems

looking ahead, we classify states into three categories—agriculture-led

growth states, urbanizing states and lagging states. To identify which states

belong in these categories, we use three major outcomes in the structural

transformation process. The rst outcome that is used in the state classi-

cation is GDP per capita. In our model GDP per capita represents both

income levels and the productivity of individuals. We classify states into

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

high GDP per capita or low GDP per capita depending on whether they

are above or below the average state GDP per capita across the country.

The second outcome we use is the share of agriculture in GDP.A high (or

low) agricultural share in GDP (compared to the mean) represents the

relative importance of the agricultural sector in contributing to economic

development within the state. The third outcome measure is urbanization

rates. A high (or low) rate of urbanization represents the relative impor-

tance of the non-agricultural sector in contributing to GDP growth.

Combing these three outcome measures, we classify states into the three

categories (as shown in Table2.2). We classify states with high GDP per

capita, where agriculture continues to remain an important contributor to

GDP growth and low urbanization rates as agriculture-led growth states.

We classify states with high GDP per capita and high urbanizing rates as

urbanizing states. Finally, in places with low GDP per capita and low rates

of urbanization, we classify states as lagging states.

In line with our description in the previous section on the subnational

growth experience, in agriculture-led growth states, a high productive agricul-

tural sector, stimulated by the introduction of the Green Revolution, is the

engine of economic growth. These economies were among the rst to adopt

new technologies for staple crop production. This led to an increase in their

agricultural productivity and production and played a key role in transforming

their economic landscape. While the Green Revolution played an important

role in creating a sizeable agriculture surplus, some of these states have not

reinvested the same in the non-agricultural sectors. This explains the relatively

low urbanization rates. States such as Punjab, Haryana, Himachal Pradesh

and Andhra Pradesh represent this development paradigm.

Table 2.2 Classication of states

Typology Agriculture-led growth

states

Urbanizing states Lagging states

Criteria Low urbanization rates

and high GDP per capita

share of agriculture are

relatively high

High urbanization rates

and high GDP per

capita share of

agriculture are reducing

Low urbanization rates and

low GDP per capita and

low productive agricultural

sector drive growth

States Punjab, Haryana,

Andhra Pradesh,

Himachal Pradesh

Kerala, Goa,

Maharashtra, Tamil

Nadu, Gujarat,

Karnataka, Telangana,

Uttarakhand

Bihar, MP, UP, Odisha,

Jharkhand, Chhattisgarh,

West Bengal, Rajasthan,

J&K, northeast states

P. PINGALI ET AL.

The second group of states in our model are the urbanizing states. In

these states, economic development started with the Green Revolution.

Many of these states were either able to reinvest surpluses created during

their Green Revolution or were able to attract investments of surpluses

from neighboring states into the development of their non-agricultural

sectors. For example, Delhi attracted much of the agricultural surplus

investments from Punjab, while Telangana was able to redirect agricultural

surpluses from Andhra Pradesh’s Green Revolution for its development.

Alongside these changes, investments in human capital development,

aggressive infrastructure development policies, rapid urban agglomeration

and other non-agricultural development policies also paid off. In some of

these states, growth has been driven by the manufacturing sectors, while

in others a high-skilled service industry has been the major driver of

growth. Examples of such states would include Maharashtra, Tamil Nadu,

Gujarat, Uttarakhand, Karnataka, Telangana.

The last category are the lagging states. Due to the technology unsuit-

ability in these regions, many of these states did not see the widespread adop-

tion of Green Revolution HYV seeds when it was rst rolled out in the

1970s. In the next phase of the Green Revolution, dominated by cash crop

production, price policies for staple production distorted incentives to diver-

sify into non-staple agricultural production. Thus many of these states were

not able to take advantage of the comparative advantages they had in the

production of non-staple crops. As a result, they continued to rely on a low

productive agricultural sector to drive their structural transformation while

other states forged ahead. In the absence of strong non- agricultural develop-

ment policy, urbanization rates remained low relative to other groups as well.

States such as Bihar, Rajasthan, Madhya Pradesh, Orissa, Uttar Pradesh,

Jharkhand, Chhattisgarh and Jammu and Kashmir belong to this category.

A caveat for this classication is that there exists a lot of inter-group variation in the ST

experience of states. For example, the factors that led to Tamil Nadu’s growth are different

from the factors that led Kerala to become urbanized. Similarly, agriculture-led transforma-

tion in Punjab is dominated by staple crops, but cash crops can better explain Himachal’s

progress towards ST.However for the sake of parsimony, we bundle states together. This

allows us to capture the broad historical experiences ofstates as well as identify some major

trends by group as we look ahead. As we move forward, researchers would have to develop

state-specic policies that reect on the various trends within states. We leave this exercise to

the future academic researchers and policy makers.

In this chapter, states from the North east are included into the ‘special category

states’ classication since this region received concessions on central taxes and nancial

redistributions in order to develop their institutions and economies. Whilewe acknowledge

that there is a lot of variation between these states in terms of the ST experience, their

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

2.2.2 An Empirical Exercise onCharacterizing ST inIndia

In Table2.3, we see the outcomes of the different development process

mentioned in the previous section. In the table, we regress state GDP per

capita on a number of xed effects controlling for lags (up to ve years).

In this model, the province xed effects control for differences in institu-

tions and other time invariant factors that were common within the prov-

ince. The time xed effects account for changes in access to technology

or politics and so on that may have impacted states differently over time.

In column 1 (and 3), the constant term represents the annual year-on-

year increase in GDP per capita (and percentage change) over time that is

exogenous to these changes. It shows how much faster growing states

increased their GDP per capita over time. This inequality increasing fea-

ture of states economic growth patterns is reected in Fig. 2.3, which

compares differences in the way that state transformed between the 1960s

to recent times. From column 2 onward, we introduce two more xed

effects. First, we divide up the year variable into decadal dummies. These

dummies represent the different timelines of the planning committee of

India within which they introduced different technologies and policies to

facilitate ST in India. In the 1960s and 1970s(D1 & D2), for example,

the main policy focus was on building agricultural systems. In the

1980s(D3), small industry development became a national focus. In the

1990s(D4), trade liberalization and deregulation became the main focus

of development strategies. In the 2000s (D5), the high-skilled service

sector, facilitated by the internet technology boom across the world

became a key driving force. Since the main focus of policy kept changing

between these decades, the additional variation from the changing insti-

tutional context we feel is captured by adding these dummies. Second, to

capture the differential effects of policy on state-wise development, we

then interact the decadal dummies with the type of ST that has come to

characterize state-wise development. In columns 2 and 4, our preferred

specications,we include a full set of interactions that account for both

the development experience of the state and the decade xed effects. As

one would expect, states with ST led by agriculture greatly beneted

from the early changes made during the Green Revolution. These states

economies remain weak compared to the rest of the country. This makes them comparable

in outcomes to the lagging states.Thus, in other chapters, gures or tables,where there is

no data on these states, the experience of lagging states will be assumed to represent their

experience as well.

P. PINGALI ET AL.

Table 2.3 Per capita growth over time

Variables (1) (2) (3) (4)

NSDP PC NSDP PC Log NSDPPC Log NSDPPC

Lagging×D1 5,064** −731.2* 0.379* 0.301

(2,147) (375.9) (0.190) (0.212)

Lagging×D2 −925.0 −1,515** −0.0772 −0.0317

(3,159) (594.0) (0.134) (0.120)

Lagging×D3 −2,523 −440.6 −0.0888 −0.0818

(2,212) (323.7) (0.115) (0.0992)

Lagging×D4 −4,051** −228.1 −0.0136 −0.0196

(1,917) (326.4) (0.0986) (0.0774)

Lagging×D5 −4,242 −365.6 0.208 0.277

(3,429) (447.2) (0.233) (0.196)

Lagging×D6 −6,598 −251.3 0.260 0.357

(5,449) (757.6) (0.251) (0.216)

High Ag×D1 8,276* −1,156** 1.174*** 1.467***

(4,405) (427.2) (0.271) (0.171)

High Ag×D2 7,324** −1,527** 0.949*** 0.798***

(3,072) (570.1) (0.127) (0.128)

High Ag×D3 9,178*** −593.2 1.035*** 0.855***

(1,994) (368.3) (0.0949) (0.0957)

High Ag×D4 13,859*** 78.72 1.129*** 0.936***

(2,606) (741.6) (0.0811) (0.0872)

High Ag×D5 28,789*** 1,489** 1.255*** 0.917***

(4,262) (685.1) (0.237) (0.195)

High Ag×D6 42,487*** 1,674 1.308*** 0.875***

(6,915) (1,183) (0.247) (0.255)

Urbanizing×D1 −12,164 2,463*** 0.623*** 0.911***

(9,068) (839.5) (0.147) (0.214)

Urbanizing×D2 −13,782 2,897*** 0.480*** 0.788***

(11,472) (838.4) (0.144) (0.169)

Urbanizing×D3 −9,961 3,056*** 0.534*** 0.807***

(9,142) (651.7) (0.126) (0.165)

Urbanizing×D4 1,314 5,274*** 0.581*** 0.855***

(4,528) (1,394) (0.148) (0.145)

Urbanizing×D5 23,021*** 5,781*** 0.804*** 0.773***

(2,421) (910.8) (0.164) (0.174)

Urbanizing×D6 58,910*** 8,817*** 1.016*** 0.638**

(7,312) (2,176) (0.211) (0.277)

Constant 52,464*** 4,005** 10.21*** 9.834***

(4,379) (1,523) (0.191) (0.276)

Observations 1,340 1,188 1,340 1,188

(continued)

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

Variables (1) (2) (3) (4)

NSDP PC NSDP PC Log NSDPPC Log NSDPPC

R-squared 0.909 0.989 0.917 0.936

State FE YES YES YES YES

Year FE YES YES YES YES

Decade FE YES YES YES YES

Lags NO YES NO YES

Robust SE YES YES YES YES

Robust standard errors in parentheses—clustered by state, ***p<0.01, **p<0.05, *p<0.1

NSDP PC—National State Domestic Product per capita, Log NSDP PC—log values of NSDP PC—rep-

resents year-on-year growth

High Ag—high agricultural productive states, Spl Cat—special category states; lagging states are the base-

line comparison groups

FE—refers to xed effects, lags—include ve lags for NSDP PC values

Table 2.3 (continued)

grew around 14% each year in the rst decade and then around 8% on

average every year. Urbanizing states, which diversied out of staple

grains and agriculture, grew steadily around 9% year on year over the

entire time. Lagging states, which focused their agriculture on staples on

the other hand, grew very slowly in the rst three decades. Much of their

2–3% growth has come from the post-liberalization times.

2.3 tranSItIon fromthEagrIculturE tothEnon-

agrIcultural SEctor: frIctIonS andSEarch coStS

Inlabor markEtS

During the process of ST, economic growth brings new employment

opportunities in the fast growing non-farm economy (Johnston & Mellor,

1961). As the number of opportunities to engage in the non-farm rural

sector increases, many opportunities for employment and growth also

come to situate themselves in urban agglomerations such as peri-urban

areas, towns and cities. Agglomeration of skills and capital in these urban

units are known to speed up the process of growth, thus pushing up urban

wages faster than rural wages. Hence, historically, it has been common to

see large numbers of people migrating from rural to urban areas to avail

the benets of this growth (Barrett, Christian, & Shiferaw, 2017; Johnston,

1970; Johnston & Mellor, 1961; P.Pingali, 2010).

P. PINGALI ET AL.

In India, while cities have grown in size and economic opportunities

have increased, an important criticism of the ST process is that there has

been a very low rural to urban migration rates in response to these

changes. The employment share of agriculture in total employment has

not fallen as fast as the decrease in the value added of agriculture in

GDP. In line with this observation, migration data from the census

2011 reveals that rural to rural migration has dominated patterns for

working age males. The major occupational choice for these types of

migrants are agricultural laborer- related jobs, which explains why agri-

cultural share in labor remains high even though India has undergone

structural transformation. Rural to urban migration, often character-

ized by the transition of jobs from the agricultural to the non-agricul-

tural sector, has been increasing, albeit too slowly (Fig.2.4). This is in

spite of the fact that urban unemployment continues to remain high

and increasing demand for urban services continues to drive up wages

(Binswanger-Mkhize, 2013; Munshi & Rosenzweig, 2016).

To explain

this conundrum, in this section, we propose explanations on the market

dynamics and illuminate the different search or entry costs that have

impacted labor markets and hence migration patterns in India. In a

future chapter, we highlight the micro-level constraints involved for

income diversication of households.

2.3.1 The Push andPull ofMigration inResponse

toDisequilibria inLabor Markets

We classify labor markets in India into those for low skills and those for

high skills. The low-skilled labor markets in India are characterized by

lower human capital investments in education. Sectors such as agricul-

ture, construction, mining and low value added industries and (non-

agricultural) services determine the labor demand. In the absence of

signals for worker quality, which generally come from education, social

networks play an important role in reducing search costs. Social networks

also help reduce monitoring costs and costs of contract enforcement

Many peri-urban areas continue to remain classied as rural based on a hard and fast

census classication for urban areas. Experts who tend to use these census denitions tend to

underestimate the amount of urbanization in the country, and hence migration rates at best

underestimate the true migration rates between rural and urban areas.

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

for employers in these low-skilled labor markets. In high-skilled labor

markets, rms from sectors such as nance, medical care, education

and research and technology development determine labor demand.

Entry costs, reected by costs of accessing good quality education,

restrict labor supply and the total skills available for rms to access. In

these markets, social networks play a smaller role in determining

employment opportunities. Firms instead rely on observable worker

quality, experience working in other rms and educational levels of

individuals as credible signals in the hiring process.

All states in India have some combination of these markets depend-

ing on their level of ST. In Tamil Nadu and Gujarat, rms demanding

high-

skilled labor can be found in both urban and semi-urban areas.

Higher levels of ST in these states create demand for both high-skilled

and low-

skilled workers in urban areas. This cr

eates the pull factor for

labor out of agricultural jobs and out of rural areas. In order to replace

these outmigrants, wages in rural areas increase to attract new labor.

This creates a pull for able-bodied and productive migrants from other

states where rural labor markets may be depressed due to economic

conditions. In states such as Madhya Pradesh and Orissa, the low-

skilled labor supply is large, but employment opportunities outside the

local labor market may not exist due to low worker productivity. In

these states, migrants from rural areas will often participate in low-

skilled labor markets closer to their homes. Thus, these various factors

contribute to four internal migration patterns documented in the

Indian census (Table2.4).

The rst type of migration is the rural to rural (R2R) transition,

which records the percentage of individuals who transition between

rural areas of residence from one census survey to the next. The second

type of migration is rural to urban (R2U) migration. This migration

reects the movement of individuals from rural residences to urban

residences. According to the labor market theories, during ST, greater

urban growth, driven by growth in the non-agricultural sector, is

expected to stimulate demand for this type of transition. The third and

fourth types of migration pattern are the urban to urban (U2U) and

the urban to rural (U2R) migration. For the former, high levels of

urbanization both between and within states determine migration pat-

terns. For those migrating from urban to rural areas, age and gender

P. PINGALI ET AL.

play a major role. This type of migration is dominated by older aged

individuals migrating for retirement and by women migrating for mar-

riage. Within states, the level of ST and proximity to urban centers can

inuence migration patterns. For example, locational advantages such

as proximity to Delhi explain greater R2U migration for work related

employment from Haryana. High urbanization, low migration costs

and the promise of high incomes per capita encourage the inmigration

of low- skilled workers from neighboring states. R2R migration pat-

terns would be larger in lagging states like Bihar. Low urbanization

rates and low incomes per capita reduce incentive for rural to urban

migration in favor of rural to rural migration. Individuals are more

likely to move between rural areas within the state. U2U migration

patterns would be larger for urbanizing states like Maharashtra. High

rates of urbanization, greater access to the global economy and more

opportunities for urban-oriented economic growth create the impetus

for driving the migration of both high-skilled and low-skilled individuals

towards its urban areas (Census Report, 2001, pp.23–24).

Table 2.4 Migration patterns over time

Year Group Rural to rural Rural to urban Urban to rural Urban to urban

1971 Male 53.2 26.6 6.4 13.8

Female 77.6 10.7 5 6.7

Total 70 15.6 5.5 8.9

1981 Male 45.6 30 7 17.4

Female 73.3 12.5 5.6 8.6

Total 65.2 17.6 5.9 11.3

1991 Male 43.43 31.6 7.2 17.8

Female 76.5 8.4 5.8 9.3

Total 67.2 13.9 6.2 11.7

2001 Male 36.4 34.2 6.3 23.1

Female 72.3 13.5 4.2 10

Total 62.9 18.9 4.8 13.4

2011 Male 33.9 30.2 7.1 28.8

Female 64.0 15.7 5.2 15.1

Total 54.9 20.1 5.8 19.3

Source: Singh etal. (2011), census 2011

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

2.3.2 Explaining High R2R Migration Rates: Moving

Low-skilled Agricultural Labor BetweenLow andHigh ST States

In 2011, nearly 55% of total migration involved individuals moving

between rural areas of India. These transition patterns tend to dominate

the migration story of India and are often used to drive home the point

that ST processes have not been sufcient in India. In this section, we

argue instead, embedded in the macro statistics are the pull factors created

by low-skilled agricultural labor markets in high ST areas vis-a-vis low ST

areas. In high ST states, for example, increase in productivity of agricul-

ture has driven up the labor costs of low-skilled agricultural laborers

(S.Bhalla, 1979). In response to these pull factors, labor from low ST

areas migrate towards job opportunities in these agricultural labor markets.

There are two reasons for a migrant from a low productive agricultural

labor market to move to a high productive but low-skilled agricultural

labor market. One, as long as the expected wages at the destination are

higher than their current wages, migrants will prefer to move between

labor markets that maximize their wages given their skills, knowledge and

preferences for work (Fields, 2011; Harrison & Leamer, 1997; Lipton,

1980). Other factors that inuence the cost of migration such as proximity

to home town or linguistic and ethnic proximity to members at the desti-

nation can inuence both where the individual may choose to migrate as

well as how long they choose to stay (Harris & Todaro, 1970; Todaro,

1969). These costs also differ based on educational qualications, the

strength of social networks and opportunity costs of migration (Fields,

1975; Lipton, 1980). High intra-district gures and high rural to rural

migration may thus reect rational responses of migrant households to

local labor market frictions rather than failed outcomes of urbanization or

ST.In low-skilled agricultural labor markets, wages are higher in high ST

states than low ST states as evidenced from the literature (Fig.2.7). As a

result, workers from low ST areas migrate into agricultural markets in high

ST states. In 2001 migration census report, migration from Bihar (0.14

million) and Uttar Pradesh (0.24 million) dominated inmigration gures

to Punjab. Work employment was cited as the main reason for migration

by male migrants from UP (72.1%) and Bihar (82.2%).

While one would ideally like to have migration transition probabilities between states by

sector, this data is not available. However, it is reasonableto assume that rural to rural migra-

tion rates from Bihar to Punjab are higher than rural to urban migration rates between these

states.

P. PINGALI ET AL.

2.3.3 Explaining Low R2U Migration Rates: Illuminating

Frictions That Affect theSpeed ofTransition

Urban markets are thought to house non-agricultural production centers

that grow during ST. The ST theory predicts that non-agricultural sector

growth, represented by greater urbanization and industrial growth, creates

the major pull factors for migration out of rural areas. Thus ST is expected

to bring with it high rural to urban migration rates (B.Bhattacharyya, 1985;

Fields, 1975, 2011; Lipton, 1980; Todaro, 1969; Zhang & Song, 2003). In

India, both urbanization, as well as wage differentials between urban and

rural markets, have been increasing with ST. In response to these changes,

one would expect that there would an increase in the R2U migration rates.

However, based on census migration data, we see that R2U migration sta-

tistics has been increasing rather slowly. Experts have argued that even

though 30% of India reports migrating over ten years, most of the migration

is by women moving for marriage and males moving for employment within

0 .5 1 1.5 2

Real Wages

Lagging High Ag Prod Urbanizing

Sp. Category States

1990 2000 2009

Fig. 2.7 Agriculture wage differentials by state classications. Source: ICRISAT

VDSA meso-level data; based on authors calculations

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

their districts.

Temporary migration, a situation where individuals may

enter urban labor markets for six or fewer months, has been the dening

feature of this type of migration (Bhagat, 2017; Kone etal., 2016; Mitra &

Marayama, 2009; Pandey, 2014; Tumbe, 2014). Low R2U migration in the

presence of high wage differentials and unemployment represent a contra-

diction to the expected growth process as determined by ST.

At the micro level, experts have highlighted the role of language, caste,

religion and age in explaining the phenomena of high rates of temporary

migration of low-skilled workers and low occupational mobility in urban

areas (Munshi, 2011; Munshi & Rosenzweig, 2006, 2016). In China

(Rozelle, Taylor, & DeBrauw, 1999) and Mexico (Taylor & Wyatt, 1996),

authors nd that poorly dened land rights often prevent laborers from

selling their unproductive lands and moving out of agriculture. The litera-

ture also nds that proximity to urban areas also plays a role in determin-

ing migration outcomes. Urban infrastructure constraints also impose

costs on permanent migration since land costs in urban areas are extremely

high (Bhagat, 2017; Imbert & Papp, 2014; Pandey, 2014). These entry

costs along with poor human capital development add to labor market

frictions and reduce incentives for workers from rural areas to respond to

urban labor market demand. If the probability of nding a job is low due

to lack of information, this will discourage rural to urban migration in the

presence of urban unemployment and rising wages (B. Bhattacharyya,

1985; Fields, 2011; Lipton, 1980).

At the macro level, low levels of ST in states or low growth of the non-

agricultural sectors reduces pull factors that ar

e essential for migration to

take place. Looking at the data on the migration probabilities between

states, one sees that geographical proximity of urbanizing states deter-

mines migration patterns. In 2001, Maharashtra saw the greatest increase

in migrants with over 3.2 million people entering the state. Of those

migrating, 81% moved into urban areas. Delhi welcomed an additional 2.2

million people. Much of the migration to these urbanizing states came

from lagging states. More than 70% of male migrants to these states

reported that they migrated for work and employment.

Urban population growth doubled between 1901 and 2001, then increased 8% between

2001 and 2011. This growth has come from (1) high urban fertility rates (around 2.0), and

urban fertility has reached this level only recently. Till 2001 it was above 2, which meant that

urban population growth was driven by those living in urban areas. (2) Migration to cities—

this has been a smaller portion of the total urban growth for now. However, it will change

soon as migration has urban fertility rates that have fallen below replacement rates in 2011.

P. PINGALI ET AL.

2.3.4 Changing Demographic Structure andIts Impact

onRural Productivity

In India, outmigration is characterized by welfare reducing factors at the

point of origin. Overall, highly educated, young, productive and rich male

individuals migrate rst followed by their nuclear families (Census, 2001;

Kone etal., 2016; Pandey, 2014; Tumbe, 2014; Zhang & Song, 2003).

Reverse migration or the process of moving from urban to rural areas also

contributes to changing the socio-demographic prole of villages for those

left behind (Census, 2001). Among those participating in U2R migration,

marriage is the largest driver of female migration and old age is the largest

driven of male migrants. Thus outmigration of young workers and inmi-

gration of women and older individuals create a village economy charac-

terized by older age individuals and women and children. These groups

are then expected to manage the farm and hence drive therural economy.

In Munshi and Rosenzweig (2016), authors show that outmigration

greatly impacts the strength and wealth of the social network, increasing

vulnerability of those who are left behind. Migrant remittances are often

used to pay back the debt incurred for helping a family member migrate

or in replacing farm labor with automated tools of production. Desai and

Banerji (2008) show that women who are left behind exhibit indepen-

dence and better empowerment indicators only if they do not already live

with an extended family. Living with extended family decreases their

agency in supporting the household.

In such situations, there are three important things to note. One, over

time, women and older individuals often become an important part of the

labor force in agriculture in rural areas. In the last census, the female to

male ratio of women working in the agricultural sector had increased both

over time and with greater amounts of GDP per capita. Figure2.8 reiter-

ates the importance of focusing on increasing agricultural productivity of

women to stimulate rural growth in the future. Two, without access to

nancial markets to invest gains from migration or non-agricultural mar-

kets to spend their cash on, rural economies may not benet from net

migration. Thus investments in increasing access to banks or other savings

instruments will be important for stimulating investments and hence

growth in the non-farm rural sector. Three, as rural fertility remains high

and child mortality continues to reduce, there is bound to be an increase

in the number of young individuals who will become eligible to participate

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

in the labor markets over time. Lack of access to proper education or

health facilities due to poor rural infrastructure and poor access to nutri-

tion will reduce the productivity of the future labor force. This will rein-

force the existence of a low productive rural economy, thus impacting

future efforts towards stimulating greater structural transformation.

2.4 concluSIon

As of 2018, India has become the sixth largest economy in the world dis-

placing France from this position. The emergence of the country on the

global stage is evident in its growing per capita incomes and its emergence

as a global economic and thought leader. However, India’s growth experi-

ence has been marred by subnational divergence. This has led to the emer-

gence of states like Goa and Delhi whose development experiences

compare to high growth countries in Latin America, while states like Bihar

and Uttar Pradesh are now more comparable to some of the low-income

500

1000

1500

Females to 1000 Males

8 9 10 11 12 13

Log (NET) State Dom Product per Capita

Red – 1991; Blue – 2001; Green – 2011

Fig. 2.8 Growing participation of women in agriculture. Source: Census 1991,

2001 & 2011; based on authors calculations

P. PINGALI ET AL.

countries in sub-Saharan Africa. In the former, development is driven by a

high growth urban economy, while the latter’s development is weighed

down by a low productive agricultural sector.

In this chapter, we deliberate upon the reasons behind the divergent

subnational growth experience. Overall there are four major takeaways.

First we nd that the Green Revolution, which played an important role

in catalyzing economic growth in many states across the country, did not

benet all states. States (currently lagging states) which did not have any

comparative advantages in the production of rice and wheat have been left

behind in the development process. Instead, those states that have built

their agricultural sectors on comparative advantages such as ease of access

to global markets, agro-climatic advantages, high-skilled farm capacity for

production have been the ones to benet from technology advances of the

Green Revolution. In many of the fast growing states, agricultural value

added and agricultural productivity remains high and continues to grow,

reiterating the role of a productive agricultural sector in supporting the

growth process. In lagging states, staple-grain-focused agricultural policies

and rigid procurement policies lock small farmers into staple grain produc-

tion even when they have no comparative advantages in its production.

The lack of documentation of landownership and the increase in fragmen-

tation of land have also been linked to poor investments in productivity-

enhancing inputs, thus leading to low yields. This creates a vicious cycle of

low yields and low returns to farming and keeps small farmers in their

subsistence mode of production especially in lagging states.

Second, our analysis of the development process reveals that serendipi-

tous changes in national (aggregate) demand (pre-1990s) or global

demand (post-1990s) and the readiness of states to direct their economic

sectors to respond to this demand have been the key ingredients in propel-

ling them forward. States that have been more exible in their develop-

ment approach, focusing on developing industries in which they have

comparative advantages in resource availability, have been more successful

in enabling greater ST. In urbanizing states, even though the Green

Revolution provided the impetus for growth, development strategies that

have focused on comparative advantages, in skill and infrastructure avail-

ability, rather than absolute advantages, say in availability of land, have

proved successful for ST. Thus national policies that keep states locked

into a single type of development strategy have now become high-risk

strategies. Even states focused on agriculture-led growth need to actively

ECONOMIC GROWTH, AGRICULTURE ANDFOOD SYSTEMS: EXPLAINING…

redirect their economies to benet from global opportunities for growth

based on their comparative advantages in high-value crop production, for

example. In this regard, investment strategies that increase the productiv-

ity of resources are important towards ensuring long-term development.

Third, embedded in our discussion on the macro factors that impact

growth is the assumption that if economies are to structurally transform, a

robust non-agricultural sector will be needed. The non-agricultural sector

creates the pull factor that helps redirect underemployed agricultural labor

from low productivity to higher productivity jobs. This non-agricultural

sector growth can come from the non-farm rural sector as well as urban

areas. While we discuss this in more detail in Chap. 3, in this chapter, we

argue that reducing labor market frictions will increase participation in the

non-farm (or non-agricultural sector) and is key to facilitate faster ST. This

involves reducing search costs and entry costs into rural and urban non-

farm labor markets. For example, we identify that human capital invest

ments reduce both search and entry costs and are needed for greater

occupational mobility. Additionally, information about labor market

returns, increasing safety in the workplace and access to role models who

come from the same caste and community can also be important inputs

into reducing barriers to entry. Four, a major trend that we see emerging

for the future is the growing importance of women in the agricultural

sector. On-far

m labor-saving technology which enhances productivity and

reduces drudgery is essential for kickstarting a Green Revolution 2.0,

especially in low productive regions. However, technology adoption can

enhance on-farm productivity only if it accounts for issues of access that

are impacted often by gender, poor education, lack of land tenure rights

or lack of access to nancial markets. These labor market frictions need to

be addressed through appropriate rural development and human capital

enhancing policies.

Looking ahead, we see three important drivers for economic growth

that will impact the speed of ST within the country. First, recent research

has shown that climate change has created a non-trivial threat to future

production. Studies have already documented the negative effects of tem-

perature and rainfall shocks on agricultural productivity, labor productivity

and health of individuals within the country (Majra & Gur, 2009;

E.Somanathan & Somanathan, 2009). This poses a major challenge for

development policies as there is expected to be regional disparities in the

intensity of impacts due to climate change. Thus economic policy needs to

simultaneously invest in creating comparative advantages for growth while

P. PINGALI ET AL.

reducing greenhouse gas emissions through appropriate climate change

mitigation policies. Second, extrapolating on the current demographic

and migration trends from the country, we see that over the next 30years,

a greater number of young Indians are expected to enter the workforce.

However only healthy individuals will have the ability to participate in

growth processes to their full capacity. Also, current trends in industry

growth indicate the growing preference of mechanization and labor- saving

technologies in production processes. Creating a clear pathway for young

people to benet from economic growth opportunities that a mechanized

ST process brings with it, which, simultaneously addressing the human

capital challenge of better nutrition and health, will be an important policy

commitment. Three, rapid urbanization of population poses a major chal-

lenge if it is not inclusive of the rural growth. Looking ahead, tying rural

development to urban food growth requires policy innovations in agricul-

tural development, food supply chains, food safety nets and non-farm eco-

nomic opportunities. These commitments will be important towards

ensuring the long-term sustainability of economic development processes.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_3

CHAPTER 3

Rural Livelihood Challenges: Moving out

ofAgriculture

3.1 IntroductIon

Narratives around poverty, hunger, food security and nutrition—largely

subsumed in the food system—are intrinsically linked to the development

of the rural economy. Rural economic structure is constantly reshaped by

forces of urbanization, expanding markets, returns to livelihood opportu-

nities, changes in land use patterns and the inherent socio-demographic

structure of villages. Also, thereliance on cultivation as the main source of

livelihood in rural areas is declining with the growth of smaller towns and

non-farm livelihood opportunities. Thus, the future of agricultural work

will look very different from what we have seen.

The theory of structural transformation suggests a decline in agricul-

ture’s share in total output and employment over time. As people move

out of agriculture, householdincome and access to non-farm economic

opportunities—rather than just farm-level production diversity or farm

incomes—become equally important predictors of household food and

nutrition security. This is driven by the fact that, as agricultural systems

modernize and markets develop, there is an increasing separation between

the production and consumption decisions of households (Pingali &

Sunder, 2017). As a result, home consumption declines and food security

concerns progressively become an issue of access rather than availability.

To enhance access to nutrition and food, when most households progres-

sively become net consumers of food, household income becomes the

most important instrument for improving welfare.

The logical question

therefore ensues: how can one increase income earning opportunities in

rural areas such that it increases food security and welfare? The develop-

ment world has taken note of the fact that income diversication is key to

rural development, poverty reduction and food security and the same

applies to India as well. Along the path ofstructural transformation, the

non-farm sector in India hasgains in prominence becoming an important

pathway for increasing food security.

In the last four decades, Indian rural output has increased by almost

seven times—Rs. 3,199 billion to Rs. 21,107 billion at 2004–05 prices—but

the share of agriculture in rural income has reduced from 72.4% to 39.2%

(Chand, Srivastava, & Singh, 2017). Pathways from agriculture to nutrition

mostly assume farming—as a source of income and food—to be the most

important means to access food in rural economies. However, a greater

share of households in rural India now rely on markets to access food.

Nationally representative data suggests that 88% of farming households rely

on some form of non-farm income sources to sustain their livelihoods

(Chandrasekhar & Mehrotra, 2016). Non-farm income is therefore becom-

ing an important source of food security and dietary diversity (Mishra &

Rahman, 2018). Livelihood and income diversication out of farming have

been considered asdesirable for enabling greater structural transformation.

By moving underemployed agricultural labor towards non-farm economic

opportunities, it isexpected to enhance capabilities and raisehousehold liv-

ing standards (Ellis, 1998). During times of distress such as weather shocks,

non-agricultural labor supply is generally found to increaseenabling income

diversicationand consumption smoothening (Ito & Kurosaki, 2009).

Against this background, this chapter discusses the evolving role of

non-farm income in determining household food security and nutrition in

rural Indiathrough diversication of incomes and livelihoods. Webuild

upon the idea that promotion of the rural non-farm economy should be

an important component of India’s rural transformation strategy. We

painta comprehensive portrait ofthe changing nature of the rural eco-

nomic structure, blurring of rural-urban distinctions, and how this poses a

challenge as well as opportunity to create employment for labor leaving

the agricultural sector. The analytical lens of a food system approach here is

See chapter on health for discussion on the pathways to reduce malnutrition.

In 2011–12, 84% of India’s population was classied as net consumers of rice, much of

which was purchased in the market (CITE).

P. PINGALI ET AL.

particularly helpful in imagining rural as farm production and beyond—

encompassing various food-related non-farm activities such as storage,

processing, distribution and transportation of food in addition to many

other services which do not necessarily fall within the realm of food pro-

duction but provide livelihood opportunities to the rural population.

3.2 non-farm Sector aSPart ofthedeveloPment

trategy

Livelihood diversication and non-farm employment are important levers

for rural economic growth. Across developing countries, the success of the

Green Revolution led to the idea of a “unimodal” agrarian structure

(Tomich et al., 1995). It was believed that agricultural growth through

productivity- enhancing strategies could generate economy-wide growth

multipliers, leading to across-the-board income growth and employment

generation. While agricultural growth did propel growth and structural

transformation in many countries, demographic pressure, preponderance

of small farms, declining share of household income from agriculture and

commercialization have changed the role of agriculture in future eco-

nomic growth. Hazell (2018) recognizes a growing differentiation within

the agricultural sectors of developing countries. Imagining the future of

agriculture, based upon experience in the last 100 years, Hazell argues

that the development strategies for rural areas should now prioritize pov-

erty reduction as part of long-term agricultural growth strategy and foster

an environment of gainful job creation. Agricultural issues should be

focused towards smallholders, specically increasing their commercially

viability through connecting them to markets. Economic changes have

reconguredthe roles of culture, institutions, gender and access to human

capitalin rural areas. At the same time,quality education and health infra-

structure, in addition to the issue of access to land, irrigation and other

natural resources are increasingly becoming important. Policy focus,

therefore, should be on quality jobs, better labor market participation,

higher wages and reductions in rural poverty. These arguments further

those of Mellor and Johnston (1984) who had argued that reducing pov-

erty and its various manifestations including malnutrition require a con-

certed attempt of “…interacting forces, characterized as a ring, that link

nutritional need, generation of effective demand for food on the part of

Many of these points will be discussed in the following chapters.

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

the poor, increased employment, a strategy of development that structures

demand towards goods and services which have a high employment con-

tent, production of wage goods, and an emphasis on growth in agricul-

ture”. The development strategy path followed by a nation, therefore, is

central to how the food equation balances.

The transformation of the workforce in India away from low- productivity

agricultural sector into manufacturing and other tertiary activities has been

slow. More than 60% of the rural workforce continues to be employed in

agriculture-based livelihoods, despite the share of agriculture output being

around 17%. There has been a decline in the share of cultivators, but the

share of agricultural labor increased; the desired transition from rural to

urban occupation did not take place (Fig.3.1). Poorer regions specially

continue to have a greater share of the rural workforce primarily engaged

in agriculture, either as cultivators or wage laborers. In the urbanizing

states, and those where agriculture is the driving force, the share of the

workforce employed in cultivation is lower (Fig.3.2). The share of those

employed in agriculture—in cultivation and agricultural labor—is highest

The food equation is the term used by Malthus in his 1978 “Essay on Population” as a

race between food and population. A balanced food equation implies food sufciency where

domestic food demand is met by overall supplies.

Fig. 3.1 Change in the agricultural workforce. Source: Data from Indian Census

1961–2011, based on author’s calculations (Note: We have used data for the

major Indian states, and district boundaries represent the 1971 divisions for the

sake of comparability over time.)

P. PINGALI ET AL.

among the lagging states. Further distinguishing between main and mar-

ginal occupation further elucidates the above point. In the lagging states, a

greater share of the workforce is also a marginal worker (Fig.3.3). More

advanced states have a lower share of marginal cultivators while the lagging

states have marginal workers who are spread across agricultural and non-

agricultural occupations. These differentiations help us underscore the

point that while India’s structural transformation largely has often been

21.7

18.2

27.9

23.6

31.5

34.2

54.6

50.3

37.9

0.0

10.

20.

30.

40.

50.

60.0

Urbanizing High Performing AgricultureLagging

Cultivation Agricultural Labor Others

Fig. 3.2 Labor share by state classication. Source: Data from Census of India

2011; based on author’s calculations

Main Marginal Main Marginal Main Marginal

Urbanizing High Performing Agriculture Lagging

Cultivation

Agricultural Labor

Others

Total

Fig. 3.3 Nature of work: main and marginal workers (in %). Source: Data from

Census of India 2011; based on author’s calculations

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

dubbed as “stunted” (Binswanger-Mkhize, 2013), more nuance lies in

subnational variations. Regional variation in land fragmentation and poor

access to capital with smallholders has further stied the desired pace of

structural transformation in the lagging regions.

Dynamic changes in the rural economy were historicallybrought about

by Green Revolution productivity increase. These gains, however, were

limited to regions which could specialize in the production of staple crops

and had better agro-climatic endowments, irrigation and road infrastruc-

ture and institutional structures that allowed for better governance of nat-

ural resources, such as land and water rights.

In the case of high- productive

agriculture states which beneted from the Green Revolution, rise in farm

incomes and demand for labor induced higher wage rates which stimulated

rural non-farm activities. Rural transformation and greater non-farm

employment were brought about by the “pull” forces implying relatively

higher returns in the non-farm sector. Income from the non-farm sector is

potentially a major poverty-reducing strategy and often picks up the slack

when agriculture is not doing well (Haggblade, Hazell, & Reardon, 2010).

It is a widely accepted fact that agricultural households engage in a wide

range of economic activities apart from cultivation. A recent nationally

representative survey of farmers reectsthis phenomenon: only 12% of the

households whose primary source of income is cultivation are not engaged

in any secondary activity (Chandrasekhar & Mehrotra, 2016).

For the rst time, in 2012, a greater share of Indian population worked

in the non-farm sector. Between 2005 and 2012, about 50 million jobs

were created in the non-farm sector, while 34 million jobs were lost in

agriculture (Chand, Saxena, & Rana, 2015).

As the non-farm sector is

increasingly becoming more important for Indian rural economy, the of-

cial line of thinking on India’s agrarian society too has begun to acknowl-

edge rural employment as more than cultivation and agricultural labor. In

an interview, Dr. Ramesh Chand, member, agriculture, a government

think-tank, NITI Aayog, said, “…it is not proper to view rural India as

only an agricultural economy. Now two-third of the economy of rural

India is non agriculture and only one-third is agriculture.”

He adds,

Structural transformation by regions has been dealt with in detail in Chap. 2.

A report by McKinsey Global Institute titled “India’s Labour Market: A new emphasis on

gainful employment” presents a similar gure. It says that during 2011–15, 33 million non-

farm jobs were created, while the number of agricultural jobs declined by 26 million.

https://www.rstpost.com/business/research-on-agrarian-distress-is-inadequate-we-

need-some-proper-indicator-says-ramesh-chand-of-niti-aayog-4795141.html. Accessed on

July 24, 2018.

P. PINGALI ET AL.

“Ultimately, like China, Japan or any small farm economy, we need to

move in the direction of part-time farmers. We recognise that one or two

acres will not give them income, they have to earn from other sources. In

many cases it is already happening, but we have to move as a development

strategy.”

3.2.1 Distributional Implications ofNon-farm Income

Investing in the growth of the non-farm sector is hailed as an important

development strategy because of its potential for the redistribution of

incomes. Non-farm income acts as a redistribution mechanism in a num-

ber of ways (Lanjouw & Lanjouw, 2001). First, by producing more afford-

able and lower quality goods consumed mostly by the poor, rural industrial

production leads to lower local prices. Second, non-farm economic oppor-

tunities provide a source of employment to those for whom agriculture

may not provide sustenance and therefore helps to absorb the growing

rural labor force, especially in the states which are lagging. Third, through

increasing rural livelihood avenues, these types of economic activities help

slow down temporary migration (ibid).

India’s growth experience suggests a steep rise in inter-personal inequal-

ity (Jayaraj & Subramanian, 2013; Motiram & Naraparaju, 2015). As the

central agrarian question in India remains the availability of productive

land, non-farm sector helps maintain income for the landless and the

smallholder. It is fairly well established that Indian agriculture is domi-

nated by smallholders, and fragmentation of land is the root cause of pov-

erty and inequality in rural areas (Chakravorty, Chandrasekhar, &

Naraparaju, 2016). Land fragmentation leads to a reduction in the mean

plot size below the threshold beyond which mechanization becomes a

challenge. This further lowers the economic viability of farms (Deininger,

Monchuk, Nagarajan, & Singh, 2017). While redistribution of land is not

a politically attractive option and the consolidation of holdings is opera-

tionally challenging, promotion of non-farm opportunities seems to be a

more pragmatic way of increasing the income of smallholders and other

rural poor. Given the greater pro-poor incidence of non-farm income,

historically marginalized sections of the rural society—which have lower

access to land and capital—have beneted substantially from the non-farm

sector employment despite its casual nature. Similarly, women also benet

from the non-farm sector as their access to resources such as land and jobs

remains limited (Lei, Desai, & Vanneman, 2017). Reduction in inequality

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

requires greater access to non-farm jobs which are formal. While non-farm

jobs reduce inequality through alleviating unequal access to land (Joshi &

Lanjouw, 2016), formal sector employment would ensure it is more

sustainable.

3.3 comPoSItIon oftherural non-farm

ector InIndIa

The important question, however, is to understand the nature of non-

farm sector to understand its welfare implications. Traditionally, the rural

non-farm sector comprises of a highly heterogeneous portfolio of activities

including services and small-scale manufacturing industries which cater to

agricultural input needs and meet the demands of rural consumers

(Haggblade etal., 2010). Rural non-farm employment includes food pro-

cessing or clothing manufacture in the manufacturing sector, in addition

to services such as motor repair, or other skilled or unskilled work. Non-

farm workers could also be self-employed through small-scale enterprises

and petty trade (Reardon, Stamoulis, & Pingali, 2007). The nature of the

non-farm sector changes as one travelstowards villages locatedcloser to

towns and other urban centers.

With overall economic growth, better rural infrastructure and declining

rural-urbantravel time distances, the composition of the rural non-farm

sector in India has changed; construction and manufacturing sectors

have become major employment sources. According to the estimates

based on the National Sample Survey (NSS), construction sector employs

30.1% of the total non-agricultural employment (Chand et al., 2017).

Manufacturing employment, on the other hand, stands at 22.1%, while

services employ 45.1% of the labor force. Unprecedented growth in the

construction and the service sector over the last decade has led to a greater

number of jobs but also led to greater casualization of the labor force.

Lack of formal written contracts between the construction workers and

their employers raises the issue of job quality. Even among the formal

sector employees in the non-farm economy, such as manufacturing or ser-

vices, only 60% have a formal contract, depriving a majority with no social

security benets (Saha & Verick, 2017). Introduction of the public

employment programs, such as MGNREGA, havealso facilitated a faster

move towards the rural non-farm sector, yetthese livelihood avenuesare a

last resort means forthose in the lower income quintile, casting doubts on

the long-run welfare of this transition.

P. PINGALI ET AL.

It has been argued that the rise in agricultural productivity abets non-

farm activity (T.Reardon, 1997). In the long run, the expansion of the

non-farm sector leads to higher agricultural wages which act as the indi-

rect channel of rural poverty reduction (Lanjouw, 2007). In the Indian

context, where education levels are low and vocational skills limited, the

non-farm sector is a lucrative alternative for the poor. Over the long run,

with a reduction in poverty and investment in future human capital, the

non-farm sector could be the springboard for greater economic mobility.

The promise of the non-farm sector for abetting human capital investment

returns in long-term economic mobility, however, rests on its ability to

provide equitable access to quality education, access to well-functioning

credit markets as well as the strengthening of the rural-urban linkages.

With agriculture becoming commercialized and a large share of the

country expected to be urban by 2050, most households would be buying

food from the market, and henceaccess to food and nutritional security,

therefore, would mostly be determined through the income pathway.

Indian policy makers thus face a precarious challenge where they not only

need to ensure cultivation is remunerative for greater rural income but also

create an enabling environment where quality non-farm economic activi-

ties are accessible to a wider rural population which are at a disadvantage

because of lack of education, skills, social networks and nancial capital.

3.4 urbanIzatIon andgrowth oftherural

conomy

Urbanization is an outcome of the development process and is intrinsically

linked to the evolving food systems. We discuss how urbanization is

reshaping diets in Chap. 5. Here, we examine the role of urbanization in

contributing to the rural economy through greater employment opportu-

nities. We will specically address the challenge of meeting the growing

urban need for food and other rural resources while at the same time

ensuring sustainable rural growth.

Urban areas benet from agglomeration effects and economies of scale

because they can attract a skilled workforce and production inputs are

more easily available (Glaeser & Maré, 2001). The concentration of eco-

nomic activities leads to technological spillovers and reduced costs of

infrastructure provisions. Theoretically, urban economic growth can con-

tribute to reducing rural poverty through two main channels: absorption

of surplus labor and productivity spillovers. As per the classic Lewisian

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

model, surplus rural labor is absorbed in the urban sector, leading to

higher rural wages (Lewis, 1954). Rural poverty reduction is also inu-

enced through greater urbanization and the rise in the demand for rural

products. Urban economic growth also affects rural incomes through

remittances. The lack of labor-intensive manufacturing sector and ade-

quate urban employment has been one of the reasons why the share of

labor in agriculture has not declined commensurate with its declining

share in overall output. Similarly, low levels of permanent migration sug-

gest hindrance to rural-urban mobility. At the same time, India’s growth

story across the globe is of its sprawling metropolises with an abundance

of technically skilled manpower and seats of global innovation. The ques-

tion of our time is therefore how to leverage India’s urbanization for

greater rural prosperity.

As India is expected to be 60% urban by 2050, better infrastructure and

communication networks are expected to reduce physical distance and

cultural barriers between rural and urban residents. Agriculture, therefore,

may no longer continue to be the dening feature of the economic and

cultural life in rural areas. This rural transformation—an essential part of

structural transformation—entails greater interaction along the rural-

urban spaces, thereby pr

omoting agricultural productivity and greater

marketable surpluses. This could then facilitate overall production diversi-

cation, new forms of livelihood and better infrastructure provision in

rural areas. Spatial boundaries across the rural-urban dichotomies are

increasingly getting blurred as with larger rural areas becoming indistin-

guishable from the small urban areas, especially regarding the occupa-

tional patterns and built-up area characterizations (Chatterjee, Murgai, &

Rama, 2015). The right set of public policies, however, are essential to

ensure smooth, inclusive and sustainable urbanization for structural trans-

formation to take place.

It is now fairly well-established that urbanization has been a signicant

contributor to rural poverty reduction since 1991 by providing rural

households with a greater number of livelihood opportunities during the

period when agriculture has largely remained largely stagnant (Chatterjee,

Murgai, Narayan, & Rama, 2016). However, understanding the varie-

gated nature of urbanization is crucial to understand its impact on rural

poverty. Urbanization is generally imagined to be the growth of larger

metropolises which misses the point that most of the urban population

resides in smaller towns. Breaking the monolith of “urban” into its various

kinds is therefore very important. Against the common notion which

P. PINGALI ET AL.

equates urbanization with big cities and planning, Indian urbanization has

been noted to have a subaltern character, which implies a rapid rise in

settlement agglomerations, which are often not classied as urban by the

Indian census operations (Denis, Zerah, & Mukhopadhyay, 2012). The

other way to represent these transitions is to call it RUrbanism or Rurality

where urban is rapidly integrating with the rural (Chandrasekhar &

Mukhopadhyay, 2017; Revi etal., 2006). Subaltern urbanization, with a

growth of small towns in the last decade, has been more prominent in the

poorer states (B. Chaudhuri, Chatterjee, Mazumdar, & Karim, 2017).

The urban transition has already matured in the more developed states.

3.4.1 Emergence ofSmaller Towns

Rural non-farm economy along with the secondary towns contributes sig-

nicantly to inclusive growth patterns and poverty reduction during the

process of rural transformation (Christiaensen & Todo, 2014). Compared

to major urban agglomerations, rural poverty reduction is much stronger

if the urban economic growth is driven by smaller towns. These towns

provide easier connectivity to the rural hinterland, encouraging labor

mobility as well as better access to markets and amenities, including access

to human capital. In India, despite all the focus on metropolitan cities as

engines of growth, it isactually the smaller towns which have had the big-

gestimpact on poverty reduction during the last two decades (Chatterjee

etal., 2016; Gibson, Datt, Murgai, & Ravallion, 2017). Along the spatial

gradient—where the strict rural and urban denitions become blurry—

agglomeration effects around smaller cities have been the highest as they

have led to many high-performing rural places (Li & Rama, 2015).

In regions where agriculture is the dominant sector and farmers are

prosperous, clusters of small towns have emerged. Many of these small

towns are market towns often referred to as mandi towns which are cen-

ters for agriculture inputs and marketing (Kapur & Krishnamurthy, 2014).

Without expanding enoughto become cities, these regions lie along the

rural-urban continuum where theprincipaleconomic activities are essen-

tially linked to agriculture and consumer demand emanating out of farm

income. They comprise facilities for cultivation, input distribution and

agricultural marketing yards as well as provide essential consumer goods

and services to the villages nearby. Economic activities in smaller towns

typically include manufacturing, trades and services.

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

Middle spaces between the village and small towns are settlements

which Indian census operations call as census towns. India’s census opera-

tions dene census towns (CTs) as urban areas if it has a population of at

least 5,000 people, population density is greater than 400 persons per

square kilometer and at least 75% of the main male workforce is employed

in the non-farming sector. While this is the standard classication of what

is considered as “urban” in India, CTs are peculiar in the way that despite

being urban, these settlements continue to be administered as rural areas.

The number of census towns between 2001 and 2011 saw a threefold

increase from 1,362 to 3,894 contributing to 30% of the urban population

growth, reecting in situ urbanization (Pradhan, 2013). Unlike CTs, stat-

utory towns (with a population of less than 100,000), which either have a

municipal corporation, cantonment board or notied town area commit-

tee have grown at a relatively slower pace, while census towns have almost

doubled from 7.4% to over 14% (Mukhopadhyay, Zérah, Samanta, &

Maria, 2016). The rise of census towns together with a greater increase in

the built-up areatherefore suggests a gross underestimation of urbaniza-

tion in India.

So, what happens in these census towns and why are they relevant for

agricultural growth? These newer towns have become the hub of eco-

nomic activity and commerce for the rural markets (ibid). Proximity to

rural areas has also allowed these market towns to become centers for

growth, where much of the rural demand for new services and goods are

met. This has also allowed them to be distant from the uncertainties of

larger metropolises. These smaller towns have not only generated non-

farm employment avenues and contributed to gr

eater rural poverty alle-

viation but are also the largest growing market for the FMCG sector

(Nielsen & CII, 2012). Many of the small towns or even census towns

are zones of transition from an agrarian economy to a more diversied

one where manufacturing and services have a greater role. The pace of

change, however, varies by the stage of regional rural transformation.

There is a different pattern in the regions where agriculture has not been

a part of the structural transformation process. In those regions, smaller

towns have a greater share of those employed in agriculture. Smaller

towns provide employment avenues to those who wish to or are forced

to transition out of farming. This is reected in the greater share of mar-

ginal workers in the small towns and rapid emergence of smaller towns

and large villages along the poorer regions of Indo-Gangetic plains—like

in UP and Bihar (Mukhopadhyay, 2017). Stagnant agriculture, chronic

P. PINGALI ET AL.

underemployment and insufcient job creation in the region have led to

the non-farm economy along the rural-urban spaces emerging as the

main providers of economic sustenance.

3.4.2 Peri-urban Areas andAgricultural Growth

The urban-rural distinction is blurring fast. It is also becoming increas-

ingly hard to distinguish between census towns and towns with urban

administrative status. Villages proximate to census towns are not very dif-

ferent from those proximate to statutory towns (Mukhopadhyay, 2017).

Instead of a rural-urban binary, we now have a rural-urban continuum

which is expanding alongwith structural transformation of the economy.

As villages have begun to exhibit urban characteristics, this phenomenon

is often referred to as peri-urbanization. Peri-urban regions are considered

as mixed or transitory spaces, undergoing rapid and multiple transforma-

tions (Dupont, 2005). While there are issues of disentangling the rural-

urban dichotomy, peri-urban agriculture could be a signicant contributor

to poverty alleviation and food security. Assuming that commuters live in

peri-urban areas, Chandrasekhar (2011) estimates them as around 32 mil-

lion (4.3% of the rural population) in India. These commuting workers are

primarily engaged in manufacturing, construction and other retail or

wholesale sector. Peri-urban regions have become important hubs helping

the diversication of economic activity through creating agglomeration

effects, andaccess to amenities and generation of non-farm employment.

In villages located closer to towns, the share of non-farm activities could

be as large as 70% (Sharma, 2016). Villages near towns also participate

more in intensive agriculture and have higher wages, and households tend

to have greater income and consumption expenditure (ibid). Against the

common understanding that manufacturing is only restricted to urban

areas, formal manufacturing activities in India too have moved from urban

to rural environments in the last decade, while urban areas comprise the

informal service sector jobs (Ghani, Goswami, & Kerr, 2012). A substan-

tial share of government and other public sector formal jobs like banking

are also located in the rural areas, where people commute daily to work.

This form of mobility is reected in a large share of urban to rural com-

muter shares.

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

3.5 PolIcy StrategIeS toencourage thegrowth

ofthenon-farm Sector InIndIa

Dividing non-farm employment into three categories—regular employ-

ment (generally salaried), casual employment (daily wage) and self-

employment—Lanjouw and Murgai (2009) note that regular non-farm

employment is the most sought after. Compared to the other two, regular

employment in the non-farm sector is associated with higher income and

greater stability, but also requires greater skill and better human capital.

The challenge for a more vibrant food system is to ensure that movement

towards non-farm employment is not a step-down. In this section, we will

highlight some of the policy strategies which could be prioritized to

encourage the non-farm sector in India.

3.5.1 Focus onAgriculture andRural Infrastructure

A vibrant agricultural sector is essential to the growth of non-farm sector

because of the large dependence on it for food security and employment.

Most of the rural households do earn a certain part of their income from

agriculture while diversifying their income portfolio in India (Chandrasekhar

& Mehrotra, 2016). Agricultural income therefore not only increases the

agency of households to command food but also provides resources to take

control over otheraspects of lives such as investing in children’s education,

setting up a new enterprise leading to greater accumulation of assets. There

could be four major categorizations of the agricultural growth and non-

farm linkages (Lanjouw & Lanjouw, 2001; Reardon, 1997; Haggblade &

Hazell, 1989). Through production linkages, agriculture connects to non-

farm suppliers of raw materials and farm inputs. There are consumption

linkages when the gains fromagricultural income are spent on locally pro-

duced non-farm goods. Through the supply of labor to non-agricultural

activities during the lean season, and investment in non-agricultural activi-

ties, agriculture is connected to the economy through factor market. There

are productivity linkages through reduced food prices. These linkages,

however, assign primacy to the agriculture as a driver of these connections.

The reverse takes place too when newer industries could ignite the demand

for agricultural products. Similarly, productivity linkages could be induced

by the non-farm sector through better input supply, product marketing or

investment from non-

farm earnings into agriculture for better seeds and

fertilizer variety leading to enhanced agricultural productivity.

P. PINGALI ET AL.

An important aspect of restructuring the rural economy is to remove

structural constraints to credit and markets. More remunerative non-

farm employment avenues are heavily determined by the density of social

networks and family ties, if not by the required degree of skills and train-

ing. Often it is the poorest who lack these and are locked out of this

market because of marginalized social groups or small land holding.

Investment in rural infrastructure goes a long way in reducing the eco-

nomic distance between rural and urban areas. Reduction in this dis-

tance abets rural transformation, integrates markets and thereby

facilitates greater access to non-farm employment opportunities, espe-

cially for women. Evaluating the impact of a national road expansion

program in India, Aggarwal (2018) shows how road infrastructure con-

tributes signicantly—through greater dietary diversity and higher agri-

cultural input usage—to the food system. Lei etal. (2017) highlight the

importance of rural roads for female employment. Studying the impact

of rural road scheme in India, Asher and Novosad (2018), however, cau-

tion against assuming road construction, that is, reduction in geographic

distance, as the only form of required rural investment. They show that

road construction in India led to a 10percentage point decrease in the

share of agricultural workers at the expense of a similar increase in wage

labor. Much of this movement took place outside of the village, but it is

not permanent migration. These impacts are most pronounced among

the groups with the lowest costs and highest potential gains from partici-

pation in labor markets: households with small landholdings and work-

ing age men. Interestingly, they nd that the movers are not the primary

income earners of the household. They nd that new paved roads under

the Pradhan Mantri Gram Sadak Yojana (PMGSY) improve available

transportation services facilitating the reallocation of labor out of agri-

culture. Rural infrastructure is important, but it isonly one of the many

possiblesolutions in abetting non-farm occupational transitions. Non-

farm opportunities did not increase in the rural areas; rather roads

become a conduit for accessing employment in nearby towns. This nd-

ing highlights the fact that road infrastructure is only one way, not the

most effective maybe, to increase rural productivity. Better results can be

had by facilitating easier movement of labor to areas of better opportu-

nity which point to the importance of urban infrastructure to facilitate

rural-urban migration.

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

3.5.2 Governing Census Towns asUrban Areas

The understanding of rural transformation in India is seriously limited by

lack of due recognition to the fact that a large share of rural settlements

exhibit urban characteristics, be it through census denitions or as reected

in their built-up areas. Former Union Minister for Rural Development

Jairam Ramesh had famously pointed out tothis byreferring to these spaces

as trishanku (middle world). The lack of acknowledgement of changing

rural forms also undermines the economic potential of these areas for struc-

tural transformation. Future growth of the rural-urban continuum and the

creation of greater non-farm opportunities are restricted by the administra-

tive framework which continues to regard census towns as rural areas despite

their urban demographic and economic characteristics. It must to be noted

that most of the census towns are not near the mega-cities; rather they are

dispersed throughout the country, which underscores the greater impor-

tance of connecting these spaces to rural areas through moving to urban

governance of these spaces. By recognizing these multiple patterns of urban-

ization, especially its subaltern nature, rural areas could attract investments,

job creation and ultimately the benets from urban growth in the vicinity.

The current government has launched a new program known as the

Shyama Prasad Mukherji Rurban Mission (SPMRM), with the objective of

developing a “… cluster of villages that preserve and nurture the essence of

rural community life with focus on equity and inclusiveness without compro-

mising with the facilities perceived to be essentially urban in nature, thus

creating a cluster of “Rurban villages”. Under the scheme, 300 rural

growth clusters would be created around the country to facilitate local and

regional development through higher investments, better infrastructure

and service provision in rural areas. The problem with the scheme again

lies in not recognizing these changing spaces as urban. The scheme envis-

ages cluster of villages (geographically contiguous with a population of

around 25,000–50,000in plain/coastal areas and of about 5,000–15,000in

desert/hilly/tribal areas) would fall under Gram Panchayats in the same

administrative block. The government has designed an agenda for the pro-

gram on how it wants to facilitate urbanization of the rural (Singh &

Rahman, 2018). Looking at some of the census towns which resemble

these potential clusters, Mukhopadhyay et al. (2016) have shown that

public service provisioning such as solid waste management and street

lighting in census towns is fairly similar to that of villages. Without an

appropriate change in the governance frameworks, rural transformations

would continue to be constrained.

P. PINGALI ET AL.

3.5.3 Linking Food Systems totheJobs Agenda

Food systems extend far beyond agricultural land and production and pro-

vide food, energy and nutrition to the population. At the same time, they

also serve an economic and social role through enhancing householdaccess

to food. Access comes through income and better jobs. As the food system

cut across agriculture, health and nutrition, poverty and the environment,

itcan alsobe leveraged to create jobs. Most new jobs in the rural areas

would be created in the non-farm sector. As the agricultural value chains

develop, there would be greater demand for those who can work in related

logistics, from aggregation to storage and processing. With the right set of

skills to youth, these sectors could become a major source of job creation.

Similarly, rural employment which links to agricultural inputs and mecha-

nization are expected to develop fast with the spread of technology and

cellphones.

Hello Tractor in Nigeria is a stellar example of leveraging

technology to generate employment avenues in rural areas. Small farmers

who cannot afford tractors use this Uber-like facility for on-demand tem-

porary access to tractors. An aggregator in the village arranges for these

demands. In India, newer organizations like Gold Farm are using Farming

as a Service (FaaS) model where farm equipment can be hired through

cellphones or call centers.

Emerging modern food value chains, which include storage, processing,

distribution, transportation and retail at the mid-stream and food prepara-

tion, and restaurants at the end-stream offer multiple avenues to create gain-

ful employment. These are also the sectors where youth and women can be

employed in larger numbers. In a recent report, Future of Food: Shaping the

Food System to Deliver Jobs, by the World Bank, some of these aspects are

highlighted in the developing world context (Townsend, Benca, Prasann,

& Lee, 2017). This is especially true for villages in the vicinity of cities or

towns. Planners should think of creatingagriculture hubs (e.g., processors,

agro-industries, storage, packers) for structured food value chains. This

would enable an easier transportation of food to the urban population while

generating downstream employment concerning moving agricultural pro-

duce off the farm and into or through the supply chain. With rural transfor-

mation, the size of agribusiness and agricultural value chains increase relative

to the farm economy. For example, the agribusiness sector is about half the

https://www.thebetterindia.com/137361/gold-farm-equipment-aggregator-startup-

raises-capital/

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

economic size of farming in sub- Saharan Africa. In relatively more developed

countries of Asia and Latin America, it is about two to three times the size of

agriculture; across the developed world, it could be more than ten times as

large. In the post-

harvest season, when the labor demand in agricultur

e is

low, agribusiness and food value chains offer signicant avenues for employ-

ment growth. It has been shown that 10% growth in organized food process-

ing leads to 5% employment growth in this sector (World Bank, 2015). As

per capita incomes increase and eating patterns shift, the demand for jobs in

these off-farm segments of the food system will increase. Capitalizing on the

same could employ the skilled as well as semi-skilled youth in the hinterlands.

3.5.4

Skill Enhancement andInvestment inHuman Capital

A challenge for policy makers in India, however, has been to pr

ovide skills

and increase the workforce participation of rural women. A stylized fact is

that most rural women in India work on their household farm as unpaid

labor. According to the latest census gures,workforce participation rate of

rural women is only 30% compared to 53% for rural males. Another funda-

mental feature of women in rural India is their low human capital. On 58%

of therural womenare literate compared to 77% ofrural men. This implies

that almost one-fourth of rural non-farm workers in India are illiterate.

Lack of education and the required skills inhibit a smooth transition into

the non-farm sector. Since construction sector does not require much

skills,this sector provides thegreatestshare of non-farm work. The formal

service sector which provides a better quality of employment and written

contracts, however, requires more skilled and educated workers. Skilled and

educated workers, however, are short in supply. This is a major problem

with generating non-farm employment whichstems from poor schooling

quality in early childhood to lack of vocational training post formalschool-

ing years. While India prides itself in achieving a near-universal school

enrolment ratio, it has an abysmal record of actual learning outcome of

children (Kingdon, 2007). For the rms, the shortage of skilled labor stems

in two ways: lack of a sufcient number of trained personnel and trained

people lacking in the required job skills (Mehrotra, 2014). This has been

attributed to the outdated syllabus at these vocational institutes which cre-

ate a mismatch between the quality of training and requirements of the job.

A major challenge for policy makers in India, therefore, is providing

qualityskills to the workers. Lack of skills has been a major impediment for

female employment too. Through the National Policy for Skills

P. PINGALI ET AL.

Development and Entrepreneurship in India, the government is trying to

increase women labor participation through skilling and gender main-

streaming of skills. Policy should take a cue from the work of NGOs like

the Self-Employed Women’s Association (SEWA) where they impart train-

ing and skills to women so that they can start their own business. This

needs to be prioritized through focusing on the potential of emerging job

opportunities through food system transformations in food retail as

upstream-downstream opportunities along the agricultural value chains.

3.5.5 Quality ofNon-farm Sector

The quality of jobs being created in the non-farm sector can be dubbed as

ordinary—informal and casual—regarding their potential for rural trans-

formation and lowering structural poverty. The poor quality of rural non-

farm sector jobs especially for women leads to greater withdrawal from the

labor market (Chatterjee etal., 2015). Poverty, vulnerability to poverty,

and informal employment status are highly associated. Around 79% of

workers who work in the informal sector can be classied as poor without

any job or social security (NCEUS, 2008). These workers not only work

at low wages, but their working conditions are also miserable. Informality

is not particularly specic to rural areas. Even for urban dwellers and

migrant, employment and jobs opportunities for the low-skilled workers is

nothing but precarious (Breman, 2016).

3.6 concluSIon

There are clear complementarities between the development of agricul-

tural and non-agricultural sectors (Foster & Rosenzweig, 2007). As the

agricultural share in the GDP declines, rural non-farm economy becomes

a conduit for the resource ows from agriculture to other sectors. Non-

farm economic activities are therefore central to the overall processes of

economic growth and changes in the food systems.

Changing economic structure, livelihood opportunities, urban growth

opportunities and the commercialization of agriculture—in the course of

the structural transformation process—lead to the greater role of markets

in accessing food. As a result, means to household food access in the future

would be inuenced by earning capacities. Farming households would rely

on the market value of their produce to access food, whereas the earning

capacity of the households dependent upon the non-agriculturalsector for

RURAL LIVELIHOOD CHALLENGES: MOVING OUT OFAGRICULTURE

livelihood would depend upon wages. The blurring of the rural-urban

distinction and greater ease of commute are expected to diversify the port-

folio of economic opportunities available to the rural households. Greater

fragmentation of landholdings would further increase the role of non-

farm sector in facilitating labor movement out of agriculture. This process

would lead to a change in the prole of agricultural workers, and eco-

nomic activities would increasingly become wage-oriented similar to the

experience of the developed world. Rising urbanization and urban con-

sumption demand would create fertile opportunities for the non-

agricultural workforce to migrate, commute and get employment in food

value chains.

Attainment of SDGs—zero hunger and a poverty-free world—there-

fore depends crucially on how rural areas transform and the nature of their

inclusiveness. Given the slow pace of rural transformation in India, the

potential for leveraging food systems to propel the growth of the non-

farm sector is immense. Through organized upstream and downstream

networks of activities with the emergence of greater agribusiness opportu-

nities, surplus agricultural labor—especially youth and women—are

expected to be employed in value chain processes. Such inclusive transfor-

mation of rural spaces—by including those who are left out of non-farm

employment—is essential to reduce rural poverty.

The other important channel for propelling agricultural growth is to

strengthen the rural-urban continuum which provides ample opportuni-

ties to the small farmers and other rural population to share in the fruits of

urban economic growth. Till now, policy makers in India have not recog-

nized the potential of small towns and the peri-urbanspaces to create job

opportunities. Recognizing these newer urban settlements and providing

them with urban amenities could be a catalyst for non-farm diversication.

Local agglomeration economy benets could be realized through creating

clusters of urban-rural spaces which feed the consumer services demand

for agricultural households as well as the market for new inputs, technolo-

gies and information. The rural-urban continuum would create alterna-

tives to less remunerative migration often resorted as a strategy to escape

poverty and hunger and benet from agglomeration effects from the

poorer regions.

While urbanization and changing employment patterns offer opportu-

nities for a more diversied food system, the challenge lies in ensuring

these transformations are smooth and contribute to sustainable poverty

reduction. Most importantly, the quality of human capital is key to char-

P. PINGALI ET AL.

tering a swifter pace of structural transformation. It has been well docu-

mented that India’s economic growth has not been able to generate

sufcient employment in the manufacturing sector. Similarly, quality ser-

vice sector jobs require specic skills depending on emerging job require-

ments; labor transition into the non-farm sector is difcult for most of the

farm-based labor. Despite achieving universal enrolment in primary

schools, learning outcomes remain low. Similarly, the lack of vocational

educational facilities further limits the opportunities to transition into

more gainful and formal employment avenues. These are some of the

structural issues which have held back the transformation of India’s econ-

omy in general.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_4

CHAPTER 4

Diet Diversity andtheDeclining Importance

ofStaple Grains

4.1 IntroductIon

Nutrition transition is an important outcome of the structural transfor-

mation process (Timmer, 2017). It is understood as the phenomenon

that captures changes in households’ dietary intake, eating practices and

physical activity patterns amidst economy-wide changes (Popkin, 1997).

Dietary patterns are inuenced by the process of structural transforma-

tion in two stages (Pingali & Khwaja, 2004). During the rst stage, eco-

nomic growth and rise in per capita income induce diet diversication.

Consumer preferences move away from quantity to quality, substituting

traditional staples with non-staples. In the second stage, the effects of

economic globalization are reected in an increase in the consumption of

processed foods which are rich in proteins, sugars and fats. Such struc-

tural changes lead to certain improvements in the quality of life, and

improvedhealth and hygiene requirements which lead to a decline in the

food quantity requirements (Pingali & Sunder, 2017). At the same

time,consumer preference for taste attributes of the food increases and

diets begin to diversify. These changing dietary preference demandsare

met through an expansion of agribusiness value chains and the transfor-

mation of food systems.

Nutrition transition in India is increasingly evident. The share of staple

grains—rice and wheat—is declining, and households are moving towards

a diversied diet (Pingali, 2006). According to the NSSO consumption

expenditure surveys, the share of monthly expenditure on cereals and

cereal products came down from 41.1% to 10.8% in rural India between

1971–72 and 2011–12. For urban areas, cereal expenditure shares declined

from 23.4% to 6.6%. There has been an increase in the share of expendi-

ture of non-staples. Over the next few decades, a rising Indian population,

greater urbanization, increases in per capita incomes and demographic

changes in the population would create new challenges for food systems.

Agricultural systems would need to respond to the changing demand of

the population through more diversied production patterns. Greater

income and globalization of diets have led to greater demand for diverse

food, produced globally as well as imported from abroad. For a healthy

nutrition transition to take place, food systems should have a sufcient

supply of nutrient-rich food items and the policy push to promote healthy

diets.

While every country goes through this transition along the process

of economic development, the nutrition-related health outcomes along

the process may vary. In the next chapter, we discuss the changing burden

of nutrition and health that takes place during the structural transforma-

tion process. Understanding the nature of nutrition transition, and how it

shapes and is shaped by the food systems, is essential for public health and

nutrition policy.

Building on this thread, this chapter asks the following questions: What

is the nature of changing food demand in India as we look towards 2050?

What does it imply for the food systems? Do these dietary changes imply

better nutritional outcomes? Are these changes contributing to the rising

concern of the “triple burden” of malnutrition? These questions are

important from the perspective of rising incidence of obesity and non-

communicable diseases. Implicit in this chapter is the assumption that a

lack of a healthy workforce and a high incidence of undernourished chil-

dren will put a limit on a country’s future growth trajectory. Given that

the future demographic predictions—growing numbers of working-age

people entering India’s labor force—poor diets and poor health would

lead to the loss of the potential returns from this “demographic dividend”.

In the chapters on agricultural supply, we discuss options for catering to diversied pro-

duction systems and commercialization of farms so that they can benet from the growing

urban demand for food.

P. PINGALI ET AL.

4.2 the nature ofchangIng food demand

By 2021, India is expected to overtake China as the most populous coun-

try in the world. With around 1.38 billion people (almost 17% of the

world), changing food habits—dietary quality as well as quantity—have

ramications for future consumption demand and food systems.

Westernization of diets and the agri-food system transformation are central

to understanding the nature of future demand in India (Pingali, 2007;

Reardon & Timmer, 2014). Traditional food systems and food policy

were conceptualized around the emergency response to drought and hun-

ger mitigation, a common feature of the Indian agrarian economy prior to

the 1970s. Breakthroughs in grain production technology because of the

Green Revolution led to self-sufciency in food production. Food security

concerns therefore evolved from food availability to access. Similarly, ris-

ing income because of agricultural productivity growth and its economy-

wide effects facilitated greater demand for the consumption of non-cereals

relative to staples. The rst stage of India’s nutrition transition was com-

pleted with the achievement of food self-sufciency. The challenge of food

availability therefore has been addressed. The new challenge lies in the

access and affordability of a nutritious diet. With an increase in the demand

for high-value agricultural products such as fruits and vegetables, dairy

and meat and processed foods, India has now entered the second stage of

this nutrition transition. Indian diets are now becoming more westernized,

inuenced by a multitude of factors such as rising income, demographic

transition, urbanization and the spread of retail chains or supermarkets.

Urbanization, demographic changes, globalization and exposure to new

types of food havenot only brought about lifestyle changes but havecon-

siderably changed Indian food consumption patternstoo.

Consumption data from subsequent rounds of the National Sample

Survey (NSS) appropriately reects these dietary changes (Fig. 4.1).

There has been a secular decline in the household share of food expendi-

ture, across both rural and urban areas. In 1972–73, 72.9% of monthly

expenditure was allocated to food items in rural India which has come

down to 52.9% in 2011–12. The share of food expenditure in urban areas

is lower than rural shares and has come down signicantly from 64.5% to

42.6% during the same time. This is consistent with Engel’s Law which

states that the proportional share of food expenditure declines in the

household budget with growth in income: over time and across income

classes. The declining share of food expenditure, however, also reects the

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

move towards a more diversied diet with an increase in income. This

conrms theBennett’s Law which states that lifestyle changes accompa-

nied by the opportunity cost of women’s time and urbanization lead to a

reduction in the demand of staple food items and hence a proportional

share of food expenditures. One can see that the decline in the share of

food consumption has been accompanied by a proportionately higher

decline in the share of expenditure on cereals, while expenditure on non-

cereals like vegetables, fruit, dairy products, edible oils, meat products,

beverages and other processed food has increased. A compelling case for

the changing dietary preferences can be discerned through food expendi-

ture elasticities. These elasticity estimates reect how an additional increase

in household expenditure would be spent on the food. Commodities with

higher expenditure elasticities would imply that the consumers would

spend an extra unit of income gain on the particular item. Joshi and

Kumar (2016) calculate these elasticities which show that consumers pre-

fer an additional income on food and beverages, followed by animal pro-

tein items (meats, sh and eggs) (Fig.4.2). Consumer food preference is

the lowest for cereals followed by coarse cereals.

These statistics strongly reect the notion that India is undergoing a

nutrition transition where higher incomes facilitate greater consumption

of non-cereal food products, processed food and eating out. The changing

Rural Urban Rural Urban Rural Urban RuralUrban

1972–73 1983 1993–94 2011–12

Cereal and Products Pulses and ProductsMilk and Products

Edible Oil

Meat, Eggs and Fish

Vegetables and Fruits

Beverages and Processed Food

Fig. 4.1 Share of monthly expenditures on various food items. Source: NSS

Surveys; based on authors calculations

P. PINGALI ET AL.

nature of food demand reects Indian consumers’ desire to move away

from staple dominated diets. With time, Indian consumers—urban and

rural—are moving towards the calorie threshold at which greater income

leads to substitution away from cereals. Staples are the cheapest source of

calories. They are essential for the diet, especially for the poor, to address

hunger. Once households surpass a subsistence level of energy intake, their

marginal utility from extra calories declines and they substitute towards

food products with non-nutritional attributes such as taste (Jensen &

Miller, 2010). The diversication of diets also comes at a cost. Evidence

suggests a preference for variety and quality to increase over time across

the entire population distribution, even the poorest households (Rahman,

2017). Greater income and rising monetary value of time use allow house-

holds to afford that. Poverty estimates for rural India for the years 2001–12

suggest that districts with a lower incidence of poverty have a greater share

of food expenditure on non-cereals compared to cereals (Fig.4.3). There

is also a decline in the dietary practices with a change in poverty levels

which leads to a decline in average calorie consumption while overall

nutritional and other health outcomes continue to improve. Occupational

changes which require less strenuous labor, improvements in health,

hygiene and sanitary conditions across India have reduced the need for

greater energy intake (Deaton & Drèze, 2009; Duh & Spears, 2016).

Looking ahead, therefore, one can convincingly argue that consumption

demand for these non-staples is expected to drive the future food system.

-0.2

0.2

0.4

0.6

0.8

1.2

Poor Middle-IncomeHigh-Incom

Rice

Wheat

Coarse Cereals

Pulses

Edible Oils

Sugar

Vegetables

Fruits

Spices and Beverages Milk Meat, Fish and Eggs

Fig. 4.2 Expenditure elasticity for food items by household class. Source: Joshi

and Kumar (2016)

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

4.3 transformatIon IntheagrI-food systems

Rising demand for high-value products, eating out and processed food has

coincided with the growth of restaurants and fast-food chains and the

emergence of modern food value chain. Newer forms of food value chains

have affected how food travels from farm to fork. The expansion of mod-

ern value chains through large modern supermarkets or mega-markets

have gradually started replacing small convenience stores, at least in the

urban centers. The proliferation of retail chains—of varying quality, tastes

and affordability catering to all sections of the society—and changing time

use of women, too, have affected how India eats.

Reardon and Timmer (2014) identify ve interlinked transformations of

the agri-food system occurring across Asia: (1) urbanization, (2) diet change,

(3) agri-food system transformation, (4) rural factor market transformation

and (5) intensication of farm technology (the agricultural transformation).

Fig. 4.3 District-level association between share of expenditure on non-cereals

to cereals and poverty levels in rural India. Source: NSSO 2011–12; based on

authors calculations

P. PINGALI ET AL.

Broader developments in the food system have made the staple grain self-

sufciency paradigm of food security redundant. During the early years of

the Green Revolution, “grow more” policy objectives for the rising popula-

tion disregarded the food supply chain and urban food demand (Reardon &

Timmer, 2014). Almost ve decades later, urban food economy has increas-

ingly become important with a greater share of the population living in

urban areas and changing dietary patterns of the consumers and greater

movement of people and products along the rural- urban continuum. Food

growers are now more sensitive to urban food demands. Further, labor

mobility from rural to urban areas and the rise in rural incomes have further

facilitated the changes in rural dietary patterns. Changing food demand is

also characterized by a growing consumer preference for internationally

acceptable grades and standards that signal quality and nutritional diversity

in food and food products and align with their health, food safety and envi-

ronmental concerns (Eaton, Meijerink, & Bijman, 2008; Narayanan, 2014;

Poulton, Dorward, & Kydd, 2010; Roy & Thorat, 2008; Swinnen &

Maertens, 2007).

One of the key drivers of agri-food systems and future food demand

in India is the expansion of the modern food retail industry duringthe

last decade. Market research reports suggest that the number of super-

markets have increased from 500in 2006 to 8,500in 2016.

With an

annual growth of around 15%, India’s food retail industry is ranked as

the sixth largest in the world. Currently, it is valued at 380 billion USD

(USDA, 2018). It contributes to a substantial part of the overall eco-

nomic output and has grown because of favorable changes in demo-

graphics along with increasing disposable incomes. Much of the retail

sector continues to be unorganized, but there has been a signicant

growth when organized brands were almost non-existent. The emer-

gence of modern retail in India has taken place in three stages (Reardon,

Lansing, Minten, & Ababa, 2011). It began with the expansion of gov-

ernment retail chains during the 1960s/1970s. In the second stage,

there was a proliferation of chain of cooperative retail stores starting in

the 1970s and 1980s, followed by the rapid increase in the presence of

private retail chains beginning slowly in the 1990s which picked up pace

during the 2000s. In the last decade, private retailstoreshave become

even more prominent with the advent of Foreign Direct Investment (FDI)

https://www.statista.com/statistics/791302/india-number-of-supermarkets. Accessed

on November 13, 2018.

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

in retail. Supermarkets are now spreading across the country. Studies

have shown that organized modern retail is growing quite faster than the

unorganized retail sector in India. The number of modern retail stores in

Delhi, for example, has more than doubled during 2003–09 with the

private sector modern retail comprising 6.5% of the processed food mar-

kets and about 3–4% of the fresh produce (Minten, Reardon, & Sutradhar,

2010). Comparing these estimates to the value of food and agricultural

exports from India, Minten etal. (2010) nd the contribution of mod-

ern retail to be close to 41% of this number, which is remarkable given

that the Indian food retail market is still in its infancy. Greater penetra-

tion of the food retail market in India is also a result of changes in eco-

nomic and demographic structure: rise in incomes and the emergence of

a middle class; urbanization driven by rapid growth small and medium

towns,apart from the larger urban metropolis. Greater public infrastruc-

ture (roads and communication channels) enabling better rural-urban

connectivity; and remittance-based economies and global integration of

the economy and people. With FDI in retail being approved, the avail-

ability of processed foods would vastly increase, especially catering to the

well-off urban population more connected to the global consumption

trends and with sufcient disposable income.

Together with the expansion of food retail, there has also been a sig-

nicant change in how India eats. Entry of foreign brands like

McDonald’s, Pizza Hut, Domino’s and others during the 1990s and

greater participationof women in the workforce, at least in the urban

areas, eating out is increasingly becoming a common feature. More than

25% of the households report to eating out every month (Gaiha, Jha, &

Kulkarni, 2013). Quite understandably, people in the major metropoli-

tan cities eat out the most, followed by the urban population in non-

metro urban areas and then by the rural population. With greater

urbanization in the future, the eating out feature of the Indian popula-

tion is further expected to increase. While consumption from local ven-

dors and small eateries has always been a feature of Indian diets, the

emergence and consolidation of indigenousbrands like Haldiram’s and

Barbeque Nation, among others, have also affected Indian diets. Greater

integration with the global economy, and the rise of an aspirational

“middle class” with it, has played its role in bringing this change in con-

sumption patterns, providing an opportunity for the modern agri-food

systems to evolve.

P. PINGALI ET AL.

4.4 urbanIzatIon, cultural anddemographIc

hange

Urbanization and demographic changes have been the key drivers of nutri-

tion transition. The processes of urbanization, changing environments

(physical and economic) as well as dietary preferences interact to inuence

urban diets and nutritional outcomes. According to the Census 2011 g-

ures, 33% of the Indian population is classied as urban. However, using

other methods of urban concentration, the proportion of India’s popula-

tion living in areas with urban-like features stands much higher at 55.3%.

According to UN World Urbanization Prospects, India’s urban population

share would equal that of the middle-income countries by 2050 (Fig.4.4).

Rising population along the peripheries of major metropolitan cities—

beyond the ofcial administrative boundaries of major cities like Delhi,

Mumbai, Hyderabad and Kolkata—has led to greater urban agglomera-

tion effects leading to a rising demand for restaurants and other related

business opportunities. Overall urbanization rates of India, however, mask

the degree of urban food demand. A study by Ablett etal. (2007) nds

that by 2006, 29% of India’s population lived in cities, yet urban consum-

ers contributed to 43% of all expenditures on food consumption. As India

urbanizes more, future consumer food demand would begin to resemble

that of east and southeast Asian countries where urban consumers account

for more than two-thirds of overall food expenditures (Reardon, 2015).

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

2019

2022

2025

2028

2031

2034

2037

2040

2043

2046

2049

World

High-income countries

Middle-income countries

Low-income countries India

Fig. 4.4 Projected share of urban population. Source: UN World Urbanization

Prospects

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

A notable feature of India’s demographic change is the emergence of a

middle class which consists of around 600 million, or half of India’s popu-

lation (Krishnan & Hatekar, 2017). Multinational corporations have been

betting on this rising middle class and emerging consumer economy in

India (Ablett etal., 2007). Reduction in poverty and greater consumer

demand for food quality is expected to create signicant potential growth

for the food industry. India’s new urban middle class comprising of many

single working youths, nuclear families and working couples, travelling

internationally and living metropolitan lifestyles, has led to the westerniza-

tion of food preferences (Pingali & Khwaja, 2004). Greater frequency of

dining out, tasting alternative cuisines and the reliance on ready-to-eat

foods reect the same. This has resulted in a signicant increase in the

number of restaurants, food courts and internationally branded eateries

across India’s large cities. The market value of food restaurants in the food

service industry has more than trebled in the last decade, from 70.5 to

230.1 billion USD between 2010 and 2019.

Greater migration (domestic and international), cable television and

the penetration of the Internet have also played their role in the rising

demand for processed food products and the food service industry.

Changing dietary practices aren’t only restricted to urban areas as greater

rates of spatial diffusion of cultural habits have inuenced dietary patterns

even in rural areas. While the urban elites may emulate western diets,

rural population imitates the consumption practices of those in urban

areas.

There is also an ongoing process of convergence as well as adapta-

tion of dietary practices across regions (Kennedy, Nantel, & Shetty,

2004). While convergence refers to greater similarity in diets—decline in

staple consumption and increase in the demand for pulses, animal-based

proteins and fruits and vegetables—dietary adaptation implies the adjust-

ment of diets to the changing pace of urban lifestyles. In households

where both parents often commute long distances and work long hours,

https://www.statista.com/statistics/676084/value-of-restaurants-in-food-service-

industry-india/. Accessed on November 13, 2018.

Government statistics on food consumed away from home (FAFH) is often under-

reported (Smith, 2015). Consumption expenditure surveys conducted by the National

Sample Survey Organization (NSSO) of India collect information on the quantity consumed

and expenditure incurred on a set of food items. Earlier they collected information on the

consumption of “cooked meals” as a single item in their food consumption module which

aimed to capture FAFH at the household level. It is only recently that they have moved to

more detailed FAFH sub-categories to capture the prevalence of eating out.

P. PINGALI ET AL.

consumers eat more meals outside the home and purchase more brand-

name processed foods. Time constraints arising from the greater partici-

pation of women—primarily responsible for cooking at home—in the

household reliance on purchased or packaged processed food have fur-

ther seen an increase.

4.5 concerns forthefood systems

While the changing food demand is suggestive of the nutrition transition

and offers the potential for growth of the agribusiness industry and ush-

ering in the modern food value chains, it also poses a challenge for the

food systems regarding what is produced and consumed and ultimately its

effect on human health. Greater diversication of the food consumption

basket—because of increase in the consumption ofprocessed and pack-

aged food, away-from-home meals, edible oils and sugar-sweetened

beverages—has led to concerns of a high incidence of obesity and other

non-communicable diseases. While over-nutrition has increased, average

calorie consumption has declined. With the changing nature of occupa-

tions, better means of transportation and mechanization of agriculture,

there has been a reduction in physical activity and the advent of a more

sedentary lifestyle among the working-class population. Changes in life-

style along with an improvement in disease environment have led to a

lowering of the total energy intake (Deaton & Drèze, 2009). Reduction

in calorie requirements, however, has coincided with a rise in the quality

of diets as measured through dietary diversity (Shankar etal., 2017). On

average, the number of food groups consumed by the households increased

from 8.8 (out of 12 food groups) to 9.7 between 1990 and 2012in rural

India. In urban areas, it increased from 9.3 to 9.5 groups. Per capita calo-

rie intake declined by 8.6% and 2.4% during 1983–2005in rural and urban

areas, respectively.

4.5.1 Rise intheConsumption ofConvenience Food

Since the 1990s, there has been a greater shift towards the consumption of

“convenience food” as eating out has increased along with the greater con-

sumption of processed food, beverages and other packaged items which have

higher salt, fat or sugar content, often associated with the incidence of chronic

non-communicable diseases (NCDs). The consumption of these unhealthy

commodities is rapidly rising across most low- and medium-income countries

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

(LMICs) because of greater availability and access. Understanding these

transformations along with economic and social changes is important to

understand future food demand. With the increase in the money value of

time as wages rise, more and more women participate in the workforce, and

convenience food not only becomes affordable but also frees up time. The

issue of energy-dense snack items high in fat content is now increasingly

becoming a feature of household consumption in low-income populations

across rural and urban areas. Consider the following passage from a news

article about slums in New Delhi:

…“Most children have tea and phan [rusk] for breakfast,” said Najma, a feisty

worker who went door to door to conduct the study. “Mothers have to leave early

on work so they give the babies what they eat.” Food is cooked twice at home: rice,

roti, dal [mostly masoor since it’s the cheapest], sabzi [mostly potatoes], but

never green leafy vegetables or fruit or milk. Meals are interspersed with Maggi,

popcorn and a variety of chips, which kill the appetite for a full meal. It isn’t

just that children like their taste, there is an economic rationale to rely on junk

food. A packet of Maggi noodles costs Rs 10 while a meal of rice, dal and vege-

tables would cost approximately three times that amount. (Mohan, 2015)

The cost of food from the local carts and other cheap processed food is

often less than the cost of cooking food at home, especially when both par-

ents work. Consumption of these unhealthy food items, in an increasingly

dynamic economy, is often an economic choice for the poor. Even in rural

India, the consumption of convenience foods like chips, chocolate, bakery

products, soft drinks and other sugar-sweetened beverages is extremely com-

mon among school-going children (Gupta, Downs, Ghosh-

Jerath, Lock, &

Singh, 2016

). With 60% of India’s population under 30years of age and

many of them on the move, various formal and informal retail food sellers

provide eating convenience food options. There has been a steady expansion

of restaurants and fast-food eating joints in India. Many global brands have

opened up their retail chains in India, specically focusing on the younger

section of India’s population. Based upon a household survey of slums in

Delhi, Singh, Gupta, Ghosh, Lock, and Ghosh-Jerath (2015) nd that on

average households spend around 11% of their monthly food expenditure

on snacks, while 15% of the working member reported eating lunch outside.

While higher-income households may rely on more packaged convenience

foods, for the households with poor socioeconomic, often the local vendors

are the purchase point. Food hygiene and dietary safety, therefore, become

very pertinent concerning diets of the poor. From the policy perspective,

P. PINGALI ET AL.

these changes are often ignored as food consumption from hawkers, and wet

market stall operators are not appropriately captured in the NSSO surveys

used to estimate dietary patterns (Smith, 2015).

4.5.2 Food Prices andInation

A major concern, which affects food security and dietary diversication,

especially for the poor, is the rise in food prices. Food ination is among

one of the most pressing challenges for India’s food policy as higher levels

of ination have been a feature of the economy in the last decade. Rise in

food prices directly affect the diets and nutritional status of households

(Brinkman, de Pee, Sanogo, Subran, & Bloem, 2010). In India, the food

price ination episode between 2006 and 2009 led to an increase in the risk

of child malnutrition (Vellakkal etal., 2015). This connection stems from a

decline in the quantity of food consumed and dietary quality through an

increase in the cost of the food basket. With a clear shift, away from cereals,

it is important to ensure other nutritive food items are available at afford-

able prices. Without access to nutritive substitutes, dietary diversity

would suffer. Protein-rich items such as pulses and animal-based protein

items have seen an increase in the prices as well as its volatility (Fig.4.5).

This was famously referred to as “protein ination” by the former deputy

100

150

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250

300

350

400

450

500

Apr-04

Sep-04

Feb-05

Jul-05

Dec-05

May-06

Oct-06

Mar-07

Aug-07

Jan-08

Jun-08

Nov-08

Apr-09

Sep-09

Feb-10

Jul-10

Dec-10

May-11

Oct-11

Mar-12

Aug-12

Jan-13

Jun-13

Nov-13

Apr-14

Sep-14

Feb-15

Jul-15

Dec-15

May-16

Oct-16

Mar-17

Pulses VegetablesCereals

Fruits Milk Eggs, Fish and Meat

Fig. 4.5 Wholesale Price Index (WPI) for food items. Source: Ofce of the

Economic Adviser, Govt. of India, Ministry of Commerce and Industry

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

governor of India’s central bank (Gokarn, 2011). Increase in the price of

protein-rich items like eggs, meat, sh, milk is primarily driven by greater

demand for these products (Sekhar, Roy, & Bhatt, 2017). Similarly, the

highly seasonal supply of fruits and vegetables and the lack of a storage

infrastructure to smoothen prices make effective food price policy and,

hence, become tantamount to a nutrition-sensitive food system which

enables transition towards a healthier diet.

4.5.3

Implications forHealth, Nutrition andEnvironment

While gr

eater dietary diversity has been welfare enhancing, the consumption

of more protein and fats together with a decline in the levels of physical activ-

ity as a result of urbanization and changes in occupational patterns have led

to the greater prevalence of obesity, coronary heart disease, diabetes and

other non-communicable diseases among the Indian population. According

to an estimate by Misra etal. (2011), nutrition transition has led to an “epi-

demic of diet-related non-communicable diseases (DR-NCDs)” which begins

with maternal nutritional deprivation causing low birth weight among infants,

“…which, coupled with early childhood ‘catch-up growth’, leads to obesity

in early childhood, thus predisposing to NCDs later in life”. This raises an

important challenge from the public health perspective. There are distinct

regional patterns in diets which have implications for the various aspects of

NCDs. As one moves from rural to urban areas, there is an increase in energy

and salt consumption, but the share of calories from rice declines, while the

share of oils, fruit, pulses and legumes increases (Joy etal., 2017). This sug-

gests that while urban consumers had a greater likelihood of being obese,

they are less likely to be underweight. Their study suggests benecial as well

as detrimental impact of diets on health because of dietary changes in India.

4.6 conclusIon

Indian diets are changing. While thisnutrition transition may be slower

compared to other developing countries like China or those in Latin

America, the inuence of the forces of globalization on Indian dietary

habits cannot be denied. Urbanization and globalization have enabled

easier access to fat and sugar-rich food items which appeal to the innate

sensory preferences. Changing consumer preferences—driven by income

growth, demographic changes and globalization effects—for more diversi-

ed foods have increased the demand for foods other than staples.

P. PINGALI ET AL.

Accelerated nutrition transition for the low-income countries, however,

may not be benecial if the supply of healthy food items is absent from the

food value chain (Drewnowski & Popkin, 2009). The traditional notion of

more developed countries as the onlyones with fat-rich diets is no longer

true. Across the developing world,there has beena decline in the importance

of cereals, while consumption of animal-based protein, and processed, and

purchased food is on the increase. These trends are consistent across rural as

well as urban areas, though the degree of transition may vary. Demand-side

challenges for food security in India need to factor in these changes. Policy

debates around food security in India till now have mainly focused upon

ensuring adequate access to calories through a continued focus on staple-

grain production. However, emerging trends around dietary changes and

nutrition transition provide a compelling case for questioning the existing

paradigm and opening up conversations around access to good quality, and

balanced diet. In order to bring a more nutritious and diverse food system,

accessibility and affordability aspects of food security needs tobe stressed.

Creating new opportunities for the food systems to augment supplyof more

nutritious food forthis changing demand should thus become a policy focus.

While modern food retail in India is still in its infancy, it is already

expanding rapidly, at least in urban areas. With greater rural infrastructure

and purchasing power, it is expected to penetrate rural areas soon. An

emerging policy challenge is the rising consumption of packaged/

processed food and the growing phenomena of eating out. Increases in

the rates of obesity and overweight are widely documented, from urban

and rural areas in the poorest countries of sub-Saharan Africa and South

Asia to populations in countries with higher income levels. While these are

some of the manifestations of nutrition transition, its ill-effects regarding

the rising incidence of NCDs need to be actively managed. Modernizing

supply chains, better food safety standards and incentives for encouraging

a more health-oriented food industry would be a crucial step towards that.

While saying this, we are fully aware of the issue of the acute levels of

undernutrition in India. We do not intend to gloss over this aspect of mal-

nutrition and the consumer demand from the lower end of the income

strata. What we argue is for a more nutrition-sensitive food system which

addresses the issue of undernutrition as well as obesity. The long-term

policy challenge lies in enabling a diversied food system where a better

and more diversied diet becomes affordable to all sections of the society.

In addition to the nutritional challenges for food demand, greater com-

petition for land, water, and energy, its related environmental costs pose

DIET DIVERSITY ANDTHEDECLINING IMPORTANCE OFSTAPLE GRAINS

critical challenges for the food systems to supply affordable and nutritious

food (Godfray etal., 2010). Similarly, urbanizationwhich is considered as

a harbinger of nutrition transition also poses challenges regarding diet

quality and over-nutrition. The “messy” nature of urbanization is reected

in the fact that 65.5 million Indians live in urban slums according to

Census 2011, and 13.7% of the urban population lives below the ofcial

poverty line. Greater concentration of poor in the urban areas, often with

poor access to infrastructure and services, is further expected to impose

challenges on the food system. Policy should therefore factor in the

dynamic nature of growth and the changing nature of consumerdemand

for nutritious food systems.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_5

CHAPTER 5

The Nutrition Transformation:

FromUndernutrition toObesity

5.1 IntroductIon

As structural transformation changes countries from subsistence agri-

culture economies to modernized economies, countries undergo a

nutrition- related transition

(Grifths & Bentley, 2001). High rates of

undernutrition

come down and population health improves. However,

even as undernutrition decreases, experiences of some countries in the

recent past have shown that obesity rates may increase due to over-

nutrition

and this can decrease overall gains made to health during the

In the previous chapter, we use the denition of the nutrition transition as described in

Popkin (1997), which refers to the dietary transformation that are related to ST. In this

chapter the nutrition transformation refers to the changing burden of nutrition-related

health problems that constitute the triple burden of malnutrition—we build on the Grifths

and Bentley (2001) conceptualization here.

At its broadest level, undernourished individuals are those who do not have access to one

or more essential nutrients in their diets. Being undernourished, represented by individuals

who are either underweight (too thin for their age), wasted (too thin for their height and

age) or stunted (too short for their age) compared to a well-nourished reference population,

is one type of undernourishment. Another type of undernourishment is called hidden hun-

ger. This manifests itself as deciencies of essential micronutrients such as vitamins or miner-

als in the human body.

Over-nourished individuals, on the other hand, are those who consume an excess of a

particular macronutrient—calories in particular. This condition is represented by overweight

and obesity outcomes which are determined by the age, gender, height and weight of the

individual in relation to a similar well-nourished group.

nutrition transition. When food systems focus narrowly on ensuring

food security but do not think more broadly about ensuring nutrition

security, this problem of obesity and hence malnutrition can become

synonymous with the problem of poverty and low incomes. Thus, poor

nourishment and poor health may increase during structural transfor-

mation. In India too, economic growth, agricultural development and

a keen policy focus on nutrition-related health improvements have

brought with it a reduction in hunger and undernutrition rates across

the country. Between the NFHS I (1992–93) and NFHS IV (2015–16)

surveys, undernutrition rates for children under the ages of ve have

fallen. The incidence of stunting has decreased by 13 percentage

points, and underweight rates have decreased by 24 percentage points.

Between NFHS III (2005–06) and NFHS IV (2015–16), the percent-

age of adult women and men who are underweight has decreased by

13pp and 15pp (respectively). However, within the last decade, the

over-nutrition prevalence rate has doubled within the country (see

Fig. 5.1). Given its close association with the incidence of non-

communicable diseases, this phenomenon has created new and serious

challenges for the health of individuals. In the long term, increasing

risks for malnutrition may have repercussions for economic develop-

ment, agriculture and health.

-60.0

-40.0 -20.0 0.0 20.0 40.0 60.0 80.0 100.0 120.

Anemia

Undernutrition

Overnutrition

Children

MenWomen

Fig. 5.1 Percentage point changes in the triple burden of malnutrition in India.

Source: NFHS 2005–06 and NFHS 2015–16; based on authors calculations

P. PINGALI ET AL.

In the previous chapter, we have seen that the demand for foodper

capita, demand for diverse foods and demand for eating out has kept pace

with rising per capita incomes. If food systems cannot respond appropri-

ately to the growing demand for nutrients with an adequate supply

response, this may reduce the effectiveness of current policy interventions

in meeting their goals of lowering undernutrition and hidden hunger.

Additionally, in Chaps. 2 and 3, we have seen that forces of ST have led to

a divergence in the growth experience across regions and the agricultural

and non-agricultural sectors. If food systems cannot address the problem

of income inequality, this may impact a household’s ability to access and

purchase diverse and quality nutrients from markets. These factors have

important (negative) implications for the Indian experience.

In this chapter, we explore the food system’s role in reducing the triple

burden of malnutrition

and moving towards a healthier population. We

bring forward evidence from the literature that illuminates the pathways

through which malnutrition is impacted as well as discuss interventions

from India that have been successful in reducing poor nutrition outcomes

thus far. We also bring forward evidence from international contexts on

other potential interventions available for reducing malnutrition and lay

out different options that can help regulate the nutrition transition that we

see unfolding in the country today.

The triple burden of malnutrition encapsulates the coexistence of a large number of

undernourished individuals side by side with over-nourished people in the presence of high

levels of micronutrient deciencies within a given population. At its broadest level, under-

nourished individuals are those who do not have access to one or more essential nutrients in

their diets. Being undernourished manifests itself as individuals who are either underweight

(too thin for their age), wasted (too thin for their height and age) or stunted (too short for

their age) compared to a well-nourished reference population. Calorie deprivation and pro-

tein energy deciency are some of the major causes of this type of undernourishment.

Another type of undernourishment is called hidden hunger. This manifests itself as decien-

cies of essential nutrients such as vitamins or minerals called micronutrients. Diseases such as

anemia, night blindness, rickets, scurvy and so on are outcomes of these deciencies. Over-

nourished individuals on the other hand are those who consume an excess of a particular

macronutrient, calories in particular. This condition is represented by overweight and obesity

outcomes.

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

5.2 current State ofthetrIple Burden

ofMalnutrItIon InIndIa

The triple burden of malnutrition is particularly an acute problem for

India. For one, the latest NFHS estimates show that around 30% were too

thin for their age and gender (underweight)

and 38% of all children under

the ages of ve weretoo short for their age and gender(stunted). With

regard to the former, India did far worse regarding prevalence both across

ST and when compared to other countries (Fig. 5.2). However, with

regard to stunting indicators, it can be seen that poor states in India have

comparable outcomes to countries from the SSA regions, while more

developed states are closer to world averages (Fig. 5.3). Poor nutrition

outcomes are known to lower cognitive skills, lower educational out-

comes, lower productivity and lower wages in adults who were malnour-

ished as children compared to adults who were not (Alderman, Hoddinott,

& Kinsey, 2006; Black et al., 2013; Chen & Zhou, 2007; Hoddinott,

Most of the improvements came from moving people out of the severely malnourished

cases into the moderately malnourished.

20.0

24.3

24.8

28.3

36.7

41.5

57.6

60.4

24.5

26.0

24.9

21.4

25.4

31.6

51.3

38.0

9.6

2.5

9.4

6.7

4.6

10.7

14.5

20.1

China Brazil East Asia

& Pacific

LACSouth

Africa

World India SSA

Child Anemia Women Anemia Undernourished

Fig. 5.2 International comparisons in the share of malnutrition (2015–16).

Source: World Bank DataBank; based on authors calculations

P. PINGALI ET AL.

Maluccio, Behrman, Flores, & Martorell, 2008; Roseboom, de Rooij, &

Painter, 2006; T.J. Roseboom etal., 2001; Victora etal., 2008; Akresh,

Verwimp, & Bundervoet, 2013; Gørgens, Meng, & Vaithianathan, 2012;

Lumey etal., 2007; Stein etal., 2008). In addition to greater mortality

risks for children, studies have also shown that adults who were under-

nourished in childhood have greater incidence of non-communicable

diseases than those who were properly fed (Chen & Zhou, 2007; Gørgens,

2002; T.Roseboom etal., 2006). While one can still argue thatthere has

been progress towards reducing stunting, underweight between the 2005

and 2015 National Family Health Surveys (NFHS) across all levels of

state-wise development, the incidence of wasting has increased during this

time (Fig.5.4). Wasting occurs when children are too thin for their respec-

tive heights, ages and gender. This indicator has been correlated with

lower access to food in the short term as well as increased mortality risks

for children under the ages of ve. An increase in this indicator reects the

speed of, or lack thereof, progress in comprehensively reducing food inse-

curity and undernutrition within the country.

Peru

Senegal

World

Zimbabwe

HighAg_Prod

Mali

Urbanizing

NEStates

Nigeria

Tanzania

Malawi

Rwanda

India

Lagging

Guatemala

Fig. 5.3 Share of stunted children under 5 years (2015–16). Source: NFHS

2015–16 and World Bank DataBank; based on authors calculations

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

Two, the problem of hidden hunger, or micronutrient deciency, in India

continues to remain acute. For example, the current incidence rates of anemia

for men (23%), women (53%) and children (58%) are higher than incidence

rates of the same group of individuals in poor countries such as those in sub-

Saharan Africa (Fig.5.5). Of those who are anemic, iron deciency anemia

(IDA) is believed to affect around 60% of all individuals (Murray etal., 2012).

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

Lagging NEStates IndiaHighAg_ProdUrbanizing

Men Child Women

Fig. 5.5 Percentage change in anemia prevalence by state classications. Source:

NFHS 2005–06 and NFHS 2015–16; based on authors calculations

-30.0

-20.0

-10.0

0.0

10.0

20.0

Lagging NEStates IndiaHighAg_Prod Urbanizing

Underweight StuntingWasting

Fig. 5.4 Percentage change in the undernutrition in children under ve by state

classication. Source: NFHS 2005–06 and NFHS 2015–16; based on authors

calculations

P. PINGALI ET AL.

This disease has been correlated with greater fatigue and lower productivity.

Other essential nutrients such as iodine and vitamin A too, that are important

inputs into biological processes, have not yet been able to nd a way into the

Indian diet (Jha, Gaiha, & Sharma, 2009). For women in India, reducing

anemia continues to remain extremely difcult to tackle compared to other

groups. Between the NFHS III & IV, anemia incidence decreased by 3.6

percentage points for non-pregnant women in comparison to men whose

anemia decreased by 4.2 percentage points. Both these groups were not tar-

geted for any interventions. In states which have had a history of high produc-

tive agricultural systems, anemia rates of women have increased during this

time. This is a cause of concern given that this micronutrient deciency has

been linked with higher maternal mortality in adults as well as lower cognitive

development and higher infant mortality rates (Akhtar et al., 2013; Allen,

Peerson, & Olney, 2009; Bobonis, Miguel, & Sharma, 2004; Brabin, Hakimi,

& Pelletier, 2001; Jones etal., 2016; Rasmussen, 2001).

Three, while the country continues to grapple with the problem of under-

nutrition, experts have called to attention the unprecedented increase in obe-

sity rates, both in rural and urban areas in the country (R.Jha etal., 2009;

Meenakshi, 2016; P.Pingali, 2007; Popkin, 1997, 1999; Sengupta, Angeli,

Syamala, Dagnelie, & Schayck, 2015; Sturm, Ringel, & Andreyeva, 2004;

Swinburn et al., 2011). Traditionally, obesity has been viewed as a luxury

good associated with higher per capita incomes and a greater level of struc-

tural transformation (Popkin, 1997, 1999). However, obesity rates have

increased at an alarming rate in the last ten years—doubled for men and

increased by 62% for women (Fig.5.6). Even across states, it would seem that

poorer states are worse affected by the changes in obesity rates compared to

richer states. Obesity is a known risk factor for non-communicable diseases

(NCDs) such as diabetes, heart disease, cancer and other chronic diseases.

Even in the country, higher incidence of high sugar is correlated with high

obesity in states (Fig.5.7). In the United states, in addition to health risks,

obesity has also been found to explain lower incomes, productivity and wages

in addition to lower long-term health (Alaimo, Olson, & Frongillo, 2001;

Cawley, 2015; Wang, McPherson, Marsh, Gortmaker, & Brown, 2011).

The fourth but important characteristic of the malnutrition problem in

India is that it remains a problem for women and children regardless of the

level of economic development in the country. Even though multiple

interventions have targeted changes to move the indicators on these

groups, the stickiness of the problem is reected both in economic out-

comes and in the inequities remaining more or less constant over time.

Regarding anemia prevalence, over-nutrition or even undernutrition, the

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

100

y = 0.0775x + 1.9146

51015202530354

045

Share of population with Sugar > 160

mg/dl

Share of Population with BMI > 25

Fig. 5.7 Relationship between the risk of diabetes and over-nutrition in adults.

Source: NFHS 2015–16; based on authors calculations

0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0

180.0

Lagging

NEStates

India

HighAg_Prod

Urbanizing

WomenMen

Fig. 5.6 Percentage change in obesity incidence by state classications. Source:

NFHS 2005–06 and NFHS 2015–16; based on authors calculations

prevalence rates continue to remain the highest for these groups. When

women are undernourished, research has found that this leads to low labor

productivity, health and economic development of the household. This

has negative intergenerational spillovers on the health of children for

whom the woman is the major care giver. When children are undernour-

ished in their childhood, this has been linked to poor adult education,

health and productivity outcomes (Alderman et al., 2006; Almond &

Currie, 2011; Gutierrez, 2013; J.Hoddinott etal., 2008; J.A. Maluccio

etal., 2009; Plessow etal., 2015).

P. PINGALI ET AL.

101

5.3 pathwayS towardS Better nutrItIon outcoMeS

Policy makers and scientists around the world have learned that reduc-

ing malnutrition is not just about making more food or even more

healthy food available for individuals to consume. There are many

other channels through which individuals are prevented from accessing

adequate food or nutrients. To capture the complexity of the problem

of access, we build on the nutrition framework proposed by Pingali and

Ricketts (2014) that encompasses the main pathways relevant in our

food systems approach. At its broadest level, there are two main units

of analysis in this framework—the household and the individual.

Malnutrition arises from the lack of access to diverse diets for house-

holds. This arises due to the lack of availability of diverse foods in a

local ecosystem (Fig.5.10, quadrant 1) as well as due to income inse-

curity that impacts the affordability of a balanced diet (Fig.5.10, quad-

rant 2). This translates into low food security and poor diet diversity

across households and thus enhances risks involved in being malnour-

ished. With regard to ensuring greater availability of diverse foods

within a local ecosystem, corresponding nutrition and agriculture-

related interventions play an important role in access. Income uncer-

tainty that arises from socio-economic disadvantages is known to limit

households’ ability to access foods. Thus interventions that create

safety nets to protect households against income shocks can play a key

role in improving access. Within households, intra-household dynam-

ics (Fig. 5.10, quadrant 3) and the health environment (Fig. 5.10,

quadrant 4) determine nutrition access and hence explain differences

in nutrition outcomes between members. With regard torisk factors

that arise from intra-household dynamics, age, gender, relationship to

the head of household and so onplay an important role in determining

access to food. This dynamic is reected in Figs.5.8 and 5.9, where

one sees that women and children have the highest rates of malnutri-

tion compared to male members. Finally is the effect of the health

environment which is impacted by disease burden as well as water and

sanitation quality within households. By affecting human biological

processes that help in the absorption of nutrition, a poor health envi-

ronment becomes an important risk factor in determining malnutrition

levels (Fig.5.10).

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

102

In this chapter, we add the effects of the growing incidence of NCDs,

rising economic inequality and threats from climate change to the frame-

work. NCDs can directly reduce individuals’ ability to absorb food by

impacting their health. If women are more susceptible to health shocks

from NCDs, this can worsen the problem of access to nutrition and can

also negatively impact children’s health outcomes (Shetty etal., 2012).

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

Lagging NEStates India HighAg_Prod Urbanizing

Men

Women Children

Fig. 5.8 Intra-household burden of undernutrition share by state classications.

Source: NFHS 2015–16; based on authors calculations

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

Lagging NEStates IndiaHighAg_Prod Urbanizing

MenWomen Children

Fig. 5.9 Intra-household burden of anemia by state classication. Source: NFHS

2015–16; based on authors calculations

P. PINGALI ET AL.

103

Increase in NCDs can also lower the productivity of household mem-

bers, thus impacting how much food there would be available to con-

sume. Exposure to secondary health risks increases the probability of

catastrophic health episodes and thus reduces income security of house-

holds. An unanticipated health episode is known to be a major risk fac-

tor in the impoverishment of households (Krishna, 2011). Rising

economic inequality reduces the number of economic opportunities

available for households to participate in the process of development.

This creates a self-reinforcing vicious cycle of low income and low ST.

States with low ST do not have the institutional capacity to implement

successful poverty alleviation programs. Given that labor is a major input

into agricultural production in these regions, poor health of individuals

in these states translates into low agricultural productivity. Poor health

also prevents individuals from participating in economic development

activities that may be available in high growth states, thus locking indi-

viduals and their respective states into a suboptimal equilibrium of

Fig. 5.10 Pathways to better nutrition

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

104

poor health and poor economic development. This reduces the ability of

states to participate in catch-up growth. Finally, threats from climate

change have brought new, unanticipated negative spillovers to economic

development, health and agriculture. By increasing uncertainty in agri-

cultural production, climate change threatens to increase food price

volatility, decrease access to food for poor households, decrease the

nutrient content of crops as well as decrease the health environment.

These shocks will threaten efforts made towards improving nutrition

outcomes. In the next section, we summarize the evidence from the lit-

erature with regard to the pathways as well as the experience of these

interventions along these pathways in enabling greater nutrition.

5.4 evIdence onpathwayS andtheIr

orreSpondIng food, agrIculture andnutrItIon

nterventIonS

5.4.1 Pathways toReduce Household Malnutrition

ThroughDiet Diversication

According to the Food and Agriculture Organization of the United

Nations (FAO), “Dietary diversity is a qualitative measure of food con-

sumption that reects household access to a variety of foods, and is also a

proxy for nutrient adequacy of the diet of individuals” (Kennedy, Ballard,

& Dop, 2011). Diet diversity of households is known to be correlated with

better nutrition (Arimond & Ruel, 2004; Busert etal., 2016; J.Hoddinott

& Yohannes, 2002; Pingali & Sunder, 2017; Popkin, Horton, Kim, Mahal,

& Shuigao, 2001; J.H. Rah etal., 2010). For example, increased dietary

diversity has been associated with lower prevalence of hidden hunger and

higher nutrient adequacy ratios for individuals (Arimond & Ruel, 2004;

Ruel, 2003; Steyn, Nel, Nantel, Kennedy, & Labadarios, 2006). In house-

holds with greater consumption of animal-

based products such as milk,

eggs or meat, children who are not breastfed have lower stunting and

wasting as well (Ruel, 2003). Lack of diet diversity has more recently been

linked to a higher risk of obesity (Azadbakht & Esmaillzadeh, 2011;

Nicklas, Baranowski, Cullen, & Berenson, 2001). Given this close rela-

tionship between dietary diversity of households and nutrition outcomes,

ensuring that households can access diverse foods requires interventions at

More evidence on these factors can be found in the chapter on climate change.

P. PINGALI ET AL.

105

two levels. First is to ensure that there is greater availability of food diver-

sity within the local system. The second set of interventions would need to

improve the affordability of these diets. In this section, we discuss the vari-

ous interventions that have been currently implemented in India with

regard to improving nutrition by targeting household diet diversity.

5.4.1.1 Improving Access toFood Diversity

In India, staple grain policy has subsidized the production of calorie dense

foods (P.Pingali, 2015). While these policies have successfully increased

staple grain productivity and hence economic outcomes and nutrition in

some parts of the country, it has also led to a regional divergence in out-

comes. Agricultural households from low ST areas have low cropping

diversity, low ability to participate in markets as well as some of the worse

nutrition outcomes in the country. Staple grain fundamentalism in agricul-

tural policy has preoccupied policy makers in investing in productivity

enhancing staple-grain-focused technologies at the cost of developing sim-

ilar biotechnologies for non-staple crops (Pingali, 2012). This strategy has

increased vulnerability in the production of non-staples, especially in areas

which are not properly irrigated. As climate change threatens the produc-

tion of crops, lack of technology for drought-resistant, heat- resistant and

ood-resistant non-staples increases vulnerability of the same.

On the

demand side, as discussed in Chap. 4, the growth of the retail sector and

organized sector and increased expenditures on non- staples reects the

increase in demand and hence willingness to spend on these goods. Urban

dietary demand, for example, has been rising quite rapidly across all states,

especially in those regions that are more developed (Fig.5.11). Agricultural

(rural) households too are spending a larger fraction of their incomes on

non-staples (such as meat, pulses, fruits and vegetables) purchased from

the markets (S. Subramanian & Deaton, 1996; Deaton, 1987). These

demand factors create non-trivial production challenges and challenges for

theirdistribution. These supply and demand factors have important impli-

cations for the availability of nutrients and diverse foods at the household

level. If climate shocks increase uncertainty in food production and

henceincrease volatility of food prices, poor households will be more vul-

nerableto shocks food security and hencemalnutrition (Jensen, 2000).

Currently, research on the safety net programs such as the Mid-Day

Meal Scheme (MDMS) and the Public Distribution System (PDS) have

shown mixed results regarding their impact on improvinghousehold diet

These factors are discussed in more detail in Chap. 7.

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

106

200

400

600

800

1000

1200

1400

Lagging India Northeast HighAg

Productivity

Urbanizing

Rs/Capita/Month

Cereal

Gram

Cereal Subs Pulses

Milk Products

Sugar

Salt

Edible Oil

Egg, Fish, Meat

Vegetables

Fresh Fruits

Dry Fruits

Spices

Beverages etc

Fig. 5.11 Urban household dietary-spending patterns in India (2011–12).

Source: Food Consumption Expenditure report NSSO 2011–12; based on authors

calculations

diversity. Research on the Integrated Child Development Scheme (ICDS)

program has shown it to be mildly effective in reducing undernutrition in

children and mothers who are beneciaries of the program. In areas where

Anganwadi health workers have been compensated for performance, there

has been greater short-term progress in addressing malnutrition (Dubowitz

etal., 2007; P.Singh, 2015). Thus having a strong locally oriented health

task force has been an important complementary investment required for

improving undernutrition outcomes. Evaluations of the MDMS has shown

its effectiveness in reducing undernutrition of school- aged children, espe-

cially from families who suffered from shocks such as droughts (Singh,

Park, & Dercon, 2013). Rahman (2016) and Kishore and Chakrabarti

(2015) have linked universal access to the PDS with greater household

diet diversity. However, in a study by Kaushal and Muchomba (2015), the

author found that PDS access may not have a clear impact on nutrition

outcomes. The challenges in implementation that have led to this mixed

evidence on their impact will be discussed in more detail in the next chapter.

P. PINGALI ET AL.

107

On the other end of the malnutrition burden, research has shown that

rising obesity and NCD prevalence has been linked to consumption of

excessive carbohydrates and sugar in diets. Staple grain crops and sugar

crops have been long favored by agricultural and PDS procurement poli-

cies in the country. By articially keeping consumption prices low, experts

have speculated that this has led to overconsumption of these foods in

diets. According to Arora, Pillai, Dasgupta, and Garg (2014) increased

consumption of sugar and fat products in diets is a major risk factor in

explaining the rise in obesity in India. Anjana et al. (2015) found that

increased intake of rened cereals was highly correlated with increased

diabetes incidence especiallywhen time spent on sedentary activities (such

as watching television and sitting) was high and abdominal obesity was

high. Shrivastava, Misra, Mohan, Unnikrishnan, and Bachani (2017) have

found evidence that South Asians consumed more calories from carbohy-

drates and their foods had a greater glycemic index compared to their

European counterparts. These dietary patterns have been linked to greater

NCD risks. However, research in this area is new and needs to be further

developed. In addition, given that it is a new phenomenon, interventions

have not yet been incorporated into policy making.

Micronutrient deciency (hidden hunger) is the third component of the

triple burden that has been linked to lower diet diversity of households. At

various points in the country’s history, the nutrition department has run

information campaigns on better diets and nutrition. A cross- sectional study

on the effectiveness of advertisement campaigns on purchasing iodized salt

found that it reduced undernutrition of children, but the authors found the

effects to be very small (S.Kumar & Berkman, 2015). In the 1990s, famous

national advertising campaigns that encouraged the consumption of milk

and eggs became a part of nutritional messaging in the country. Even

though knowledge about the benets of these products grew, there have

been no experimental evaluations of the impact of these information and

communication programs on household diet diversity or nutritional out-

comes thus far. In the chapter on policy (11), we discuss the possibility of

introducing laws for increasing food safety, fortication of foods and biofor-

tication of crops as methods to improve access to micronutrients in food at

the economy level and hence at the household level.

5.4.1.2 Increasing Household Incomes

When the level of income or the number of employment-generating oppor-

tunities that households have access to is low and the pr

obability that house-

holds are impacted by productivity shocks is high, households faced greater

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

108

income insecurity. By reducing the ability of households to plan ahead and

thus purchase diverse foods from markets, income insecurity reduces the

affordability of nutritious diets and thus increases malnutrition. In households

from more developed states in India, greater income security (incomes per

capita) and more market access (greater employment opportunities) have

been found to be correlated with higher dietary diversity and lower levels of

undernutrition (Koppmair, Kassie, & Qaim, 2017; Sibhatu, Krishna, & Qaim,

2015). Agricultural households from these areas too have greater income-

generating capability and hence better access to nutritious foods and hence

better nutrition outcomes. In lagging states in India, agricultural households

are more likely to consume food from their own farms (P.Pingali, Mittra, &

Rahman, 2017). Research from other similar subsistence agriculture contexts

has shown that access to home gardens or livestock related livelihood oppor-

tunities can improve diet diversity and nutrition in such contexts (Ali, Ahmed,

& Islam, 2008; Berti, Krasevec, & FitzGerald, 2004; Jones, Shrinivas, &

Bezner-Kerr, 2014; Masset, Leroy, & Frongillo, 2007).

Looking at effective interventions across the country, commercialization

of the agricultural production system is an important pathway to increase

ST, reduce rural poverty and reduce rural malnutrition. In order to enable

greater commercialization, reducing transaction costs in participating supply

chains (Abraham & Pingali, 2017) as well as strengthening the participation

of the retail sector in procurement and distribution of foods from small

farms is an important way forward (Boselie, Henson, & Weatherspoon,

2003; Reardon, Timmer, & Minten, 2012; Thomas Reardon & Minten,

2011).

As seen in Chap. 3, non-farm incomes and remittances from

migrants have also been found to play an important role in increasing income

security and diet diversity as well as reducing malnutrition in rural house-

holds (Babatunde & Qaim, 2010; Binswanger- Mkhize, 2012; Imai, Gaiha,

& Thapa, 2015; Owusu, Abdulai, & Abdul-Rahman, 2011; Benjamin,

Reardon, Stamoulis, & Winters, 2002; Binswanger-Mkhize, 2013). Also,

interventions that reduce costs of migrating, rural infrastructure projects

that increase access to urban markets and rural development programs that

stimulate local markets can thus alleviate malnutrition by increasing house-

hold incomes. In urban areas as well, income per capita, permanent employ-

ment opportunities and better- quality urban infrastructure are known to be

correlated with greater diet diversity as well as lower undernutrition.

However, there is very little research on the pathways that impact urban

food (in)security (Maxwell, 1999). Moving forward, urbanization trends in

This will be discussed in Chap. 8.

P. PINGALI ET AL.

109

India will recongure the importance of urban food security in the nutrition

debates. Developing interventions that focus on improving urban food

security will become important as we look ahead.

The second pathway that reduces the affordability of nutritious diets

and thus increases household-level malnutrition is unanticipated shocks to

household productivity. In this regard, poor households are more likely to

be impacted by unanticipated catastrophic events such as health, weather

or food price shocks. This increases their vulnerability and thus impacts

malnutrition. Research has shown that in the absence of appropriate nan-

cial tools to hedge against short-term production risks, crop price shocks

tend to translate into worse malnutrition outcomes of households

(Bellemare, 2015; De Brauw, 2011; Ivanic & Martin, 2008; R.T. Jensen

& Miller, 2008). For example, in Nicaragua, undernutrition in children

worsened when incomes of small farmer households growing coffee were

hurt by price shocks from the international coffee markets (Maluccio,

2005). In other instances, weather-related shocks such as lower rainfall or

longer droughts have been found to worsen nutrition outcomes of both

children and adults. For example, famines caused by extended periods of

drought have been linked to a reduction in the long-term productivity of

adults who experienced these shocks when they were in utero. Providing

adequate protection through crop or weather insurance is thus important

towards ensuring that households are protected against lower nutrition

outcomes. Health shocks can be devastating for household food security

and nutritional outcomes (Strauss & Thomas, 1998; R. M. Townsend,

1994, 1995; Asfaw & Braun, 2004). Krishna (2011) has documented an

unanticipated health shock to the breadwinner of the family can impover-

ish households. In the short term, health spending can increase household

debt, thus reducing household access to nutritious foods. In the long run,

the productivity of households can reduce if children are taken out of

school to work or women have to participate in labor markets that pay

them lower wages.

At the economy level, structural transformation and economic growth

has led to changing preferences in diets and has increased opportunity

costs of home food preparation (due to rising wages). These phenomena

have been correlated with greater demand for eating diverse foods and

eating more processed foods available at supermarkets and restaurants

(Pingali, 2006; Popkin, 1999, 2003).

These changes are reected both in

See Chap. 4 for discussion on patterns and factors of this phenomenon.

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

110

the growth in expenditure shares in household spending on non-staples,

such as milk, eggs and meat relative to staples, and in the greater demand

for eating out (Gaiha, Jha, & Kulkarni, 2013). While many of these dietary

changes have been linked to lower undernutrition and hidden hunger out-

comes, Anjana etal. (2015) found that increased intake of rened cereals,

fruits and vegetables, dairy products, and monounsaturated fatty acid was

correlated with increased diabetes when sedentary activities and abdomi-

nal obesity of individuals was also high. There is some evidence to show

that greater income per capita has increased the consumption sugary and

fat-based products (Gaiha etal., 2013; V.Gupta, Downs, Ghosh-Jerath,

Lock, & Singh, 2016; P.Pingali, 2006). Consumption of these types of

foods has been associated with greater obesity incidence. Also, Arora etal.

(2014) argue that doubling in the per capita consumption of these prod-

ucts over the last 15years can be correlated with increases in obesity in the

country. However obesity is still a new phenomenon in India. Hence there

has been very little research done so far to understand the income effects

of food demand on obesity in the country. Also thus far the obesity phe-

nomenon is largely urban and is linked to higher incomes per capita, but

research from developed country contexts nds that as the difference in

incomes per capita increases, obesity incidence becomes a burden for

poorer populations. In the absence of a food system that accounts for this

issue of access, obesity becomes a major threat to future health systems.

5.4.2 Pathways toReduce Individual Malnutrition

byImproving Access

Across India and in all types of malnutrition indicators, women and chil-

dren do far worse than the adult males. Within the same household as

well, it is common to see that women, children or older-age adults are

more malnourished than the adult male or breadwinner. Even between

children, boys are known to have better nutrition outcomes than girls.

There are two major explanations for the intra-household variation in mal-

nutrition outcomes. First, observable traits such as gender, age, education

and labor force participation often determine who has access to nutrition

within households. Households tend to invest their scarce resources

towards individuals who have the highest potential to improve household

welfare. Even if not directly observed, intra-household dynamics such as

bargaining power, time use patterns and cultural beliefs and practices can

also create unanticipated trade-offs between household members and thus

P. PINGALI ET AL.

111

moderate their access to food and nutrition. Evenin completely egalitar-

ian and altruistic households, the health environment often plays a role in

increasing morbidity and sickness. Combined with age, health stock of

individuals and their access to food, a poor health environment creates

barriers to nutrient absorption. Lack of water or sanitation facilities and

high incidence of communicable diseases increase morbidity of children

and hence reduce their ability to access nutrition. For older adults, age and

susceptibility to NCDs also increases morbidity and hence affects their

nutrition outcomes. These factors contribute to intra-household dynamics

that result in nutrition outcomes that differ across individuals who live

within the same household.

5.4.2.1 Inducing Positive Nutrition Behaviors Within Households

Within households, nutrition disparities are the outcome of six important

channels. One, in many poor agricultural households, the low opportunity

cost of time, reected by low (agricultural) wages of women and girls rela-

tive to men and boys, creates a nutrition-productivity spiral in favor of the

men and at the expense of women. This problem is particularly harsh in

income-constrained households where members may allocate more market

work to the higher-paid members, thus reinforcing a productivity nutrition

trade-off in their favor (J. R. Behrman & Deolalikar, 1993, 1990;

Deolalikar, 1988). These trade-offs become salient when households expe-

rience income shocks. For example, nutritional outcomes of women and

girl children worsen when there are agriculture-related shocks such as

droughts or oods, during price shocks and during labor market shocks

such as health shocks, migration-related shocks and economic downturns

(Agüero & Marks, 2011; Akresh, Verwimp, & Bundervoet, 2011;

Alderman etal., 2006; Baez & Santos, 2007; D’Souza & Jolliffe, 2013; del

Ninno & Lundberg, 2005; Ferreira & Schady, 2009; J.Hoddinott, 2006;

R.Jensen, 2000). Two, women are often relegated to household tasks such

as water and rewood collection or threshing and harvesting on the elds.

These tasks are energy intensive, but they are undervalued in the market

(H.R. Barrett etal., 2005; Kadiyala, Harris, Headey, Yosef, & Gillespie,

2014). Even though there is no strong evidence that malnutrition out-

comes of children worsenwhen mothers go back to work, women maybe

expected to stay home and involve

themselves in child care (Bennett, 1988;

Glick & Sahn, 1998; Kes & Swaminathan, 2006; Leslie, 1988). These

services too are undervalued andthus women’s(girls) household contribu-

tions tend to be undervalued in favor of men (boys) thus reducing access.

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

112

Studies from Mexico have found that changing returns to household work

through cash transfers for girl children can be one way tohelp reduce their

time spent on household work and to keep them in schools (Parker &

Skouas, 2000). Three, Jayachandran and Pande (2017) found the oldest

male child within a household had better nutrition-related outcomes com-

pared to similar children in Africa. However, any other child (with a higher

birth order) fared worse than a comparable group of children from the

same context. Hoddinott and Kinsey (2001) and Maccini and Yang (2009)

alsofound that when there were rainfall shocks, within the same house-

hold, girls’ malnutrition and schooling outcomes worsened in relation to

boys’ malnutrition outcomes. Thusdiscriminatory practices based on birth

order of gender oftenlead to different nutrition outcomes between groups

of children within the same households. Four, intra-household bargaining

literature shows that when women have more bargaining power within

households nutritional outcomes of all members improve. For example,

when households are headed by women rather than men, the nutrition

outcomes of children are better in the former even if their incomes were

lower on average (Headey, 2013; C.Johnson & Rogers, 1993). Multiple

authors have found that women’s education is a powerful channel through

which household malnutrition, as well as intergenerational health out-

comes of children, can improve (Case & Ardington, 2006; Currie &

Moretti, 2003; Oreopoulos, Page, & Stevens, 2006; Thomas, Strauss, &

Henriques, 1991). Intra-household bargaining power of women is also

reected in the amount of freedom they have to control resources when

they belong to male-dominated households. Multiple researchers have

found that increase in empowerment of women within households, repre-

sented by greater nancial control and more physical mobility outside the

home, played an important role in improving child nutrition indicators

(Imai, Annim, Kulkarni, & Gaiha, 2014; Shroff, Grifths, Adair,

Suchindran, & Bentley, 2009; M.R. Shroff etal., 2011). Thus increasing

women’s education, bargaining power and empowering women to take

decisions within households will be important towards decreasing intra-

household disparities.Five, within households, it can also be the case that

households may not have proper information on nutritional behaviors that

can impact malnutrition. In sub-Saharan Africa, evaluations of behavior

change communication programs on breastfeeding have been found to be

effective in increasing knowledge, duration of breastfeeding and health

outcomes especially for babies whose mothers are HIV positive (Coovadia

etal., 2007; Thior etal., 2006). Interventions such as the distribution of

vitamin A and iron tablets in India have been unsuccessful in reducing

P. PINGALI ET AL.

113

micronutrient deciency since households lack information on the benets

of following treatment protocols properly. Six, cultural practices often pre-

vent women and children from accessing the necessary care from interven-

tions that are focused on improving their health. In some cases, cultural

beliefs about the micronutrients’ effects on health play a role in reducing

whether women and children continue treatment. For example, in India,

Nichter (2008) found that women were discouraged to take iron supple-

ments since midwives from the villages believed it would increase the size

of the baby in utero and thus increase complications for child mortality in

women who were giving birth. However, the ip side to the argument was

that women who were anemic were highly susceptible to maternal mortal-

ity risks.Changing these behaviors require education interventions for all

household members, informational campaigns about the importance of

nutrition and economic growth policies that are inclusive.

Programs such as the ICDS focus on addressing malnutrition by pro-

viding pregnant women and new mothers with reproductive healthcare

such as ante-natal checkups, nutrition supplements such as iron tablets,

nutritious meals and information on managing nutrition intake during

their pregnancies. For newborn children, the ICDS provides post-natal

care, monitors anthropometric health of newborn children and edu-

cate mothers on the importance of breastfeeding and eating healthy.

Information on nutrition supplements and nutrition intake for children

are also provided to new mothers with the view to change behavior.

Evaluations of these programs have found that iron-related nutrition

outcomes of children improved after women were educated on the same

(Kapur, Sharma, & Agarwal, 2003). With regard to undernutrition,

additional interventions such as encouraging early initiation of breast-

feeding practices were found to be more effective than just providing

individuals with more information on nutrition practices (Kumar, Goel,

Mittal, & Misra, 2006). Introduction of complementary feeding prac-

tices along with breastfeeding was found to be associated with better

nutrition outcomes for children in some areas as well (Menon, Bamezai,

Subandoro, Ayoya, & Aguayo, 2015). In states such as Maharashtra,

regular monitoring of babies and mothers and strict protocols to iden-

tify and treat groups that are at high risk of malnutrition have played an

important role in reducing its severity. Greater citizen involvement has also

been thought to be the key motivation for creating efcient systems in

Maharashtra. The MDMS program, on the other hand, has been found

to be an extremely cost-effective program in improving nutrition out-

comes of students. Afridi (2010) found that for less than Rs. 20 aday,

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

114

a child attending a school with access to MDMS reduced their daily

dietary calorie deciency by 30%, iron deciency by 10% and reduced

protein deciency by 100%.

India has some of the world’s worst rates of anemia for men, women

and children, and this burden exists across states and economic develop-

ment outcomes in the country. Anemia has been linked to the lack of

micronutrient availability in diets and is known to have many long-term

negative health effects on individuals as well. Many interventions imple-

mented by the health department in India have focused on improving the

last mile access with regard to micronutrients. For example, distribution of

vitamin A and iron capsules for pregnant women and babies have long

been part of the strategy to improve reproductive and child health in the

country. However, there have not been many rigorous evaluations of these

programs. For example, Semba etal. (2010) found some evidence that

vitamin A interventions in India did reduce child undernutrition, espe-

cially wasting in children. However, the effects were modest at best. In

cases where it has worked, experts have shown that there are signicant

improvements to child health. Adhvaryu and Nyshadham (2016) found

that when children were exposed to iodine supplementations in utero,

they were more like to have better health and cognitive outcomes com-

pared to a sibling who was not exposed.

The other important and growing phenomenon in the malnutrition

burden is obesity incidence. A systematic review of the nature of obesity

within households reveals that in less developed countries, obesity is an

outcome of income and is equally prevalent between men and women in

rich households. However, greater economic development becomes asso-

ciated with obesity of women in the lower income strata, but male obesity

tended to more malleable to economic growth (Dinsa, Goryakin,

Fumagalli, & Suhrcke, 2012). In these contexts, obesity of women is also

associated with a higher premium in labor markets regarding reduced

wages as well as greater health spending (Cawley, 2004, 2010). These

effects are known to spill over on poor health outcomes that have negative

effects for both women and their children. In India, S.Gulati etal. (2013)

nd that socio-economic indicators and the lack of knowledge on obesity

explain the high overweight rates of girls and boys in urban schools.

However, other than the income and information pathways, there is very

little known about why women and children may be susceptible to obesity

in the country. Given its challenges for health, this becomes an extremely

crucial investment area as we think ahead to improve nutrition outcomes.

P. PINGALI ET AL.

115

5.4.2.2 Improving Nutrient Absorption byInvesting intheHealth

Environment

Poor nutrition and a poor health environment have an endogenous rela-

tionship. Among the factors that increase thisvulnerability are the age of

the individual and their health stock. Children who are undernourished or

anemic, for example, are more susceptible to diseases in the health envi-

ronment (Horton & Ross, 2003; Thakur, Chandra, Pemde, & Singh,

2014). Similarly, children who have higher morbidity have worse malnu-

trition outcomes (Clasen et al., 2014; Miguel & Kremer, 2015). This

endogeneity reinforces the problem of poor nutrient absorption for chil-

dren. A poor health environment can be an outcome of low quality of

drinking water, inadequate sewerage facilities, proximity to fecal contami-

nation by livestock and humans and poor hygiene in water and sanitation

practices. As disease burden increases in the surrounding areas, constant

exposure to disease reduces individuals’ ability to absorb nutrition from

foods that they eat.

In India, much of the disease burden still comes from diarrhea inci-

dence. Diarrhea is an outcome of bacterial and viral infections that can be

transmitted through an unclean environment. In Fig. 5.12, we see the

strong correlation between low sanitation infrastructure and diarrhea

incidence in children. Hammer and Spears (2016) and Spears, Ghosh,

y = 2.4718x + 23.107

0 246810 12 14 16

Percent of households without access to toilet

infrastructure

Diarrhea incidence in children under 5 (2 week recall)

Fig. 5.12 Relationship between diarrhea prevalence and lack of sanitation.

Source: NFHS 2015–16; based on authors calculations

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

116

and Cumming (2013) showed that in India, reduction in stunting was

correlated with a reduction in open defecation in villages through the

construction of toilet infrastructure. In the lagging states of Madhya

Pradesh and Orissa, Clasen etal. (2014) and Patil etal. (2014) showed

that constructing toilets could not help reduce diarrheal infections since

households did not engage in clean sanitation behaviors even after the

infrastructure became available. Supplementing investments made in con-

structing infrastructure for water and sanitation services, along with BCC

interventions, has been found to be most effective in improving nutri-

tionin many other developing countries. Having access to clean water

and engaging in hygienic practices for sanitation-related cleanliness was

found to be effective in lowering disease burden and hence improving

nutrition outcomes in India (Lee, Rosenzweig, & Pitt, 1997; Mangyo,

2008). Rah etal. (2015) found that in areas where the primary care givers

encouraged clean drinking water practices such as washing hands before

eating and after using the toilet, stunting-related malnutrition decreased.

In places where households consume water stored in containers, sanitiz-

ing water storage facilities through the addition of chlorine tablets has

been found to decrease the spread of disease (Mengistie, Berhane, &

Worku, 2013). Other practices such as boiling water before consuming it

and encouraging people to wash hands with soap before they eat has been

found to be effective in the ght against diarrhea (Biran et al., 2008).

Other health-

related inter

ventions such as vaccinations against communi-

cable diseases, distribution of deworming tablets, provision of bed nets to

reduce the spread of mosquitoes and malaria have also been found to be

effective in improving child health (Lim etal., 2011; Miguel & Kremer,

2015). By reducing morbidity, these interventions improve the nutrition

absorption capacity of children and thus can contribute to the ght

against malnutrition.

5.5 challengeS forthefuture

Moving the country from high undernutrition to low undernutrition

while simultaneously preventing an increase in obesity needs to be a key

goal for enabling a smooth transition towards better health. However

tackling high undernutrition, micronutrient deciency or high prevalence

of obesity requires different interventions that address key challenges

based on the malnutrition type. In Fig. 5.13, we see that obesity has

become a problem of high incomes, while undernutrition is correlated

P. PINGALI ET AL.

117

with low ST. Hence interventions need to address the specic nutrition-

economic growth context of ST that aligns with each state. For example,

tackling obesity in urbanizing states like Kerala would need to become the

key focus of state development policies while tackling undernutrition in

lagging states like UP needs to remain a priority. Within each of these cat-

egories, identifying the main channel through which malnutrition is

impacted should be identied both by state and by district. For example,

in more hilly areas of Chhattisgarh, solving the problem of access to food

maybe more important for reducing undernutrition while improving sani-

tation access might be more effective in the plains of Madhya Pradesh.

Similarly, improving nutrition education and positive nutrition behaviors

might be key in Tamil Nadu where white collar jobs dominate economic

growth while improving food grades and safety in Maharashtra would

improve access to nutrition in urban areas, where much of food is accessed

by eating out. Thus,looking ahead there is a need for more state specic

research foridentifying the most important pathway through which the

threat formalnutrition can be reduced.

There are three additional challenges for the triple burden of malnutri-

tion as we look ahead to 2050. The rst challenge is tackling the rising

incidence of NCDs. As per the report (MoHFW, 2017), nearly 62% of all

deaths in the country are due to NCDs. This number has nearly doubled

Female Obesity (2015)

Male Obesity (2015)

010

y = 9.52 + 0.26

x, R

= 0.34

y = 9.75 + 0.2

x, R

= 0.22

0102

Urbanization (2011)

Fig. 5.13 District-level association between urbanization and obesity. Source:

Census 2011 and NFHS 2015–16; based on authors calculations

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

118

in the last two decades. Urbanized states have the highest DALYs

from

premature deaths while lagging states have the lowest this far. NCDs

account for 35% of premature deaths of individuals between the ages of 15

and 39 and 74% of all deaths for individuals between the ages of 40 and

69 in the country. Among the NCDs, cardiovascular diseases, chronic

respiratory diseases, cancers and diabetes explain more than 80% of all

deaths. DALYs from diabetes incidence has increased by 80% and unhealthy

diets, higher blood pressure, high cholesterol and overweight now account

for 25% of risk associated with NCDs.

Urbanized states have seen the

greatest increase in NCDs and also have the highest increases in obesity

incidence (MoHFW, 2017). Given demographic projections for the

future, increasing trends for urbanization and increasing incidence of obe-

sity, there is a credible threat that NCDs will become a liability for health

systems as well look ahead. This will not only impact malnutrition out-

comes; it will lead to a reduction in the productivity of individuals as well

as lower economic growth outcomes in the long run.

The second major threat comes from climate change. Changing rainfall

patterns, an increase in the number of heat days and increased air and

water pollution will worsen the health environment. By reducing access to

essential resources such as water and increasing disease burden, climate

change will increase the risks for malnutrition. Current research has shown

that air and water pollution too can directly impact the health environ-

ment and thus health and mortality. Climatic risk factors will also directly

impact the rate of incidence of NCDs and hence pose a further threat to

progress made towards improving health (Kjellstrom, Holmer, & Lemke,

2009; Majra & Gur, 2009; Myers etal., 2017; Patz, Campbell-Lendrum,

Holloway, & Foley, 2005; Watts etal., 2015). Through the agricultural

system, climate change also threatens to impact nutrition by reducing

food availability and nutrient content in crops. Literature has suggested

that women and children will be more vulnerable as climate change threat-

ens access to water and other natural resources which occupy Cooperative

Marketing Federation (much of the time use patterns for these groups. All

these factors will further reduce the effectiveness of interventions cur-

rently designed to address malnutrition.

DALYS—Disability Adjusted Life Years—years of healthy life lost due to premature

death and suffering. DALYS = years of life lost + years lived with disability.

The latter has increased from 10% in the 1990s.

P. PINGALI ET AL.

119

The third challenge is the problem of growing income inequality across

geographical space and incomes. The malnutrition transformation predicts

that as incomes increase, undernutrition rst decreases and is followed by

an increase in over-nutrition. However, with higher levels of development,

greater income inequality leads to over-nutrition incidence transitioning

away from the rich towards a problem of the poor and less privileged. This

transition is driven by increased access to unhealthy processed foods from

supermarkets, higher opportunity costs related to home meal preparation

as well as greater demand for diet diversity. In India, we are in the process

of moving towards high over-nutrition even before we have successfully

tackled the problem of undernutrition. This transition can be explained by

both the growing income inequality within the country as well as the lim-

ited success of current interventions to tackle the undernutrition problem.

Given that some states will progress more quickly towards completing

their ST, guiding their economies away from a malnutrition transition

through appropriate policy interventions that are best suited to the devel-

opment experiences of the states will be important as we look ahead.

5.6 concluSIon

Similar to the experience of other countries that have undergone a greater

structural transformation, India has made progress towards reducing hun-

ger and reducing undernutrition as it emerges into the global stage. Over

the last three decades, the country has managed to reduce undernutrition

by at least ten percentage points across all individuals. However, tackling

micronutrient deciency continues to remain a challenge for policy mak-

ers. Anemia rates of children and women have remained stubbornly high

and are still comparable to those in sub-Saharan African countries, which

themselves have been on a lower transformation pathway. Much of the

progress made towards tackling this problem has now been marred by the

fast increasing rates of overweight individuals. This new phenomenon has

blindsided policy efforts. While one may be tempted to argue that increas-

ing obesity may itself represent the role of fast rising incomes (as experi-

enced by many other countries), its rate of increase and its indirect effects

on non-communicable diseases are extremely concerning. NCDs currently

explain around 62% of all deaths in India, a doubling of the rate since the

early 2000s. Much of the increase in NCDs has come from diseases such

as heart conditions and diabetes which are closely related to issues of food

access and malnutrition. This abrupt shift in the distribution of the triple

THE NUTRITION TRANSFORMATION: FROMUNDERNUTRITION TOOBESITY

120

burden of malnutrition is unprecedented, and experts and policy makers

have become concerned about its impacts for the health of individuals

both in the short term and the long term. In the short term, malnutrition

has been found to lower labor productivity and reduce household food

security. In the long term, growing numbers of unhealthy populations

place a large public health burden on the Indian health system to deliver

health services. This may affect the potential for long-term economic

development.

Through this chapter, we provide an account of the pathways through

which malnutrition can be reduced. We identify four such pathways using

a food systems approach. At the household level, access to diverse diets

and income security play a major role with regard to increasing food secu-

rity and reducing malnutrition. Research has shown that helping house-

holds diversify their diets by increasing access to diverse foods through

markets as well as increasing income and livelihood opportunities is impor-

tant for tackling malnutrition. For obesity reduction as well, having access

to nutritious diets, reducing overconsumption of calories from sugar as

well as increasing income security, will play an important role. Within the

household, intra-household dynamics with regards to food access and the

quality of the surrounding health environment determine an individual’s

ability to absorb nutrition from food. Women and children in households

are thus especially vulnerable to malnutrition compared to men. Research

from developed country contexts suggests that these dynamics play out

obesity risks as well. Higher obesity has been found to be associated with

poor economic outcomes and lower intergenerational health for women.

Spillovers from increasing obesity rates often impact incidence and mortal-

ity related to NCDs as well. Thus, improving welfare in the future involves

a continued commitment towards the reduction of undernutrition and

micronutrient deciencies, as well as increasing commitment towards

reducing risk factors for obesity and thus NCDs.

In this chapter, we present evidence on the success of various interven-

tions that have been implemented in India to tackle the issue of malnutri-

tion. Our chapter alsohighlights areas where more research or evidence is

required to understand how malnutrition can be reduced. For example,

we show that there is very little known on the pathways through which

obesity can be reduced. Similarly, though there have been many interven-

tions to reduce hidden hunger or micronutrient deciencies, there is little

known on what has worked or not. Also, we discuss the importance of

investing in other channels for reducing undernutrition such as reducing

P. PINGALI ET AL.

121

communicable disease incidence through vaccinations and increasing

access to clean and safe drinking water. We also highlight the differences

in the national and regional policy responses to the nutrition issue and

argue that a decentralized approach is now more relevant in tackling mal-

nutrition. For example, we proposethat discussions on reducing obesity

need to become more important in the food policy debates in urbanizing

states, while their agricultural policies need to focus on increasing rural

income security. In lagging states on the other hand, food and agricultural

policy needs to remain focused on reducing undernutrition and hidden

hunger. In addition, we highlight the risks that climate change, rising

NCDs and regional inequality pose to tackling malnutrition. These phe-

nomena, we argue, increase health systems risks associated with malnutri-

tion and will derail progress made towards achieving better health if not

addressed. Thus achieving the goal for nutrition security for the future will

require interventions that simultaneously tackle the multiple challenges

that impact the triple burden of malnutrition.

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P. Pingali et al., Transforming Food Systems for a Rising India,

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https://doi.org/10.1007/978-3-030-14409-8_6

CHAPTER 6

Reimagining Safety Net Programs

6.1 IntroductIon

Safety nets—food and non-food based—have been the cornerstone of

India’s emerging social security regime. While these safety programs have

existed for a while, the last 15years have seen the emergence of a welfare

policy structure in India. Driven by the rights-based initiative, which rec-

ognized basic entitlements to work, food and education as a fundamental

right of the citizen, safety net programs have been enshrined in the consti-

tution. The ve main programs which provide a semblance to the social

security architecture in India—Public Distribution System (PDS),

Integrated Child Development Scheme (ICDS), Mid-Day Meal Scheme

(MDMS), Mahatma Gandhi National Rural Employment Guarantee

Scheme (MGNREGS) and pensions for widows and elderly—have played

a crucial role in the reduction of poverty, increasing incomes, and reduc-

ing malnutrition.

However, these schemes have also been heavily criti-

cized for their design, targeting errors and corruption which leads to very

high costs of operations. Other alternatives have been proposed which

incorporate the benets of technological advancements in monitoring and

better targeting.Yet, the design of these safety net programs have been a

continuingdebate in policy circles.

In the previous chapter, we have discussed the potential role of safety nets in reducing the

triple burden of malnutrition.

136

The policy debate in India on the safety nets is grappling with the fol-

lowing questions. First, should the schemes be targeted towards poor or

be universally applicable? Second, should the social security benets bein

the forms of in-kind transfers or the beneciaries be handed cash of an

equivalent amount to choose their consumption bundle? Third, should

these social security schemes be replaced with an unconditional Universal

Basic Income (UBI)? While payments for pensions or public works pro-

gram are intrinsically cash based, the cash versus kind argument is most

relevant for the food assistance programs like PDS and ICDS. Reading the

debate closely, one gleans that much of this debate is moreideological

than evidence-based. The idea of improving nutritional outcomes is only

implied in these deliberations without explicit consideration to the role of

safety net programs in tackling the multiple emerging nutritional chal-

lenges as seen in the previous chapter. Part of this confusion stems from

the fact that the benets and costs of safety net programs are difcult to

evaluate and compare since they do not make a clear distinction between

its role as income support and nutritional assistance.

Given India’s regional divergent experience of structural transforma-

tion, in this chapter, we explore the ability of safety nets to create a suf-

cient oor for those who are disadvantaged. The challenge of a

nutrition-sensitive food system lies in its ability to respond to the current

nature of economic transformation and food demand. Given the pres-

sures of urbanization, dietary transition, demographic changes, higher

rural- urban mobility, establishment of newer food value chains, changing

consumer preferences, ecological degradation and the processes of glo-

balization, these changes create new challenges for food safety nets

regarding delivering food safely to individuals who are disadvantaged.

The rise in urban population implies greater share of net food consum-

ersin the future who wouldrely on traditional as well as commercial food

value chains for accessing food. This would increase competition for food

safety nets which have played a role in the procurement and distribution

of food. Less physically demanding jobs and better sanitation environ-

ment further reduces the number of calories needed and increases

demand for diverse nutrients. Competition for land and dwindling natu-

ral resources like water inuences the choice of the crop among farmers.

Development of markets and connection to modern value chains provide

farmers with greater avenues for growing commercial crops which fur-

ther inuences the food system diversity. Given these expected changes in

the future, we ask the following question: how should safety nets be

P. PINGALI ET AL.

137

designed to ensure better nutrition outcomes? What kind of safety net

programs would help to improve diets and nutritional outcomes?

To answer this question, we rst examine the range of existing safety

nets in India and their implications for the food system. We describe the

why, how and what of the safety nets regarding their conception, their sub-

sequent achievements and failures, and their potential future. We deliber-

ate upon the usefulness of these programs with a keen eye on the changing

nature of food demand and discuss ways to improvethese programs. We

argue that the policy makers should think hard on whether the same objec-

tives which these programs intend to achieve today would stay relevant in

the future too. Here, we also align the debates around poverty, consump-

tion demand, supply considerations and how all these factors square up

with the relevance of these safety nets.

6.2 the role ofSafety netS Inthefood SyStemS

The idea of social safety nets became popular in the global policy dialogues

during the 1980s and 1990s as a part of the humanitarian and develop-

mental debates (Croppenstedt, Knowles, & Lowder, 2017). The World

Development Report 1990 discussed the inclusion of safety nets as income

support during periods of stress and calamities, as one of the planks of the

“New Poverty Agenda”. Gradually, ideas around safety nets began to use

it as a lever for addressing economic shock and reduction in chronic pov-

erty. Without a clear denition around the kind of safety nets to be pur-

sued, it was broadly understood to be a set of interventions aimed at

reducing risks and vulnerability—social and economic—to alleviate

extreme poverty and deprivation. Safety nets became an essential part of

the poverty eradication agenda in developing countries given the imper-

fections of credit and insurance market which ensures the citizens against

any unanticipated income shocks. Gradually, it expanded to address spe-

cic concerns of hunger and nutrition. Greater scholarship on the disad-

vantages faced by women, children and the elderly further led to calls for

specically designed safety nets which ensures the well-being and agency

of the most marginalized.

There are multiple other pathways through which safety nets contrib-

ute to the food system. First, through the income pathway, transfers—in-

kind or direct—add to household income which enables food diversication,

investment in human capital and overall productivity. Greater income sup-

port potentially leads to higher investment in education and health of

REIMAGINING SAFETY NET PROGRAMS

138

children enabling a better quality of human capital which has implications

for future productivity and earning capacity. For the cultivating house-

holds, greater resources help overcome liquidity and credit constraints

which inuences greater investment in agriculture and livestock. It also

frees up resources and creates avenues to move out of agriculture. Second,

food assistance or income transfer programs ensure inter-temporal con-

sumption smoothing and food access as livelihood options in developing

countries often follow a cyclic process. Third, safety nets targeted at

women or children have implications for intra-household food access.

Supplementary food and nutritional assistance programs at various stages

of the life cycle lead to greater reduction in enhancing human capital. In

the long run, such interventions lower the probability of intergenerational

poverty. Similarly, income transfers focused at women in the household

enhances their economic status and bargaining power in the economy.

Fourth, safety nets promote local economic growth especially when it

involves agriculture. Greater productivity improves production capacity

and stimulates demand for locally grown agricultural products.

As food systems evolve along the stages of economic development, so

does the need,design and role of safety nets. Fiscal ability to spend on

safety nets by the government also changes with economic development.

Given the structural transformation of the Indian economy, this chapter

deliberates upon how safety nets should be envisaged in the future antici-

pating economic growth, demographic transitions and technological

advancement.

6.3 Safety net ProgramS InIndIa

India has a long history of safety net programs. These programs, however,

were largely driven by policy concern such as weather shocks, price risk,

social control and so on. There has not been a concerted effort at creating

a social security architecture aimed at addressing the issues of poverty and

vulnerability. For example, PDS was introduced during the 1940s to shield

urban consumers against food shortages. A public works program was

introduced in the state of Maharashtra during the early 1970s after pro-

longed droughts and in 1977. The Maharashtra government introduced

the Employment Guarantee Act employing nearly half a million workers.

ICDS, too, was initiated during the 1970s, though on a pilot basis. It was

only in the last two decades that a holistic safety net design began

to emerge.

P. PINGALI ET AL.

139

Recent reforms in the safety net programs coincided with the spec-

tacular pace of economic growth and the consequent distributional con-

cerns of growth such as lack of its “inclusiveness”. Safety net expansions

have provided economic security to a large section of the poorer popula-

tion. The bulk of the social security expenditures comprise ve major

programs: PDS, ICDS, MDMS, MGNREGS and pension schemes

(Drèze & Khera, 2017). A brief description of these programs is pro-

vided in Table6.1 in terms of its objectives, targeted population and the

nature of transfer. According to a ballpark estimate by Narayanan and

Gerber (2017), the central government of India spent around 1.7% of

the gross domestic product (GDP) on the combined operations on PDS,

ICDS, MDMS and MGNREGA in 2013–14.

In the last ten years, the

budget outlay on these programs has increased substantially. Expenditure

on ICDS has almost quadrupled from Rs. 40 billion in 2006–07 to

almost Rs. 160 billion in 2016–17 (Fig. 6.1). Food subsidy and

MGNREGS comprise the largest share of expenditure and have seen the

greatest increase too.

Despite huge outlays, these programs have been

heavily criticized for being prone to corruption, ineffective in reaching

Arriving at an exact estimate for these schemes is non-trivial because the outlays and

expenditures on food assistance programs in government statistics also include the expenses

on food procurement and stocking operations. Further, state governments may spend over

and above the central government’s expenditures, making the calculations imprecise.

It must be noted that food subsidy also includes the food procurement operations. It is

very difcult to get data which differentiates PDS from overall food subsidy.

Table 6.1 Description of major safety net programs in India

Targeted

population

Nature of the program Objectives

PDS Poor In-kind food transfers Hunger reduction

ICDS Children and

mothers

Supplemental food

assistance

Nutritional assistance

MDMS School going

children

Hot cooked meals Classroom hunger mitigation

MGNREGS Universal rural

population

Public works program Rural livelihoods

Pensions Widows and

elderly

Income transfer Poverty among elderly

RSBY Poor Health insurance Safeguard against health

shocks induced poverty

REIMAGINING SAFETY NET PROGRAMS

140

the poor and therefore a huge scal drain. The last decade, however, has

seen a substantial improvement in the coverage and utilization of these

programs. Using longitudinal data between 2004–05 and 2011–12,

Drèze and Khera (2017) highlight the extent of this expansion (Fig.6.2).

MDMS is the most popular scheme and its access among school going

100

120

Food Subsidy ICDS MGNREGS MDMS

Source: Government Budget Documents

2006–07

2016–17

Fig. 6.1 Budget expenditures on major safety nets (in Rs. ’00 billion)

MDMS ICDS – women ICDS – children PDSMGNREGS

(in %)

Source: All figures from MGNREGS from Drèze and Khera (2017) based upon the Indian Human

Development Surveys (IHDS I and II).

MGNREGS figures are only for rural households.

2004–05 2011–12

Fig. 6.2 Coverage and expansion of major social safety net programs

P. PINGALI ET AL.

141

children improved from 62% in 2004–05 to 81% in 2011–12. Substantial

improvement in the usage of ICDS and PDS are also evident.

Safety nets always wrestle with the problem of identifying the best

design where the benets are disproportionately higher to the non-poor

households. At the same time, there have to be sufcient incentives for the

beneciaries to work. These challenges are further compounded among

the poor and developing countries where the proportion of people requir-

ing support remains very high compared to the scal resources at their

disposal. Usefulness or efcacy of the social safety net hastherefore been a

very active policy debate in India. While it has been unanimously acknowl-

edged that a large share of the Indian population is poor and needs some

sort of support against anticipated and unanticipated economic shocks,

the debate has mostly veered around what is the most efcient and eco-

nomical way to build a safety net architecture. Arguments have put across,

therefore, to promote growth as a poverty reduction and channel resources

into more productive investments. Some have argued that social assistance

should rely more on narrow targeting. There have been calls for moving

towards a cash-based transfer replacing the in-kind food assistance through

PDS.Of late, there has been a debate around the usefulness of a UBI to

all households.

6.4 food-baSed Safety net ProgramS

With a life-cycle approach to food security, food assistance at various

stages of life is provided through PDS, MDMS and ICDS. Under the

umbrella of the National Food Security Act (NFSA), these programs aim

at providing nutrition to nutritional assistance for pregnant and lactating

mothers, infants, school going children and senior citizens. NFSA, as it

was passed in the Indian parliament in 2013 statesthat its objective isto

“… provide for food and nutritional security in human life cycle approach,

by ensuring access to adequate quantity of quality food at affordable

prices to people to live a life with dignity and for matters connected

therewith or incidental thereto”. NFSA furtheraims to expand the cover-

age of PDS to about two-thirds of India’s population—75%and50%of

the rural and urban population respectively—under PDS. Eligible

monthly entitlements include 5kg of grains per person at a highly sub-

sidized prices of Rs. 3/2/1 per kg for rice/wheat/coarse grains. The

identied poorest of the poor households, however, will continue to

receive 35 kg of food grains per month. Other nutritional assistance

include cooked meals to mothers during pregnancy and six months after

REIMAGINING SAFETY NET PROGRAMS

142

childbirth in addition to maternity benet of not less than Rs. 6,000 (100

USD). For children up to 14years of age, NFSA entitles nutritious meals.

In cases where entitled food grains or meals are unable to be provided,

the beneciaries are entitled to a food security allowance. We will discuss

PDS, ICDS and MDMS here in detail and their relevance for food and

nutritional security.

PDS was introduced as a food security mechanism during the World

War period under colonial rule. The original idea being that the rural areas

have greater access to food while urban residents need food provisions

during times of scarcity. The PDS expanded its rural presence onlyin the

1970s as the Green Revolution led to food surpluses. In a bid to incentiv-

ize farmers to produce more, the government announced a minimum sup-

port price (MSP). Farmers were free to sell to the government at the MSP

which remained lower than the market prices and provided a oor price.

To ensure an outlet for this huge procurement operation, the government

opened more rural Fair Price Shops (FPS) which led to the expansion of

PDS.At the same time, inefciencies like leakages and corruption were

rampant in this procurement-stocking-distribution system, given its huge

size. Initially designed as a universal scheme, PDS was curtailed to a tar-

geted program in 1997 as India adopted a structural adjustment program

to bring down the subsidies. Various state governments, in the meanwhile,

continued to have a non-targeted PDS in pursuance of a more populist

political regime. PDS has been criticized as being poorly designed, leaky,

beset with targeting errors, corruption-prone and a drain on the scal

capacity of the government. The most essential challenge in a targeted

program is how to identify beneciaries. India has failed abysmally when it

comes to the targeting of its welfare programs for the poor (Jha &

Ramaswami, 2010; Kotwal & Ramaswami, 2014). For various schemes,

the government of India classies households as poor and non-poor.

Recent estimates provided in the Economic Survey of India 2017–18 indi-

cate that targeting errors continue to persist (Government of India, 2018).

Only 28% in the bottom 40% of the household access PDS, while 36% of

the benets accrue to the non-poor (Table6.2).

Identication of poor is beset with conceptual and administrative chal-

lenges. The criteria for identifying poor household are often vague, and

the information on those indicators are hard to collect (Hirway, 2003). At

the lowest level of administration, such as villages and urban local bodies,

political favoritism often leads to poor being left out of the schemes meant

for them (Panda, 2015). In a targeted program like PDS, identication of

P. PINGALI ET AL.

143

Table 6.2 Targeting of

PDS and MGNREGS

(in %)

PDS MGNREGA

Non-beneciaries 40 65

Among the beneciaries

Leakages 36 20

Benets to non-poor 36 43

Benets to the bottom 40% 28 37

Source: Economic Survey 2017–18, p.200, Fig. A5

beneciaries has been the major issue. Many states—for example, Tamil

Nadu, Himachal Pradesh, Chhattisgarh and parts of Odisha—have there-

fore made PDS entitlements universal, thereby obviating the need for

targeting. These states have performed better in take-up rates and had

lower leakages after universalization (Drèze, Himanshu, Khera, & Sen,

2015). The recent expansion of the PDS has come about through an

expansion of the number of beneciaries through a more “inclusive

approach” as the exclusion of the non-poor often gets less political sup-

port and suffers the risk of being sabotaged by the politically powerful

non-poor groups. Despite the success of universal PDS in many states,

most of the states continue having a targeted PDS.The share of targeted

beneciaries, however, is expected to expand across most of the poorer

regions under the NFSA.

ICDS began as an experiment aimed at nutritional assistance to preg-

nant and lactating mothers and children under six years of age in 1975.

In those days, child mortality in India was very high, while health and

community-based systems were hardly present. Mid-term appraisal of the

11th 5-year plan (2007–12) pointed to serious underperformance of the

ICDS and its ineffectiveness in reducing undernutrition among children.

ICDS was criticized for its poor design and implementation. During the

last decade, however, ICDS has remarkably improved its performance

driven by advocacy effortsby civil society coalitions calling for “nutrition

to be a priority on the national agenda” (Balarajan & Reich, 2016).

Advocacy by civil society groups along with active interventions by the

Supreme Court of India brought about signicant changes in the ICDS

design and implementation. Coverage of ICDS was expanded, provisions

were made universal from a targeted one, and the provision of hot

cooked meals was introduced. Concerns about ICDS however still exist

which include inadequate infrastructure, issues of unskilled and under-

paid staff and political will for its implementation (N.Rao & Kaul, 2018).

REIMAGINING SAFETY NET PROGRAMS

144

Political will and therefore ICDS performance again vary by states.

Relatively limited focus only on children between 0 and 3years of age

has also been questioned (Drèze & Khera, 2017).

While ICDS was designed to address the issue of early childhood devel-

opment and maternal nutrition supplementation, the MDMS is a school

feeding program which aimed at increasing enrolment and reducing “class-

room hunger” among primary school students. MDMS is the biggest school

lunch program in the world (Khera, 2006). It was introduced in 1995 as the

“National Programme for Nutritional Support for Primary Education”.

MDMS wasn’t much of a success until 2001 when its coverage was expanded

to all the states of India. In the initial phase, not all schools had the right

infrastructure in place to provide “cooked meals”, and “dry ration” was

mostly distributed. Since 2001, active intervention by the Supreme Court

of India and local civil society organizations have led to mandatory provi-

sions of cooked meals to all primary school children. MDMS now provides

meals consisting of 300calories and 8–12grams of protein daily to all the

children attending primary schools.

MDMS, as it was conceived, did manage to increase school enrolment

rates; however its impact on child nutrition has been a concern as food

supplementation and its quality was low. Initially, MDMS suffered from

the availability of infrastructure and nancial resources. With improve-

ments in those aspects, concernsnow exist around the quality of nutrition

supplementations. Nutrient content of the school meals is low in compari-

son to the daily requirements for protein, fat, iron and other micronutri-

ents. Often these schemes become a tool for promoting a sectarian agenda,

such as the prohibition of eggs from the meals. Some states have banned

eggs under MDMS, promoting vegetarianism.

By depriving essential

nutrients at early stages of life, politicians take to propagating cultural and

religious dogmatism. The other issues which require immediate attention

to make MDMS more effective is adequate infrastructure at schools, suf-

cient and trained staff, better nutrient composition of the food and ade-

quate accountability mechanisms in place (Khera, 2013). There are also

glaring food safety concerns as MDMS has often been in the news related

to issues of hygiene with some cases leading to deaths.

http://www.hufngtonpost.in/2015/06/02/how-politics-and-religious-dogma-deny-

eggs-to-indias-severely-m/

http://www.bbc.com/news/world-asia-india-23342003

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6.4.1 Impact ofFood-based Safety Net Programs onNutrition

Evidence of the effects of these food-based safety nets on nutrition in

India remains unclear (Pingali & Rao, 2016). It is limited by lack of avail-

ability of longitudinal data, choice of metrics for evaluating their impact,

the appropriate period for analysis and the different geographical contexts.

As a measure of nutrition, studies have mostly focused on the intermedi-

ated indicators of nutrition such as food intake and dietary diversity. The

impact of food safety nets could be divided into two periods—before and

after 2005 when these programs were revived by the government. Studies

which used data before 2005 nd no effect of PDS on nutrition (Kaushal

& Muchomba, 2015; Kochar, 2005; Tarozzi, 2005). Recent empirical

studies, however, do provide evidence of a positive effect of PDS, on

nutrient intake as well as dietary diversity (Kishore & Chakrabarti, 2015;

Krishnamurthy, Pathania, & Tandon, 2017; Rahman, 2016). Similarly,

reforms in the functioning of ICDS have led to a signicant impact in

reducing malnutrition. Jain (2015) nds that children receiving supple-

mentary meals are taller compared to others—the effect being signicantly

higher for the girl child. Even in eastern states of India, where governance

and performance of safety nets are reportedly poor (ibid), Mittal and

Meenakshi (2015) nd a decline in the prevalence of undernutrition

among children who beneted from ICDS. MDMS, too, has had a posi-

tive impact on nutrition, especially during times of economic distress.

Access to MDMS increases daily intake of essential macronutrients—calo-

ries and protein—among school children (Afridi, 2010). In another study,

Singh, Park, and Dercon (2013) underscore the role of MDMS as a safety

net for children who faced droughts in early years of life. They nd that

despite economic shocks, there was an improvement in child anthropo-

metric measures for children with access to MDMS.

6.4.2 Calorie-based Food Assistance

One of the reasons for the failings of food-based safety net programs in

India has been its excessive focus on calorie-based supplementation. By

focusing solely on the availability and access to calories, extant food policy

has been proven to be a detriment to the nutritional challenge. The rising

prevalence of obesity and the persistence of micronutrient deciencies

now comprise a signicant share of the “triple burden of malnutrition”

(Meenakshi, 2016). Calorie assistance programs, unfortunately, are not

REIMAGINING SAFETY NET PROGRAMS

146

designed to deal with these emerging public health challenges. With sur-

plus production and food assistance programs, we have adequate mecha-

nisms in place to ensure that households have sufcient food to eat;

however, ensuring food security may not translate into better nutrition.

India’s food policy has missed this nuanced aspect of nutrition. From the

perspective of human rights and ethics, the recognition of the right to

food and enactment of NFSA has its heart at the right place, but it fails to

consider the imperatives of a dynamic food system, which reects chang-

ing consumption preferences and nutritional needs (de Brauw &

Suryanarayana, 2015). By explicitly focusing on a minimum calorie ade-

quacy idea, NFSA neglects crucial aspects of nutritional security such as

dietary diversity and hidden hunger due to micronutrient deciency. This

leads to a pressing question—how should we design our food assistance

programs to address malnutrition in its multiple dimensions?

6.5 non-food-baSed Safety netS

Along with the food-based safety nets and employment guarantee schemes

in rural areas, MGNREGS provides the basic existing architecture to

India’s social welfare regime. MGNREGS is a national-level public works

program, on the lines of the Maharashtra Employment Guarantee Act of

1977. Underthe MGNREGS, all adults in a rural household are guaran-

teed 100 days of unskilled manual work. MGNREGS is the largest social

security scheme in the world which entitles the citizens to“right to work”,

and hence it is obligatory upon the government to provide work when

demanded. The benets of public works program as a safety net lies in the

aspects of self-selection and creation of durable assets. Those who demand

work are engaged in building durable assets like roads, canals, ponds and

wells across rural India. This would address the issues of rural livelihood as

well as infrastructure at the same time. Under the scheme, a minimum

wage-material ratio of 60:40 is to be maintained.

MGNREGS was

envisaged as a program to generate employment as well as create “durable

assets” which would help agriculture through creating rural infrastructure.

Its performance in creating assets despite incurring high costs has led crit-

ics to refer to it as “doles for creating holes”. On the operational side of it,

MGNREGS, like other safety net programs alsosuffers from inefciencies

Wage here represents the amount in total paid as wages to the workers. The rest is the

amount spent on materials for the public works program.

P. PINGALI ET AL.

147

such as corruption, delayed payment or lower wages to workers as a result

of local political coalitions, for example, between post ofce ofcials and

panchayat members, which often goes unnoticed.

However, income earned from MGNREGS has proved to be nutri-

tion enhancing. Using a panel data on households, Ravi and Engler

(2015) nd that participation in MGNREGS had a signicant impact in

increasing food expenditures and a signicant reduction in the number

of meals foregone by households. Similarly, Liu and Deininger (2010)

nd a positive impact of MGNREGS on consumption expenditure, asset

accumulation as well as nutrient intake: calorie and protein. Wages play

an important role in the income pathway to nutrition. A study by Azam

(2012) shows how MGNREGS had a positive effect on agricultural wages.

Contributing to the human capital, participation in the MGNREGS by

women had a positive effect on the educational outcomes of children

(Afridi, Mukhopadhyay, & Sahoo, 2016).

6.6 PolItIcal economy oftheSafety net

Safety nets, which Indian policymakers have designed and we discuss here

can be classied as benets which help in “consumption smoothing”

rather than “mean shifting”, thereby addressing vulnerability to poverty

rather than its chronic manifestation (Devereux, 2002). Chronic poverty

is addressed if there is an increase in factor productivity (of labor, land and

capital). How much India’s current and emerging safety net architecture

would be able to address factor productivity is the policy question.

Programs like PDS, ICDS, MDMS or pension schemes are relevant for

reducing vulnerability especially to kids and elderly who cannot generate

independent livelihoods of their own. Programs focused on kids have

larger implications for human capital and future productivity. Public works

and food assistance programs, therefore, have been more hotly contested

regarding their design to achieve the desired outcome.

Part of the problem lies in the fact that safety nets are enmeshed in politi-

cal incentives which inhibit reforms in the program design. PDS reforms are

essentially linked to the government’s farm support policies. Rice and wheat

provided through PDS are procured through a system of pre-announced

minimum support prices (MSP) which ensures a remunerative price to

MGNREGS payments are made through post ofces, and the panchayat leader is the

sanctioning authority as the scheme is decentralized to the lowest tier of government

administration.

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148

farmers. Initial expansion of PDS during the 1970s largelyleveragedon the

productivity growth that resulted from Green Revolution technologies. To

promote agricultural production, the government incentivized food pro-

duction through minimum support price (MSP) and amassed massive

amounts of grain. These food grains found an outlet through PDS into the

hands of poor consumers. Agricultural growth in the Indo-Gangetic

plains—which beneted from the Green Revolution—led to a powerful

political lobby of agriculturists whose interests are aligned with greater

farm procurement of staple grains, which were distributed through the

PDS. The interlocked farmer-consumer incentive system has made it

politically challenging to introduce reforms in the PDS.While supporting

agriculture makes for sound economics and politics, the procurement-

stocking-distribution model in the food system has led to perverse incen-

tives for the farmers. Procurement through MSP mainly takes place for rice

and wheat, which disincentivizes the production of other crops. Evidence

suggest that rice-wheat dominance has led to the displacement of tradition-

ally grown nutritious crops like coarse cereals and pulses. Such lopsided

agricultural production patterns not only affect variety and essential nutri-

ents in the food system but also undermine biodiversity.

It has been widely established that the increase in expenditure on

safety nets of late has been attributed to the greater role of state govern-

ments primarily driven by three factors: history of political legacy, social

coalitions and resultant political party competition, and political leaders’

inuence in strengthening state capacity for program delivery (Deshpande,

Kailash, & Tillin, 2017). Since the 1990s, there has been a greater role

of the regional parties in central politics enabling the state governments

to have a greater say in the policy space (Kennedy, 2017). The role of

politics in enabling a more egalitarian and better designed safety nets in

the southern states of India has been there for long, but sub-national

politics has gained greater traction of late. For example, while policy leg-

acies could explain improved safety nets in southern states of India like

Kerala and Tamil Nadu, reforms in Odisha and Chhattisgarh are a result

of political populism espousing egalitarian concerns of the state party

leaders. Greater inuence of regional political settlements and their inu-

ence over safety nets could be a function of the demands of democracy

and electoral accountability. The inuence of electoral politics on the

design of the safety nets cannot be denied. Negotiating the needs of an

evolving food system in the political space is something food policy has

always grappled with. Policy interventions which focus on nutrition may

be considered less attractive to gain electoral patronage, while direct food

P. PINGALI ET AL.

149

assistance, which is more tangible and more immediate, benets the vot-

ers. Moving the focus to nutritional improvements—the distal outcome

of food assistance—hence gets ignored. The consumer interests, there-

fore, get more enmeshed with the producer incentives. Innovations in

food delivery mechanisms are becoming a more distant proposition.

6.7 the PoSSIble future ofSafety netS InIndIa

Regardless of these challenges, it is an accepted fact that safety nets have

been instrumental in alleviating poverty and improving the lives of mil-

lions across the world, and they will be a critical tool to ght poverty and

better developmental outcomes in India too.

6.7.1 Citizenship Rights or Hand-Outs?

Envisaging the future of safety nets in India needs a reection on the gen-

esis of these programs and the recent reforms. There are two paradigms of

social protection—citizenship and charity (Kidd, 2017). Under the citi-

zenship paradigm, redistribution is considered as a public good and gov-

ernments invest heavily in safety nets. The charity paradigm, however,

looks to support the poor with hand-outs and has relatively lower spending

on the social assistance programs. The developed world follows the citi-

zenship paradigm, while lower developed countries follow the charity

paradigm. With the strengthening of democracy and economic growth,

even the low and middle-income countries like India are moving towards

a citizenship paradigm based safety net, which gives the citizen a sense of

entitlement (Daigneault, 2014).

India’s safety net paradigm—based upon rights-based approach—

exhibits a similar pattern. The language of social citizenship rights through

safety nets also reduces the likelihood of class-based conict (Jayal, 2013).

There could be multiple other hypotheses for India to move towards a

citizenship-based paradigm of safety nets (Kapur & Nangia, 2015).

Theories of “social citizenship” in democracies initially entail civil rights

(such as freedom of speech, faith and others), gradually moving to politi-

cal rights, and nally the social rights which is the driver of welfare state

expansion. The “compensation hypothesis” of Karl Polanyi states that

expansion of welfare state takes place as economic insecurities increase

with the spread of the free market and economic integration across coun-

tries as a result of globalization. The third hypothesis emerges from the

REIMAGINING SAFETY NET PROGRAMS

150

power resources theory, according to which emergence of welfare regimes

reect class-related distribution and strengthening of partisan politics as

reected in organized demand by labor and other disadvantaged groups

for protection. These hypotheses, however, are merely suggestive of the

possible factors behind the emerging social welfare narrative in India with

no conclusive evidence (ibid). Regardless of the exact motivation, it can-

not be denied that the current safety net architecture in India is a combi-

nation of democratic needs, competitive politics, rising economic insecurity

and genuine concerns for the poor. More importantly, safety nets in the

countryis going to stay, and expandfurther. The direction and design of

the sameisthe issue of debate.

6.7.2 Newer Forms ofSafety Nets: Health Insurance

With the right to food and work formally enshrined in the country’s consti-

tution, health insurance under the larger ambit of the Ayushman Bharat

program is now emerging as the newer form of safety net, albeit partly pri-

vate sector based, as a departure from the current solely publicly nanced

programs. In the 2018 budget, the government of India launched a new

National Health Protection Scheme (NHPS) aiming to cover almost half of

the population with a yearly family insurance cover of Rs. 5 lakhs. The ante-

cedent of NHPS was the Rashtriya Swasthya Bima Yojana (RSBY), a health

insurance program targeted specically at the families falling below the pov-

erty line, introduced in 2008. Under RSBY, beneciaries (ve members of

the family which includes the head of household, spouse and up to three

dependents) are entitled to hospitalization coverage up to Rs. 30,000

(roughly equivalent to 500 USD) for illnesses which require hospitalization.

RSBY is implemented through insurance companies and provides the ben-

eciaries an option of choosing between public and private hospitals.

Insurance premium subsidies (Rs. 750 equivalent to 12 USD annually) are

shared by the Union and State governments on a 3:1 basis. The beneciary

pays a sum of Rs. 30 (0.5 USD) every year as a registration/renewal fee.

State governments have introduced their versions of health insurance pro-

grams like Yeshasvini in Karnataka and Aarogyasri in Andhra Pradesh.

NHPS fundamentally differs from RSBY in the sense that the former is an

entitlement; all eligible households are covered once the scheme is opera-

tionalized. NHPS is a part of the Ayushman Bharat—healthy and prosper-

ous India—a program which also includes setting up of 1.5 lakh healthcare

centers. These centers would provide for comprehensive healthcare facilities

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for maternal and child health services in addition to non-communicable

diseases, free essential drugs and diagnostic services. The overarching objec-

tive of this enhances productivity and well- being and enables a supporting

platform for unanticipated wage loss and impoverishment.

Health insurance is a necessary inclusion to the set of safety nets in

India since health shocks are one of the major causes of households falling

into poverty in India (Krishna, 2011). In contrast to other safety nets

which attempt to bring households out of poverty, subsidized health

insurance schemes are useful protection against catastrophic health expen-

ditures and hence lower the probability of falling into poverty.

6.7.3 Stage ofStructural Transformation andUrbanization

ofSafety Nets

Urban population is expected to increase. While urban poverty in India is

relatively lower than rural poverty, greater urban population increase in

the future would lead to “urbanization of poverty” (Ravallion, 2002).

Urban poverty has its peculiar features which include income volatility,

informality in jobs and living conditions, poor social services and less

cohesive community and social networks (Gentilini, 2015). The urban

poor often live inlocations with the poor quality of hygiene and exposure

to infectious disease environment. Given a robust link between access to

clean water and sanitation facilities with nutrition, the urban poor are at

high levels of risk of malnutrition. Lack of adequate social protection

schemes in urban areas further compound these problems. Urban resi-

dents, being net consumers of food, are also more exposed to uctuations

in prices. Informality and a high degree of inequality have been a feature

of India’s urbanization which makes urban poor highly vulnerable in the

absence of appropriate social support programs (Roy, 2009).

Inthe future, the role of urban safety nets would further increase in

importance. Currently, safety nets have a greater rural presence. Increase

in the rate of urban poverty and the associated nutritional impacts have

often been overlooked in the policy space. While poverty may not be

directly related to food or nutritional security, there is a denite link

between the two (Maitra & Rao, 2015). Safety nets also needto be attuned

to the greater rates of future migration to urban areas. Currently, the enti-

tlement of migrants to the various social security benets which are not

easily transferable which inhibits inter-state labor mobility and hence

structural transformation (Kone, Liu, Mattoo, Ozden, & Sharma, 2016).

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6.7.4 The Question ofCash Transfers

Shouldsafety nets should be replaced with cash transfers or Direct Benet

Transfer (DBT), as referred to in India, in place of in-kind subsidies? This

question has generated a lot of academic as well policy debates in the recent

past. DBT in the form of pensions—for elderly, widows and disabled—and

MGNREGA payment has attained reasonable success in some states of

India. The debate has largely been around PDS.Cash transfers with a lower

transaction cost have been proposed as an alternative to the costly and inef-

cient PDS.Cash, in the hands of beneciaries, also enables them the choice

of their consumption basket. One can argue thatPDS is essentially a cash

transfer because the marginal propensity of cereal consumption from the

PDS subsidy is close to zero(Balasubramanian,2015). The case for cash

transfers is further strengthened by a randomized controlled experiment by

Gangopadhyay, Lensink, and Yadav (2015) in Delhi where they nd that

replacing in-kind food subsidy with cash transfers of equivalent amount does

not affect food security. Khera (2014) questions gross generalization of such

ndings and argues that “one-size-ts-all” approach may not work, given

wide regional variation in governance, infrastructure and poverty levels.

There have been multiple arguments in-kind transfersto continue. In

India, where poverty levels are high and there is widespread inequality,

underdeveloped credit and factor markets, paternalism being a cultural

norm, “leaving people to their own devices” through cash transfers may

not be a smart policy if the idea is to ensure sufcient protection against

food insecurity. Khera (2014) nds that poorer households prefer cash

when the PDS works poorly; however, in-kind transfers are preferred

when PDS is effective. Consumer preferences also differ by gender.

Women are more averse towards cash transfer programs because of

restricted physical mobility and challenges of handling ofcial banking

procedures (ibid). While these are cultural factors, critics of cash transfers

have alsoargued that cash could be diverted into other non-food expen-

ditures. Intra-household resource allocation depends upon patriarchal

norms which could lower food access for women and children, undermin-

ing overall nutrition. The other important thing to note is the potential

benet of moving to a cash transfer when in-kind transfers have a similar

effect on food consumption. Shrinivas, Baylis, Crost, and Pingali (2018)

show that almost 83% of the PDS subsidy is spent on food. They also pro-

vide suggestive evidence that PDS could have a higher effect on the con-

sumption of nutritious food than an income increase of equivalent amount.

P. PINGALI ET AL.

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The success of cash transfers criticallyrelies upon the availability of local

markets. Most poor in India live in remote parts and their market acces-

sibility is limited and raisesconcerns oflocal food availability in the absence

of PDS.Cash transfers require other nancial infrastructures such as the

presence of banks and post ofces. India lacks such rural infrastructure,

without which a sudden move towards cash could increase distress, at least

in the short term. Open market prices exhibit cyclic uctuations. If cash

transfers are not indexed to ination, the benets are likely to beeroded.

While price indexation may seem a trivial exercise, its operationalization

against local price increase, and the awareness among beneciaries of their

entitlement every month is often much discussed.

A signicant concern when moving towards a DBT is what does the

government do with the huge amount of food grains which the government

procures from the farmers to incentivize production? Without an in-kind

transfer through PDS, food procurement would only lead to further

increase in theenormous quantities of rice and wheat which India already

has a huge stock lying in its godowns. This is a major political economy

question which is often not raised while discussing the move to cash trans-

fers. Some proponents have mentioned disbanding food procurement

completely, but the policy direction seems contrary to that. The last few

years have seen greater food procurement than earlier. The political rheto-

ric of the time has seen multiple more incentives for the farmer to sell rice

and wheat to the government as evident through cases in Madhya Pradesh,

Chhattisgarh, Bihar, Uttar Pradesh and Odisha. Government has provided

mixed signalson this issue. While it has opened up a discussion aroundmov-

ing towards DBT, ithas beenencouraging food procurementtoo.

6.7.5 Universal Basic Income

Given the difcult economics of thesafety nets, global interest in the idea

of a Universal Basic Income (UBI) has reached Indian shores too.

Narratives around replacing the existing safety nets with a UBI have

emerged as one of the most engaging debates in recent times. While aca-

demics have been talking about it for some time, Economic Survey in

2017 introduces its possibility in the policy debate by considering UBI as

“…a powerful idea whose time even if not ripe for implementation is ripe

for serious discussion”. The survey talks about the potentials of UBI

centered on the ideals of “universality, unconditionality, and agency”

to “wipe[ing] every tear from every eye”. Arvind Subramanian, who is

REIMAGINING SAFETY NET PROGRAMS

154

credited with the Economic Survey, is reported to have said that UBI

could be leveraged for the “liberation of the cognitive bandwidth” through

the provision of a basic minimum level of assistance to the neediest.

While

the idea of UBI is appealing because it provides freedom—of choosing

suitable work and consuming items of choice—operationalizing the same

could be a mammoth challenge. The government hopes to leverage the

advancements in technology to make this a possibility. The central govern-

ment has set up the Unique Identication Authority of India (UIDAI)

which collects and maintains a database on biometric and demographic

identiers of all residents and issues a 12-digit unique identity number

called Aadhaar.

Clubbing Aadhaar with the nancial inclusion program,

known as the Jan-Dhan Yojana, under which every citizen would have a

bank account, and the expansion of the coverage of mobile phones—pop-

ularly called JAM (Jan Dhan-Aadhaar-Mobile) trinity—the government

aims to build up a technology-based architecture to make this a reality.

6.7.6 Use ofTechnology forEfcient Safety Nets

Advancements in the information and communication technologies (ICTs)

have denitelyrevolutionized the ow and timeliness of information across

multiple nodes and hence offer a brilliant option to curb leakages and local

elite capture—often attributed to poor performance—in the implementa-

tion of safety nets. ICT could ensure accountability between the policymak-

ers, service providers, and citizens. JAM trinity is expected to be a game

changer regarding how social security programs operate in India. By linking

Aadhaar (biometric identication) of the beneciaries with their Jan Dhan

bank accounts and mobile phones, funds could be directly transferred to

the beneciaries into their bank accounts. This cuts out the intermediaries

in the citizen-state interactions. According to the Economic Survey, this

would save around about Rs. 3.78 lakh crore (6,000 billion USD) or 4.2%

of India’s GDP, which is currently spent on key subsidies.

While the idea

is compelling and is something which the government is seriously consider-

ing, ground-level realities produce a sobering picture of the usefulness of

https://www.cgdev.org/blog/reducing-poverty-india-with-power-digital-payments-UBI

Aadhaar is the world’s largest national identication number project.

The estimate also includes subsidies on fertilizers, LPG and other items which are not

discussed here.

P. PINGALI ET AL.

155

ICT, at least for now. It has often been found that the biometrics of many

beneciaries, especially among the poorest of the population, is not eas-

ilyregisteredon the scanningdevices. Lack of electricity and banking infra-

structure in some of the remote parts of the country make it cumbersome

for the people to access benets. On account of technological glitches,

wage payments are often delayed, irregular or even rejected at times.

Robust ICT systems take time and the required infrastructure needs

sophistication and appropriate database security systems. While ICT is

increasingly being used for program delivery and effectively so in many

places, when would be the right time for India to introduce a cash transfer

scheme or UBI, leveraging the available technology and identication sys-

tem, only time would tell.

6.7.7 Linkage andSynergies withAgriculture

Critics of the narrowly targeted programs have argued that often the enti-

tlements are mere “…token handouts to make harsh neo-liberal reforms

politically palatable, or to avoid taking real actions to redress the structural

causes of poverty and vulnerability” (Devereux, 2002). They highlight the

fact that market-based reforms in the developing world left many behind

increasing inequality. Social security benets in some way ameliorate those

impacts for the poor. These necessary interventions do not address the

structural roots of poverty. We would like to arguethat greater investment

in agriculture—private and public—and the right incentives for producers

should be the way ahead.

A major share of India’s population lives in rural areas and is primarily

engaged in agriculture-based livelihoods. For India’s nutritional security,

the challenge lies in ensuring that social security interventions are effective

at scale, which requires coordinated investments across sectors to address

deep-rooted causes of malnutrition (Kadiyala, Joshi, Mahendra Dev,

Nandakumar, & Vyas, 2012). Agriculture as the central focus of tackling

nutrition has been widely recognized in the academic as well as policy

circles (Tirivayi, Knowles, & Davis, 2016). Safety nets, food insecurity and

poverty, and agriculture are inextricably linked in the rural economy, and

these synergies make for a more resilient food system. Safety nets could be

used to increase productive investments in agriculture leading to overall

economic growth through multiple pathways (Hoddinott, 2008). First,

safety nets help in generating household assets. Second, they also protect

against assets when during times of economic shocks. Third, acting as a

REIMAGINING SAFETY NET PROGRAMS

156

risk coping mechanism, they allow households to use their existing

resources better. Fourth, by supporting the poor, safety nets contribute to

a reduction in inequality and promote growth.

The agricultural sector has been found to more effective in reducing

extreme poverty, while the non-agricultural sector has been proven more

benecial in reducing less severe poverty (Christiaensen, Demery, & Kuhl,

2011). Hence, pro-poor policies call for greater investments in agricul-

tural development. Examining trends in poverty and nutrition for 29

countries during the period of economic transformation, Webb and Block

(2012) nd that the structural transformation leads to increase in total

income and poverty reduction faster if there is strong support for agricul-

ture. Reduction in poverty, in turn, leads to better nutrition, especially in

rural areas. This transformation, however, brings with it the risks associ-

ated with the greater prevalence of obesity and non-communicable chronic

diseases. Hence, to avoid these negative consequences, the transition

needs careful management through a suitable design of support for small-

holder agriculture along with the appropriate health interventions.

Existing evidence from Latin America and Africa suggests so. In Latin

America, conditional cash transfers have proved to be benecial in increas-

ing land use, farm implements and livestock ownership. Similarly, in Africa,

cash transfer programs have led to greaterinput use and productive invest-

ments in agriculture.

There are enough avenues for greater synergies between the safety

net programs and agriculture in India. Rural asset creation through

MGNREGS could be leveraged to revitalize agriculture. Rain-fed

agriculture, where irrigation facilities are fewer, could be suitable to grow

coarse grains and pulses, which could be provided through the PDS.It

would be a useful step towards the larger goal of nutritional security with

more diversied diets as well as production systems. Food can be pro-

duced locally for MDMS, ICDS or PDS, which would not only boost the

local economy but would also adhere to the local tastes.

6.7.8 Government Investment inPublic Goods

According to the FAO (2015), reliance on social protection alone to

address hunger and rural poverty would be a aw. Safety nets need to be

combined with sufcient public and private investments in agriculture

along with rural developmental programs to ensure inclusive and sustain-

able economic growth in addressing the cycle of rural poverty. Illustrations

P. PINGALI ET AL.

157

from across the globe also throw up a contrasting result. While countries

in East Asia, the Pacic and Southeast Asia have been able to reduce the

prevalence of hunger and poverty successfully through safety nets, South

Asia and sub-Saharan Africa have shown much slower progress. Social

safety nets are crucial for smoothening consumption across the year, avoid-

ing the sale of assets or retaining children in school during times of eco-

nomic distress. However, other important interventions, such as irrigation,

markets, rural infrastructure, promoting agricultural extension services,

and facilities for crop and weather insurance play a huge role in reducing

the vulnerability of farmers. Some of these programs are not very lucrative

from the point of politicians as they do not bring in immediate gains and

are less populist.

One must understand that emergence of the social safety architecture

in the last two decades is associated with some of the major macro-

transformations in the Indian economy as well as a polity. First, the greater

intensity of electoral competition has led the emergence of newer political

settlements across various interest groups with clearer identication of

constituencies and the desired push towards gaining their electoral sup-

port. Second, economic growth since the 1990s has increased the govern-

ment’s scal capacity to nance greater investment on safety nets. Third,

the scal capacity has increased, the government’s administrative capacity,

especially at the local level may have weakened which has led to worsening

of the quality of public goods such as schools and hospitals. Safety nets

become more alluring to the voters, especially when the quality of public

services is on the wane. Elected representatives, on the other hand, use

these transfers as an incentive to bypass issues around poor provisioning of

public infrastructure.

While India has been effectively trying to weave in a safety net for the

poor, the provision of essential public amenities or public goods such as

access to clean water, sanitation, electricity, roads and so on hasn’t got

the desired attention. Kapur and Nangia (2015) attribute this to the

government’s weak administrative capacity. They argue that by prioritiz-

ing safety nets over the creation of durable public goods, India has taken

the path followed by many of the Latin American countries, which took

to social security spending as a way to reduce poverty. Comparative

analysis, however, suggests that in the long run welfare outcomes were

better among the East Asian countries which spent more on creating

better provisioning of public infrastructure while being a minimalist

welfare state.

REIMAGINING SAFETY NET PROGRAMS

158

Nutrition as a public good, too, has never been a priority development

agenda until very recent times. Recent improvements in the performance

of food-based safety can be attributed to strong advocacy groups and judi-

cial activism in the country which necessitated state intervention. The real-

ization that economic growth is no panacea to improved nutrition and the

basic human right of food entitlement has been the bedrock of this move-

ment. This led to powerful rights-based movement championed by the

“right to food” initiative which has brought about much expediency to

the policy (Gillespie, Haddad, Mannar, Menon, & Nisbett, 2013). Judicial

interventions by the Supreme Court of India helped advance the right to

food of specic food-deprived populations and signicantly contributed to

reducing hunger. This was also helped by the center-left alliance which

supported the cause of social welfare programs with the expansion and

universalization of many of these schemes (Balarajan & Reich, 2016).

6.8 concluSIon

The current set of safety nets in India—ICDS, MGNREGA, PDS and

MDMS—provide income and nutritional assistance during different stages

of the life cycle of an individual. The essential idea behind these interven-

tions is to enhance individual capabilities and welfare through more equi-

table access to food and income. Individual capabilities are increased

through a reduction in malnutrition, improved labor productivity, better

human capital and reduction in overall inequality of opportunity. It has

taken almost 70years since independence to create a basic safety net archi-

tecture, which is intrinsically linked to the economy’s structural

transformation. Economic growth has denitely played a role in the cre-

ation of a basic safety net platform. Improvements in the coverage of safety

nets during the last 25years have beneted from the quadrupling of pub-

lic revenue which has eased out the resource barrier and made its imple-

mentation more affordable (Drèze & Khera, 2017). On the demand side,

there have been multiple reasons for this expansion. Increase in interper-

sonal inequality along with economic growth has led to rising demand for

expansion in safety net provisions. Citizens in India are now much more

empowered, and civil society plays an active role in channelizing the con-

cerns leading to a citizenship paradigm for safety nets. Public policy

towards safety nets has also been inuenced by electoral concerns.

Expansion and improvement in many of these safety net programs have

also been inuenced by the electoral arithmetic of mobilizing voter

P. PINGALI ET AL.

159

support leveraging upon the populistic nature of these schemes.

Universalization of these schemes, rather than targeted poverty reduction

interventions, suggests a rise in the support by the political elites.

Safety nets, however, have been an essential part of the poverty reduc-

tion policies contributing to risk management and vulnerability reduction

for a large section of the population. While these interventions have largely

been laudable, looking into the future one does need to think about their

future role. These policies over time should become more transforma-

tional rather than just vulnerability reducing. Structural roots of poverty

need to be addressed through combining safety nets with structural

reforms and long-term interventions with the aim of increasing human

capabilities and addressing structural poverty through that. Synergies

between agriculture and safety nets, therefore, become essential. Public

work and life-cycle-based food assistance programs need to be dovetailed

into the local agrarian economy.

The future of safety nets has to take into account the changing nature

of the economic structure, demographic changing and future livelihood

patterns. Urbanization, especially, poses a challenge as well as opportunity

in restructuring the safety net architecture. Current policies which mostly

address rural poverty do not consider the fact that India would be more

urban than rural by 2050. With rising urbanization, urban informality and

unemployment in urban areas, especially educated unemployment, raise

important challenges for the food systems going ahead. Movement of

labor from rural to urban areas is further going to increase the share of net

consumers who need to be shielded away from rising food prices.

Observing the nature of transition in a developed country like the United

States offers useful clues. In the United States, many of the workers make

a living doing multiple odd jobs comprising what they call as a part of gig

economies. The Government Accountability Ofce classied about 31% of

the workforce in America as “contingent” workers. The rise in informality

in the Indian urban sector is not very different, and it may not be a stretch

to imagine the condition to be far worse in India where labor regulations

are hardly effective.

The issue of safety net design also needs serious considerations. The

current system does suffer from problems of corruption and leakages.

ICTs could be utilized better to curb these inefciencies. Research has

shown its benets in improving program effectiveness for MGNREGA

and PDS.Identication of beneciaries through Aadhaar hasbolstered

the casefor cash transfers,yet itis important however to recognize the use

REIMAGINING SAFETY NET PROGRAMS

160

they could serve without compromising identity security. Many of the

loopholes exist regarding biometric authentication using Aadhaar which

often becomes a hindrance rather than benets the poor. These inefcien-

cies should be ironed out.

Innovations in the food-based safety nets are seriously limited by the

modalities of grain procurement structure whichincentivizes only staples,

potentially crowding out more nutritive food products. This not only is

disadvantageous for the consumers through restricting choice, but also

undermines the idea of a nutrition-sensitive food production system. It is

therefore essential to break the staple grain procurement-storage-

distribution interlocked channel. These interlocked incentives are however

deeply mired in India’s rural political economy which is a major obstacle

to food system diversication.

We would also like to highlight here that Indian public policy has often

undermined the provision of essential public goods and services which are

complimentary to safety nets. Public good provisioning has been ignored

as expenditure on safety nets have got priority. The poor quality of infra-

structure—urban as well rural—is a testimony to that. It has been well

established that long-term welfare depends upon the quality of durable

public infrastructure as reected in the success of East Asian countries

which reduced poverty despite not having a welfare state.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_7

CHAPTER 7

Enabling Smallholder Prosperity through

Commercialization andDiversication

7.1 IntroductIon

India will be the most populous country in the world with a population of

1.65 billion citizens by the year 2050. Keeping in mind the need to achieve

zero hunger, the two central concerns for food security is how to increase

productivity and how to diversify food production. Growth in productiv-

ity is needed to eradicate all forms of hunger in the existing population

and safeguard the future generation from it, and diversication of produc-

tion is essential to meet the demand for higher value crops resulting from

income growth and ensure more availability of micronutrients. However,

the way forward in achieving higher productivity and diversity of foods

needs to reduce agriculture’s effect on the environment. Adapting agricul-

tural production growth with current and ongoing climate change conse-

quences such as temperature and precipitation change and replenishing

natural resources required for agriculture that is lost or on the verge of

loss, forms the core supply challenge for global and Indian agriculture.

In India, where a majority of agricultural producers are small and mar-

ginal in size, commercialization of farms by which smallholders produce

for the market is essential to improve incomes and better access to diversi-

ed and nutritious food. The rising demand for diversied agricultural

products has brought about opportunities and challenges for India’s agri-

cultural sector. The opportunities come from increasing demand for

diversied and higher value crops that can improve agricultural incomes

166

(Pingali, Khwaja, & Madelon, 2005) and improved access to a varied food

basket at the household level. The major challenge, however, is the set of

problems associated with the supply side conditions such as poor access to

credit and other input markets that have hindered commercialization and

made income opportunities inaccessible to many producers. In this chap-

ter, we assess the major institutional features of smallholder production

challenges and potential solutions to rectify them. Specically, we look at

(a) the benets and limits of the Green Revolution to determine the cur-

rent supply and nutritional challenges of the Indian food system, (b) the

production constraints smallholder agricultural systems currently face in

the context of commercialization and meeting food security and eco-

nomic growth challenges and (c) the general direction interventions need

to take in order to meet the goals of sustained productivity growth and

diversication.

7.2 Farm SIze, YIeldS andregIonal dISparItIeS—

eneFItS andlImItS oFthegreen revolutIon

A majority of the world’s agricultural production takes place on small and

marginal farms, and despite recurring predictions that small farms will soon

disappear, they have persisted and in many cases have increased in number

(Hazell, Poulton, Wiggins, & Dorward, 2010; Hazell, 2018). In India, the

average size of landholdings decreased from 1.33 hectares in 2000–01 to

1.15 hectares in 2010–11. Considering these trends, assessing small farm

viability becomes critical. Understanding the relationship between land size

and productivity is essential to identify the potentials and challenges for

small farms. The relationship between size of landholdings and productiv-

ity has been debated in the eld of rural development and economics for a

long time. Since the 1960s, economists have argued that crop productivity

per unit of land declined with an increase in farm size (Bardhan, 1973;

Mazumdar, 1965; A. Sen, 1962). Referred to as the “small farm para-

digm”, it was argued that there is an inverse relationship between farm size

and productivity. These studies conclude that small farms have an advan-

tage over large farms in per capita productivity due to higher labor utiliza-

tion (e.g., using family labor) and higher input utilization (e.g., using

intensive farming practices). This inverse relationship was a result of imper-

fect land and labor markets (Bardhan, 1973; A.Sen, 1966). Imperfections

in the labor market meant that surplus labor at the household level was

available, as off-farm opportunity costs (off-farm wages minus search and

P. PINGALI ET AL.

167

travel costs) were higher than on-farm wages, and low-cost labor allowed

for substituting lumpy inputs such as capital- intensive equipment

(Binswanger & Rosenzweig, 1986; Eastwood, Lipton, & Newell, 2010;

Poulton, Dorward, & Kydd, 2010). Imperfect land markets meant that

land lease options to access more land for farming was limited (Eswaran &

Kotwal, 1986; Hazell etal., 2010) and producers had to utilize their exist-

ing resource endowment effectively.

In many Asian countries (where land was scarce and labor abundant),

the “small farm paradigm” did hold and was considered a socially optimal

outcome (Hazell etal., 2010; Poulton etal., 2010). Johnson and Ruttan

(1994) clarify that the size and productivity relations hold when consider-

ing scale-neutral inputs associated with the actual production processes

such as labor input, monitoring and local knowledge. For these inputs, in

the pressure of high monitoring costs (to large farms), small farms are not

at a disadvantage and in many cases may have an advantage. However, with

factors including access to markets, credit and extension services, technical

knowledge and technology, along with lumpy inputs such as management

and asset-specic machinery that have high xed costs and are not scale-

neutral, small farms are at a disadvantage (Poulton et al., 2010). Some

studies have also shown that the inverse relationship between small size

and high productivity disappears when soil quality (Benjamin, 1995; S.S.

Bhalla & Roy, 1988), capital market imperfections (Feder, 1985) and

unobserved heterogeneities such as climatic variations and quality of man-

agement are considered (Eastwood etal., 2010). In countries like India,

where wages are on the rise, there has also been a lowering of off-farm

opportunity costs, eroding the labor advantage of small farms (Binswanger

& Singh, 2017). In this section, we look at agricultural development in

India in the context of smallholder production to assess the nature of

growth and regional disparity trends in the context of the Green Revolution.

7.2.1

Green Revolution T

echnologies andRegional

andCropDisparities

The Green Revolution (GR) was a landmark achievement in technological

and institutional innovation that brought about the exponential growth in

yields of cereals in many developing countries and saw improved food

availability (mainly wheat and rice), a rise in per capita incomes and

poverty

eduction. This was extraordinary because productivity growth took place

in line with population growth, which more than doubled, and when land

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

168

scarcity and land values were rising (Pingali, 2012). Central to the GR

strategy was the use of high-yielding variety (HYV) technology in staples

such as wheat, rice and maize coupled with appropriate institutional

mechanisms to enable widespread adoption across many developing coun-

tries (ibid). In countries like India, GR was effectively implemented on

small farms because these technologies were (a) scale-neutral and they

could be divided and distributed at no extra cost unlike other technologies

such as tractors and irrigation (Birner & Resnick, 2010; G.Feder, Just, &

Zilberman, 1985; Hazell etal., 2010; Mosley, 2002); and (b) it was an

international public good that had adequate input support in the form of

state-subsidized fertilizers and pesticides and extension services (Pingali,

2012), allowing for the adoption of these technologies by smallholders in

many parts of India. The positive impacts of the GR were that it led to

signicant increases in the yields of wheat and rice that led to lowering of

food prices and increased availability, improving food security, and the

resulting income growth led to a reduction of poverty in many parts of

India (ibid).

Although GR technologies were scale-neutral allowing for adoption on

small farms, they were not resource-neutral (Bernstein, 2010) and this

meant adoption was inuenced by the smallholder’s access to resources

such as irrigation, markets and credit. Also, as food security was tradition-

ally dened as caloric security, food policy was excessively focused on the

promotion of staple grains such as wheat and rice to make available suf-

cient amount of calories to the population (Pingali, 2015). Relative to

staple grains, other crops such as pulses and coarse cereals received limited

focus concerning R&D resulting in limited seed technology development

and market support such as direct procurement and support price.

Therefore, the regional and crop disparity regarding benets became stark

in the years following the GR, resulting in high interregional inequalities

in agricultural development. Much of the eastern region (Bihar, Eastern

UP, West Bengal, Odisha and Madhya Pradesh) did not see a change in

area under production (Figs.7.1 and 7.2).

As access to irrigation was vital in determining the regions where GR

technologies were implemented, Punjab and Haryana and to a less extent

the Indo-Gangetic plains saw an increase in area under production of

wheat and rice. Also, in Punjab, the wheat yields are 2 to 2.4 times higher

than of other states, and rice yields are 1.5 to 2 times that of states such as

Odisha, Maharashtra, Madhya Pradesh and Bihar. During this period, we

also see a change in cropping patterns. As the economic benets of

P. PINGALI ET AL.

169

Fig. 7.1 Change in area under production (’000 hectares) of rice between 1960s

and 2000s. Source: Ministry of Agriculture and Farmers Welfare, Government of

India; based on authors calculation

Fig. 7.2 Change in area under production (’000 hectares) of wheat between

1960s and 2000s. Source: Ministry of Agriculture and Farmers Welfare,

Government of India; based on authors calculations

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

170

increased yields were substantial, it led to the emergence of intensive crop-

ping of wheat and rice in irrigated tracts of India. Figure7.3 shows the

change in the proportion of gross cropped area under pulses in various

parts of India. In the irrigated regions that witnessed intense cultivation of

wheat and rice, there was a 30–40% drop in area under pulses cultivation,

as pulses were substituted for rice cultivation in GR adopted regions and

pulses cultivation shifted to the central parts of India (Abraham & Pingali,

2019; Pingali, 2012).

Figure 7.4 shows the per capita availability of various food grains in

India from 1951 to 2015. In the case of cereals, we see availability increased

from 65.7 to 168 grams per capita per day in wheat and from 158.9 to

186 grams per capita per day in rice to increase production in line with

population growth. In the case of pulses where comparable technological

Fig. 7.3 Change in area under production (’000 hectares) of pulses between

1960s and 2000s. Source: Tata-Cornell Institute

P. PINGALI ET AL.

171

and institutional interventions were missing, production and area under

cultivation stagnated, leading to a decline in per capita availability from 60

grams per day per person in 1951 to 43 grams in 2015. Yields witnessed

only a marginal increase (251kg/hectare) in the last 65years. In the case

of coarse grains (such as sorghum, pearl millets, nger millets, barley etc.)

per capita availability decreased from 109.6in 1951 to 67.4 grams per day

in 2015. Despite an increase in yields from 579kg per hectare to 1579kg

per hectare in coarse cereals during the same period, the area under culti-

vation decreased by about 60%, leading to lower supply.

The advantage of the GR was that it was scale-neutral and could be

adopted by small and marginal producers provided they had access to irri-

gation or were inlocations with reduced agro-climatic risk. Institutional

support and favorable policy in the form of subsidized inputs and exten-

sion services and market support through minimum support prices and

direct procurement by the state played a crucial role in enabling and

incentivizing adoption. GR was also a watershed in agricultural develop-

ment that played a critical role in poverty reduction and signicantly

reducing hunger. The limits of GR were that it was focused on signicant

staple grains such as wheat and rice and was limited to regions that were

not resource constrained. The current challenges for the India food system

are to ensure diversication to higher value crops to ensure the availability

0.0

50.0

100.0

150.0

200.0

250.0

1951

1953

1955

1957

1959

1961

1963

1965

1967

1969

1971

1973

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Rice Wheat Coarse grains Pulses

Fig. 7.4 Per capita availability of cereals, coarse grains and pulses in India

(1951–2015). Source: Ministry of Agriculture and Farmers Welfare, Government

of India

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

172

of nutritious foods and ensure income growths through productivity

increases, especially in lagging states that did not benet from the GR.

Central to ensuring broad-based growth and development in the agricul-

tural sector is rectifying the institutional and resource constraints of small-

holder production. The next section of this chapter discusses the signicant

production challenges of smallholder agricultural systems in diversication

and commercialization.

7.3 productIon challengeS—Small Farm

IverSIFIcatIon, commercIalIzatIon andrISkS

Income, urbanization and population growth are the main drivers of

demand of agricultural produce, and the supply challenge for the agricul-

tural sector in meeting this demand is two-pronged: one, to increase cereal

production to keep up with rising population, and two to ensure the avail-

ability of diversied food groups that cater to increasing demand.

Commercialization of smallholder agriculture is central to meeting this

demand. Commercialization is the process by which farms increase their

engagement with input and output markets as they move away from inte-

grated or subsistence farming systems to specialized crop and livestock

production (Pingali & Rosegrant, 1995). During the transition, non-

traded inputs are substituted for purchased seeds, pesticides and fertilizers

that enable production increase and diversication of production and sell-

ing in output markets (Carletto, Corral, & Guel, 2017; Pingali &

Rosegrant, 1995; von Braun, 1995). Commercialization is central to the

structural transformation process as greater input market orientation

increases the demand for industrial goods and technology essential for

production, increases household welfare through employment generation

and increased labor productivity and enables the transfer of surplus in the

form of food, labor and capital from the agrarian sector to the other sectors.

In India, the regional disparities in rates of commercialization have

been varied. Regions that beneted from the GR witnessed growth in

yields through the use of high-yielding seed technologies, fertilizers and

pesticides, while in unirrigated regions where agro-climatic risks were

high, production systems remain semi-commercial due to lower sur-

pluses. The ability to smallholder agriculture to transform from subsis-

tence and semi-commercial farming to commercialized farming requires

linkages to factor markets to access credit, land, inputs (seeds, fertilizer

and pesticides) and technology. In this section, we look at the signicant

P. PINGALI ET AL.

173

challenges to diversication, the disadvantages of smallholders to com-

mercialize due to capital market imperfections and changing characteris-

tics of inputs markets.

7.3.1 Small Farms andtheCosts ofDiversication

Diversication of production at the farm level is critical for food security

through increased availability of nutritious food and for improving incomes.

However, the ability to diversify is determined by both policy and access to

factors of production such as seeds, fertilizer and pesticides, credit and

extension services. Food policy in India has traditionally focused on con-

cerns of caloric security, where it aimed to ensure the availability of suf-

cient calories for its citizens (Varshney, 1998). GR technologies focused

mainly on wheat and rice and agricultural policies focused on price support

and direct procurement aimed to bring about intensive cereal-based trans-

formations (de Janvry & Subbarao, 1986; Dorward, Kydd, Morrison, &

Urey, 2004; Freebairn, 1995; Goldman & Smith, 1995).

In comparison, food grains such as coarse cereals and pulses did not see

much technological intervention or market support. The unintended con-

sequence was that it reduced the incentives for the cultivation of

micronutrient- rich coarse grains and pulses in favor of wheat and rice

affecting the availability of micronutrient-rich foods.

Costs of producing and selling different crops vary depending on

their characteristics as commodities or products. Commodities are

“Standardized agricultural products that have had little or no processing

and often raw materials for further procession” (Schaffner, Schroder &

Earle, 1998, p.6). Products are commodities that are differentiated based

on attributes (organic, processed, branded, variety, perishability) or com-

modities with value addition (Reardon & Timmer, 2007). The notable

difference between commodities and products is that commodities are

fungible (substitutable) raw materials or produce like corn, wheat, rice,

crude oil or iron ore, while products are of higher value, perishable and

often require specialized value chains.

The cost dynamics for growing commodities and products are funda-

mentally different and this inuences the ability of farms to diversify.

Table 7.1 highlights the various features on which commodities and

products differ at the farm level. As products such as fruits and vegetables,

milk, and so on are highly differentiated, they may require higher labor

inputs, monitoring and higher levels of credit access to procure quality

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

174

inputs as grades and standards requirements for marketing products may

be more stringent. This raises the costs of production and management at

the farm level for products in comparison to commodities.

The capacity of small farms to diversify from commodities to high-value

products has production and management costs and risks associated with

them. The willingness of farming households to diversify or stay in semi-

commercial production systems will depend on behavioral characteristics

such as levels of risk aversion and the ability to withstand and manage

those risks. Therefore, access to infrastructure such as irrigation and inputs

such as credit and quality inputs in the forms of seeds, fertilizer and pesti-

cides plays an essential role in the ability of smallholders to diversify. Credit

availability, changing labor costs and costs of inputs are determining fac-

tors not just for diversication but also for agricultural production growth

in general.

7.3.2 Challenges inAccessing Factor Markets andImproving

Supply—Credit, Labor andInput Costs

The ability of small farms to access credit, labor and inputs such as quality

seeds, fertilizers and pesticides determines their capacity to commercialize

and improve household level incomes. Access to these factors of production

Table 7.1 Factors inuencing costs at the farm level for commodities and

products

Characteristics Products Commodities

Labor input Higher labor inputs to manage

crops at the farm level. Pesticide

and fertilizer application

Relatively low. Labor requirements

during sowing and harvesting are high

Monitoring Higher monitoring is required

to control for quality and grade

during the growing process

Constant monitoring is not required

and this may contribute to lower labor

Credit Higher labor and monitoring

along with the need for quality

inputs raises the need to access

credit

The level of credit needed will be

lower than products

Inputs Specic inputs such as seeds,

medicines, fertilizers and

pesticides may be needed, raising

the costs of access and

negotiation

Subsidized inputs such as seeds,

fertilizers and pesticides available,

reducing the cost of production and

access costs compared to products

P. PINGALI ET AL.

175

is inuenced fundamentally by credit availability. Capital market imperfec-

tions limit access to credit for farms with low land endowments because

they have limited value as collateral (Besley, 1995a, 1995b; Bhaduri, 1977;

J.Ghosh, 2013; P.Ghosh, Mookherjee, & Ray, 2001). As the scope for

internally nancing agricultural production is limited due to slow turnover

of capital for small farms, the need for credit is essential. To assess the

potential for smallholder production to commercialize and diversify, we

look at the challenges in accessing credit and input markets and the chang-

ing dynamics of labor markets.

7.3.2.1 Access toInstitutional Credit

The impact increased access to institutional credit has on agricultural pro-

ductivity in India is well established. Binswanger and Khandker (1992)

show that credit access has a positive effect on agricultural output and that

it increased the use of fertilizer and investment in livestock and machinery

at the farm level. Bhalla and Singh (2010) using a district level analysis

show that institutional credit has a positive effect on mechanization and

non-labor inputs, and in regions that are technologically backward, the

elasticity is much higher. Access to institutional credit (from nancial insti-

tutions such as banks) is conditioned on the size of landholding and access

to irrigation. Financial institutions often do not have enough local knowl-

edge about borrowers regarding their risk proles, and this makes collat-

eral (irrigated land) an essential criterion for borrowings (Bardhan, 1996).

The high cost of acquiring information disqualies marginal farmers, ten-

ant farmers and households without proper title deeds to the land from

accessing credit.

Poor access to banks makes non-institutional sources such as money-

lenders and input dealers an important option for credit, affecting prot

and growth in the agricultural sector. According to the Situation of

Agricultural Households Survey (2014) carried out by the National Sample

Survey (NSS), 52% of all agricultural households in India are indebted.

The data also revealed the relationship between the size of landholdings

and access to formal credit. Figure7.5 shows the indebtedness in the agri-

cultural sector with the landholding size of agricultural households. The

borrowings of households possessing less than two hectares of land (mar-

ginal landholders) are higher from informal sources, and the percentage of

borrowing from formal sources goes up with an increase in land size.

Since the early 2000s, there has been a signicant drive to improve

credit access for agricultural producers. Figure 7.6 shows that between

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

176

14.9

46.9

53.2

64.8

67.5

71.5

78.9

46.8

35.1

32.5

28.5

Landholding sizes in hectares

Formal Sources

Informal

sources

Fig. 7.5 Percentage of indebtedness of different landholding sizes from different

sources of credit (2014). Source: Situation of Agricultural Households Survey,

NSSO, 2014

100000

200000

300000

400000

500000

600000

700000

800000

900000

1000000

in crores

Fig. 7.6 Institutional credit to the agricultural sector (2000–01 to 2015–16).

Source: Ministry of Agriculture and Farmers Welfare, Government of India

P. PINGALI ET AL.

177

2000–01 and 2015–16 overall agricultural credit grew 16 times from

52,827 crores to 877,527 at the compounded annual growth rate (CAGR)

of 20.6%. However, there are notable regional variations with the south-

ern regions accessing 39% of the total agricultural loans. The lagging states

in the central and eastern zones receive a lower proportion of 7% and 12%,

respectively (Table7.2). Schemes such as the Kisan Credit Card (KCC)

Table 7.2 Percentage share of agricultural loan (accounts and amounts) and

KCC in 2016in various states/regions

Selected states/regions Agricultural loans Kisan Credit Cards

Percentage of

bank accounts

to total

Percentage of

loan amount

total

Percentage of

KCC issued since

inception

Percentage of

outstanding

amount

Andhra Pradesh 6.86 9.80 9.69 5.79

Karnataka 5.32 5.01 6.31 6.67

Kerala 9.06 12.15 3.48 2.01

Tamil Nadu 5.07 3.35 6.61 2.94

Telangana 7.94 8.56 6.63 4.04

South Zone total 34.24 38.87 32.73 21.45

Gujarat 3.22 5.15 2.90 5.68

Maharashtra 7.99 7.25 6.93 8.63

Rajasthan 6.58 7.81 5.58 11.14

West Zone total 17.81 20.27 15.42 25.45

Haryana 3.21 5.75 2.42 6.45

Himachal Pradesh 0.28 0.59 0.51 0.79

Punjab 2.82 9.78 2.54 10.13

Uttarakhand 0.56 0.73 1.32 1.34

Uttar Pradesh 10.80 4.31 19.50 14.86

Jammu & Kashmir 0.13 0.32 0.47 0.68

North Zone total 17.80 21.48 26.77 34.25

Chhattisgarh 7.51 6.02 0.52 1.04

Madhya Pradesh 2.06 0.98 6.12 8.46

Central Zone total 9.57 7.00 6.65 9.51

Jharkhand 3.65 4.68 1.27 0.60

Bihar 0.40 0.42 4.54 3.08

Orissa 6.42 2.11 5.25 2.56

West Bengal 9.87 4.51 5.42 2.01

East Zone total 20.34 11.72 16.49 8.26

North East states total 0.24 0.67 1.95 1.09

Source: Department of Agriculture, Cooperation & Farmers Welfare, Government of India

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

178

were introduced in 1998 to improve timely access to short-term loans and

simplify the process of screening. Again, regional variation in credit access

through this scheme has been varied. Table7.2 shows that the south and

north zones have about twice as many credit cards issued and renewed

compared to the central and east zones. Uttar Pradesh accounts for 19.5%

of all KCC issued. In a study in the Krishnagiri district of Tamil Nadu, data

collected from 120 farmers growing paddy, sugarcane and groundnuts

showed that net income and cost of production for farmers with access to

KCC were higher (Prakash & Kumar, 2016). The higher cost of produc-

tion was attributed to the purchase of higher volumes and quality of inputs

for production. A study by NABARD (Mani, 2016) with 714 farming

households in 6 Indian states showed that farmer with access to KCC saw

an average increase in income of 5462 rupees per acre.

In order for these advantages to percolate more widely, there is a need

to increase coverage of KCC especially in the east and central regions. The

other challenges that have limited access to KCC have been the time taken

to sanction them, socioeconomic biases based on caste and landholding

size, low credit limit and lack of awareness among farmers that these provi-

sions are available to them (Kumar, Yadav, Jee, Kumar, & Chauhan, 2011;

Mani, 2016; Prakash & Kumar, 2016). Addressing these will be essential

for smallholder commercialization especially in regions of poor agricul-

tural growth.

7.3.2.2 Changing Labor Costs—Effects ofFar

m Level

andNon-farm Wages

Effective labor utilization of small farms using family labor was the main

factor that gave small farms the advantage of higher per capita

productivity.

As non-farm opportunity costs were higher, labor could substitute capital

and lumpy inputs at the farm level leading to efcient labor utilization. In

the past two decades, India has seen a growth in real farm wages at the rate

of 6.8% per annum and this is expected to rise with further economic

growth (Gulati, Jain, & Satija, 2014). Simultaneously there has been a

growth of non-farm wages as well resulting from the growth of other sec-

tors and rural social programs, especially the Mahatma Gandhi National

Rural Employment Guarantee Scheme (MGNREGS) (Binswanger-Mkhize,

2013; Gulati etal., 2014), leading to an increase in farm level opportunity

costs. Binswanger and Singh (2017) observe that rising non-farm wages

have pulled family labor out of farms as off-farm opportunity costs decrease.

They also note that non-farm wage increase tends to pull family labor out

P. PINGALI ET AL.

179

of the agricultural sector and not hired labor, as they may be older with

little education. The pull of family labor effectively erodes the advantage of

labor utilization and reduces prots, as farm wages of hired labor is high.

Also, because of the migration of productive male labor, an increase in

the feminization of agriculture is taking place (Agarwal, 2010; Pattnaik,

Lahiri-Dutt, Lockie, & Pritchard, 2018). Mechanization will play an

essential role in improving agricultural productivity, adjusting for rising

wages and reduction of drudgery in farming. In the process of structural

transformation, different countries have addressed wage increases through

mechanization replacing wage labor, farmers exiting agriculture for non-

farm sectors, diversication to higher value crops to increase income, state

expenditure in productivity increasing technologies and raising food prices

to support farm incomes (Binswanger & Singh, 2017). However, the

major challenge for small farms with credit constraints and lower than

optimal size for mechanization, as it is not scale-neutral, remains. Freeing

up land lease markets that can enable small farms to lease in the land, capi-

tal subsidies to buy equipment in the wake of credit constraints and aggre-

gation of small farms may be a few solutions to enabling this shift.

7.3.2.3 Changing Nature ofInput Markets andAccess Problems

The change in dependence on input markets by smallholder households as

opposed to depending on using inputs sourced at the farm is an integral

part of commercialization. Pray and Nagarajan (2014) argue that the

transformation of the agricultural input industry went through two stages.

Before the Green Revolution, a majority of seeds, manure, draught and

labor was sourced at the farm level. GR technologies shifted the orientation

of input access to a greater reliance on markets for seeds and inputs such

as chemical fertilizers and pesticides. Initially, State-owned Enterprises

(SoEs) played an integral role in the production of inputs. In the late

1980s onward with the liberalization of the Indian economy and post-

WTO agreements, private rms have emerged to be signicant players in

agricultural inputs. The opening up of the economy marked the second

stage of the input industry transformation. Table7.3 shows the changing

share in private sector involvement in agricultural inputs. Besides fertilizer

production, the private sector dominates the sales of other inputs, namely,

seeds and pesticides. Concerning farm implements and machinery such as

tractors, the private sector has always been the dominant player.

The current challenges of the Indian food system deviate from what GR

technologies were designed to and capable of addressing. Concerning issues

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

180

of diversication and resilience and the inputs that are needed to achieve

them, the private sector has emerged as the front-runner. Private sector inno-

vations in the past decade have focused on high-value crops such as fruits and

vegetables and also coarse grains such as pearl millets and sorghum (Ferroni

& Zhou, 2017). Multinational companies (MNCs) account for 44% of the

seed industry R&D and have been responsible for a majority of biotechnology-

based research, especially genetic modication (Pray & Nagarajan, 2014).

An important aspect relevant in the context of these changes in the input

market is the ability of smallholders to access new seed technologies.

Access to capital is essential to increase access to quality inputs.

Smallholders have low access to institutional credit and this inuences their

ability to increase production and diversify through the access to quality

inputs and technology. Regions with irrigation and lower climatic risk were

able to implement scale-neutral technologies enabling productivity growth

during the Green Revolution. The current challenge is to improve agricul-

tural productivity in marginal lands and regions that did not benet from the

Green Revolution. The newer production and seed technologies essential to

achieve this requires credit and context-specic information and mechaniza-

tion. Addressing the issue of scale and access to capital, therefore, remains

the two main challenges for smallholder productivity growth in agriculture.

7.4 the WaY ForWard: InStItutIonal InterventIonS

toaddreSS productIon challengeS andreducIng

egIonal dISparItY

The ability of smallholder production to adapt to changing demand and the

opportunities for growth depend on increasing marketable surplus and

diversifying. As production challenges vary according to regions, addressing

Table 7.3 Changing share of private and public sectors in agricultural inputs

(1991–2009)

Industry 1991 2009

Public sector Private sector Public sector Private sector

Share of seeds sale 35 65 20 80

Share of pesticides sale 8 92 <1 >99

Share of tractor sales 16 84 1 99

Share of fertilizer sales 60 40 50 50

Source: Pray and Nagarajan (2014)

P. PINGALI ET AL.

181

regional disparities is needed to reduce yield gaps and improve livelihoods

in poorer states that did not benet from the Green Revolution. In this sec-

tion, we rst look at the scope of institutional interventions such as aggre-

gation models and land reforms in addressing the issue of scale. Second, we

assess the potential of bringing the Green Revolution to the eastern states of

India. These measures we argue are critical to address issues related to econ-

omies of scale disadvantages to small farms and unequal economic and agri-

cultural development.

7.4.1 Institutional Interventions inSmallholder Agriculture-

Aggregation Models—Revisiting Land Tenure Systems

In smallholder agricultural systems, the cost of accessing inputs, informa-

tion and R&D is a challenge for resource-poor small farms. Institutional

interventions that can offset disadvantages of small farms and enable

effective implementation and uptake of policy targeted at improving pro-

duction become important. Aggregation models such as producer orga-

nizations and cooperatives, where smallholders organize themselves in

groups to jointly access resources and market their produce, have shown

to reduce transaction cost and form market linkages (Barrett etal., 2012;

Bellemare, 2012; Boselie, Henson, & Weatherspoon, 2003; Briones,

2015; Reardon, Barrett, Berdegué, & Swinnen, 2009; Schipmann &

Qaim, 2010). Promoting these institutions will help smallholders mitigate

some of the transaction costs associated with market entry, as it addresses

problems associated with economies of scale.

Cooperatives have been promoted globally to remedy the disadvantages

of scale to small farms with differing levels of success (Devaux etal., 2009;

Kherallah, Delgado, Gabre-Madhin, Minot, & Johnson, 2002; Stockbridge,

Dorward, & Kydd, 2003). In countries like Japan, South Korea and Taiwan

that were founded upon small farms,

cooperatives were set up, and factors

that put small farms at a disadvantage were neutralized through state-provi-

sioned extension services, key inputs, irrigation and market intervention

operations (Huang, 2006; Kajita, 1965; Lin, 2006). Aggregation of produc-

ers will help reduce the xed cost of accessing resource and services and once

made available these institutions can disseminate it with little additional costs.

The average size of landholdings in Japan and Korea in the twenty-rst century are

1.2acres and 1acre, respectively (Fan & Chan-Kang, 2003) and less than 1acre in Taiwan

(Lam, 2006).

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

182

However, in many developing countries and in India, cooperatives in the past

have been less successful. Their effectiveness was limited by issues of poor

organization and incompetent management, political interference in their

functioning, nancial irregularities and corruption within the organizations

(Akwabi-Ameyaw, 1997; Attwood, 1982, 1987; Baviskar, 1987; Holloway,

Nicholson, Delgado, Staal, & Ehui, 2000; Lalvani, 2008). In India, the sig-

nicant challenges the cooperatives faced were structural and incentive based.

The structural problems were political and bureaucratic interference, poor

management and governance, and elite capture of the activities to their ben-

et. Cooperatives also faced incentive problems characterized by dormant

membership and poor participation of members, hindering the growth of

these organizations. These incentive problems were due to non-

percolation

of benets to members, especially the demography the cooperatives meant

to empower.

Since the early 2000s, there has been a signicant drive in India to pro-

mote producer organizations in the agricultural sector. The amendment of

the Companies Act in 2003 that enabled the formation of Producer

Companies (PCs) was a vital step in this direction. The producer-owner

system increases the agency of members and reduces the role of the state

and bureaucracy, preventing exogenous power capture. More agency for

these organizations may prove to be a crucial step in addressing some of

the structural issues that hindered the effectiveness of cooperatives. State

support to set up aggregation models and capacity building to help pro-

ducers manage these organizations and help in forming linkages to input

and output markets will be important. These institutions can rectify scale-

disadvantages for smallholders in accessing technology, credit,

information and inputs while reducing transaction costs to enable

commercialization.

7.4.1.1

Land Tenur

e andtheQuestion ofAccess toLand

Unequal access to land has persisted in India due to the failure to imple-

ment land reforms post-independence. Although land reforms failed to

redistribute land among cultivators, it did to an extent limit land tenure

practices and made them in illegal in many states. The two central tenure

practices are xed rent contracts and sharecropping contracts (Chaudhuri

& Maitra, 1997). In a xed rent contract, the tenant cultivates the land

leased from the owner for a xed share of the produce. The tenant bears

the production risks and may not have the incentive to increase produc-

tion over a certain level due to perceived risks. In a sharecropping

contract,

P. PINGALI ET AL.

183

the tenant leases land from the owner and the rent is a percentage share of

the total output. Here the owner and the tenant share the risk, and the

tenant has a higher incentive to make investments on the farm.

According to the latest census data (2010–11), 86% of agricultural land

in India is less than two hectares in size. The number of small farms has

increased by about 6% since 1991–92. Because of increasing fragmenta-

tion of land holdings, land leasing is an essential practice for improving

access to land (Ballabh & Walker, 1992; Bell, 1990; Melmed-Sanjak,

1998; Sadoulet, Murgai, & de Janvry, 1998; Vaidyanathan, 1994).

Although land tenancy has fallen considerably since the land reforms,

according to the 2010–11 census of the Government of India, 10.4% of

rural households lease land. This gure ranges from 5% in Madhya Pradesh

to 36% in the erstwhile Andhra Pradesh. The Government of India in

2016 proposed a model land leasing act to enable the leasing of land.

According to the Expert Committee report on land leasing (GOI, 2016),

legalizing land leasing can encourage larger landowners and small and

marginal farms alike. Larger landowners can lease out land through share-

cropping when agricultural wages and monitoring costs are high without

fear of losing ownership, while smallholders can lease out land and seek

employment outside agriculture when non-farm wages increase, supple-

menting wages with land rent.

Legalizing land leasing can improve access to land. However, issues of

how tenant farmers can access credit, as leased-in land is insufcient col-

lateral, will need to be addressed. A study by Haque and Nair (2014) on

the Kudumbashree Mission, a women’s collective in Kerala, shows that

women’s collectives (of 2–10 members) jointly leasing in land to cultivate

fruits and vegetables and tapioca earned on an average 42,000 rupees per

acre. These women’s groups also had access to collateral-free credit through

Joint Liability Groups (JLGs), where the groups were jointly liable for the

loans they took. Valuable lessons can be learned from such experiences.

7.4.2

Agricultural Development inEastern India—Rectifying

Regional Disparities

Improving agricultural production in regions that the Green Revolution

did not benet will be important to rectify regional disparity through agri-

cultural development and improved incomes. Agriculture’s share in state

GDP of the eastern states of Bihar, Chhattisgarh, Jharkhand, Odisha, east-

ern Uttar Pradesh, West Bengal and Assam is high, while productivity

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

184

remains low. Improving agricultural production in regions that did not

reap the benets of the Green Revolution is important to rectify regional

disparity in agricultural development and incomes. According to the

National Bureau of Soil Survey and Land Use Planning (NBSS&LUP),

the LGP in these regions is 240days and the annual rainfall range from

1000 to 2500mm perannum (GOI, 2015). The availability of groundwa-

ter in these regions is also high but remains untapped for agricultural

development.

Despite these advantages, the exposure to abiotic stress resulting from

droughts, oods and submergence is high due to poor access to irrigation

and infrastructure of ood control. In many states such as Odisha, Assam,

Jharkhand and Chhattisgarh, households only have a single sowing sea-

son. Eighty-two percent of the fallowed land is in the eastern part of India

(Singh, Praharaj, & Sandhu, 2016). In the post paddy season, the land is

often left fallow although there is potential to grow crops such as pulses

using the residual moisture of the previous season. Practices of open graz-

ing and labor outmigration during this season also make the adoption of

second sowing problematic. In these states mentioned above, the rate of

migration to urban areas and urbanizing states are high as off-farm wages

have increased in recent years resulting in the pull of labor from the agri-

cultural sector.

Getting agricultural productivity going in these regions requires infra-

structural development and institutional interventions. Development of

irrigation in these regions is vital to reduce abiotic stress during the grow-

ing seasons. Micro-irrigation and communal irrigation facilities such as

water user groups can help reduce overuse of water and promote judicious

use of water resources. Improved access to irrigation and reduced abiotic

stress resulting from late rainfall and drought, increase the scope for diver-

sication and may improve access to credit as risks reduce. Improving

access to cold chains and specic value chains for perishables will also

improve connectivity to markets and marketing opportunities (this is dis-

cussed in detail in the next chapter). Institutional interventions such as

good extension services, R&D focused on the advantages of these regions

and aggregation models to reduce the disadvantages of scale are especially

relevant in the eastern states. This region may not have the same potential

as Punjab, Haryana and the southern Delta regions in reaching yield

potential in paddy, but have the scope to develop a comparative advantage

in growing crops such as pulses and certain fruits and vegetables.

P. PINGALI ET AL.

185

Development of extension services to help with cropping transitions is

essential. Traditionally, R&D has focused on signicant cereals, and

extending this to other crops will disproportionately benet these regions.

Technologies in increasing yields in pulses and coarse grains, short dura-

tion crops to adjust to climatic conditions, and crops with improved resil-

ience to abiotic stresses will be crucial to this region. These technologies

along with mechanization can offset the effects of migration by reducing

the drudgery of women and improving productivity. Lastly, aggregation

models can remedy the disadvantages of scale in accessing resources and

technology and will prove essential for the development of the agricultural

sector in this region.

7.5 concluSIon

Growing population and changing demand have brought about opportu-

nities for growth and challenges to the Indian agricultural sector. At the

farm level, the ability of small farms to commercialize (increase engage-

ment with input and output markets) and diversify will determine their

scope to increase production and diversify in line with changing demand.

However, the institutional challenges for small farms are their ability to

access capital, technology and mechanization that are essential for com-

mercialization. The Green Revolution was successful in India because the

technologies that it brought were scale-neutral and small farms were able

to take advantage of the higher productivity of family labor. Institutional

support in the form of direct procurement of food grains, minimum sup-

port prices and input subsidies complemented technological measures to

incentivize adoption. However, these GR technologies were concentrated

on major food grains, were not resource-neutral and therefore were suc-

cessful only in regions that had access to irrigation or had low agro-

climatic risks.

Agricultural sector growth depends on rectifying interregional dis-

parities and improving access to capital, mechanization and quality

inputs such as yield increasing seed technologies to enable commercial-

ization and diversication. As newer technologies are not scale-neutral

and the advantages of family labor utilization are being eroded due to

rising off- farm wages, access to capital and addressing the issues of econ-

omies of scale is critical. In this chapter, we looked at the scope of insti-

tutional interventions to rectify small farm disadvantages. We assessed

the scope of aggregation models such as cooperatives and FPOs in

ENABLING SMALLHOLDER PROSPERITY THROUGH COMMERCIALIZATION…

186

rectifying the scale disadvantages of accessing capital and technology and

suggested their widespread promotion in different parts of the country.

We touched upon the need to revisit the issue of land reforms, not from

the point of view of redistribution, but concerning reforming land tenure

systems to improve access to land and better enable access to mechani-

zation and credit. We also suggested that special attention be paid to

agricultural development in eastern India that has a high potential for

commer

cialization and diversication. Measures to improve access to yield

increasing technologies and corresponding institutional support in the

form of increased access to credit, R&D and information will be essential.

Interventions on these lines can help align supply conditions to changing

demand to utilize the opportunities for growth for smallholder agriculture.

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P. Pingali et al., Transforming Food Systems for a Rising India,

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CHAPTER 8

Linking Farms toMarkets: Reducing

Transaction Costs andEnhancing

Bargaining Power

8.1 IntroductIon

For commercialization, along with increased linkages to factor markets,

the link to agricultural output markets is also essential. Access to output or

commodity markets determines price realization, incentivizing small farms

to diversify production in line with the changing demands of the market.

Rising demand for diversied foods has led to a growing emphasis on

grades and standards to ensure quality, health, safety and differentiation of

products based on tastes and preferences. In response, rapid technological

changes to improve the quantity, quality and efciency of production and

marketing are becoming increasingly relevant (Eaton, Meijerink, &

Bijman, 2008; Narayanan, 2014; Poulton, Dorward, & Kydd, 2010; Roy

& Thorat, 2008; Swinnen & Maertens, 2007). A majority of agricultural

marketing in India takes place through traditional spot markets. These

predominantly unorganized markets with limited infrastructure cannot

meet the quality requirements and specications of changing demand and

this has increased the importance of organized retail for agricultural prod-

ucts (McCullough, Pingali, & Stamoulis, 2008). Parallel to traditional

markets, because of changing demand, the organized value chains for food

is also growing. In 2017, India’s retail sector was valued at 641 billion

USD.The share of food and grocery retail in this share was about 60% (or

about 380 billion USD), and the percentage of organized retail in this

194

share was roughly 2% (about 7.6 billion USD).

The retail food segment

in India is therefore signicant and unorganized, and the share of orga-

nized retail is in comparison small.

Although the current share of organized retail is small, projections

expect its share to double by the year 2020. The scope of organized retail

in food and groceries is vast. Along with organized retail outlets such as

Hypermarket, DMart, More, Big Bazaar, Godrej Nature’s Market,

Walmart, among others, the growth of e-retail in food is also increasing.

Companies such as Amazon Pantry, Big Basket, Grofers and Flipkart (after

its purchase by Walmart) are expected to show a high level of growth.

Developments in organized retail in food are dependent on effective link-

ages between farm and retail. This farm-retail linkage is essential for

income growth at the farm level, the creation of non-farm employment

both in rural and urban areas and also improving efciency and reducing

wastage. Therefore, it will have an impact on economic growth, agricul-

tural development and nutrition and access to food. The ability of small

farms to effectively link to value chains that take into consideration new

requirements of quality, quantity and efciency is a signicant challenge

for the agricultural sector. This chapter is divided into three parts. First,

we look at the characteristics and features of traditional marketing chains

in India in the context of transaction costs to determine the challenges of

market participation to small farms. Second, we assess existing forms and

newer market linkages that have emerged in agriculture to identify their

potential and problems. Last, we determine the need for institutional

interventions to improve small farm-market linkages to bring about an

inclusive, nutrition-sensitive value chain.

8.2 AgrIculturAl MArkets, sMAll Producers

AndtrAnsActIon costs

The three agricultural marketing channels in India are state-trading, coop-

erative marketing and private trade (GOI, 2007). Governmental organiza-

tions, such as the Food Corporation of India (FCI), Cotton Corporation of

India, Jute Corporation of India and National Agricultural Cooperative

Marketing Federation (NAFED), along with specialized commodity boards,

Global Agricultural Information Report (GAIN) (2017): https://gain.fas.usda.gov/

Recent%20GAIN%20Publications/Retail%20Foods_New%20Delhi_India_6-28-2018.pdf

(Accessed on 24/10/2018).

P. PINGALI ET AL.

195

which were crop-specic to rubber, tea, coffee, tobacco and spices carry out

state-trading, where the state is involved in the procurement. Cooperative

marketing exists for commodities with high-asset xity such as milk and

fruits like grapes and bananas. Here, members belonging to cooperatives

sell their produce by way of specialized supply/value chains. A signicant

part of agricultural marketing happens through private trade. The

Agriculture Produce Marketing Committee (APMC) often referred to as

the mandi is the primary market infrastructure found in all states (except

Jammu and Kashmir, Bihar, Kerala and Manipur). Their primary function is

to regulate market practices such as weighing, methods of sale, methods of

grading and methods of payment. To date, there are 7246 functioning

mandis in India.

Although the APMC aims to provide a platform for marketing activities

and reducing exploitation by traders and mercantile capital, much of the

transactions that take place is unregulated. Figure8.1 shows the structure of

agricultural markets for non-perishable commodities such as cotton, oilseeds,

pulses and grain. The various participants in the market are national agri-

businesses, big retailers, agro-processors, traders and their commissioning

agents and unlicensed petty commodity producers with different forms of

contracts and exchange relations with the primary producer. The fragmented

Village Merchant

Downstream Markets

or Forward Linkages

Trader

State Trading

Bodies

Wholesaler

Retailer

Oligopsonistic

Mills/End Users/Exports

Processing

Pucca Arhatia

Commissioning Agent

Small and Marginal

Producers

Katcha/Pucca Arhatia

Commissioning Agent

Fig. 8.1 Structure of agricultural markets. Note: The different colored lines

denote different channels through which goods are sold and distributed in the

market

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

196

nature of agricultural markets leads to high transaction costs in its access. The

various costs of carrying out marketing activities from price discovery and

transportation to searching for buyers and selling are considered market

transaction costs.

8.2.1

Transaction Costs inAgricultural Marketing

Higher transaction costs for small and mar

ginal producers are due to low

economies of scale, low bargaining power, poor connectivity to markets

and information asymmetry resulting from poor price and quality knowl-

edge. The exchange relations in agricultural markets, therefore, are not

uniform or equal, nor are they set only in price terms (Bharadwaj, 1985).

Transaction costs are household-specic, farm-specic, location-specic

and crop-specic (Pingali, Khwaja, & Madelon, 2005). Social categoriza-

tion such as caste and gender can play an inclusive and exclusionary role

concerning access to land, credit and markets (Kumar, 2013; RFST, 2005;

Sen, 2000). These household-specic transaction costs can in different

situations lead to differences in prices charged/paid for services received

or goods sold in market transactions (Thorat, 2009).

Farm and location-specic factors also determine the cost of market

access and participation. These costs can be attributed to reduced econo-

mies of scale (Poulton etal., 2010). Smallholders with limited marketable

surplus may not sell directly in the markets owing to geographical con-

straints, distance to market and poor connectivity. In such situations, they

sell their produce to traders or village merchants at the farm gate. The

primary function of these intermediaries is consolidating produce at the

village level before selling to traders, retailers or processors at the APMC.

According to Chand (2012), an average of four to six transactions take

place before the produce reaches the nal consumer. In the wake of social,

scale and geographic disadvantages, intermediaries play an essential role in

providing for missing services, although the price realized at the farm level

is the lowest competitive price.

Marketing costs to farms are also crop-specic and vary with commodi-

ties and high-value products. Higher value perishable crops have more

stringent quality requirement making market connectivity, information

and infrastructure such as storage important. Initial costs of creating value

chains may also be high mainly due to asset specicity. Table8.1 highlights

the various characteristics that inuence marketing conditions of agricul-

tural goods. In the wake of higher costs, smallholders may nd it hard to

P. PINGALI ET AL.

197

diversify from commodities to high-value products. Addressing these

market- level costs is central to enable diversication through price incen-

tives to farmers growing them.

Agricultural markets in India are complex institutional arrangements

with many forms of exchange relations and transaction costs. The promi-

nent features of these markets are that (a) participants have low economies

of scale; (b) the supply chains are highly fragmented with a large number of

intermediaries leading to marketing malpractices (e.g., poor weighing prac-

tices, no grades and standards), poor price realization and poor signaling;

and (c) the nature of agricultural produce (commodity or product) deter-

mine the challenges in marketing. Existing markets, therefore, may not be

conducive for the marketing of higher value, grades and standard oriented

products. Also, private trade through the APMCs with these limitations

have made it difcult for direct linkages between farms and retailers to

emerge, limiting the potential to diversify production at the farm level to

meet the growing demand for higher value products. Until 2003, before

the Inter-Ministerial Task Force on Agricultural Marketing Reforms (2002),

APMCs had the exclusive right to function as a market (GOI, 2002). The

task force suggested reforms that allowed private agencies and cooperatives

to trade in markets, contract farming initiatives to purchase goods directly

Table 8.1 Characteristics inuencing the marketing of commodities and high-

value products

Characteristics Commodities High-value products

Market

information

Not highly differentiated Highly differentiated—varieties,

nutrient characteristics and

value—making information

important

Price stability Prices are relatively stable and

are often supported by

minimum support price (MSP)

Prices can be volatile with huge

seasonal variations

Asset specicity Lower capital investments and

better transferability of capital

Higher capital investment in value

chains, storage and so on with

limited transferability

Perishability Can be stored for long periods

and may not perish quickly

Products are highly perishable,

making the timing of supply

important

Quality, grades

and standards

Low differentiation leads to

minimum grades and standards

variation

Highly differentiated with large

quality, grades and standard

differences

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

198

from farmers and processors and bulk buyers to procure products directly

from the farmers bypassing the APMC (ibid). The next section evaluates

the changes in value chain arrangements that emerged in the twenty-rst

century following these changes and its impact on agricultural value chains.

8.3 exPerIence oflInkIng fArMs toMArket

The inefciencies of agricultural markets in India pose challenges for the

organized retail sector to participate effectively. The need for vertically coor-

dinated markets where the intermediaries are bypassed and transaction costs

are reduced is necessary for the signaling price and quality information,

contract formation to mitigate supply risks and to establish of grades and

standards (Birthal, Joshi, & Gulati, 2005; Pingali etal., 2005). The existing

marketing system cannot accommodate these specic requirements essential

for retail chains to emerge (McCullough, Pingali, & Stamoulis, 2008).

Changes in marketing laws and newer platforms of transactions such as

eMarkets, warehousing and commodity futures have developed slowly to

rectify this mismatch. The Model APMC Act of 2003 amended the existing

marketing law in India to allow direct purchase from primary producers and

growers, previously not recognized. This led to the emergence of “contract

farming” initiatives in India through which retailers or wholesalers could

purchase products of specic grades, standards and other requirements that

could not be delivered by the existing markets. Newer marketing initiatives

and platforms have also been set in place to align traditional marketing with

changing markets. The initiatives using electronic platforms have been the

eNAM online trading platforms and online commodity exchanges provid-

ing platforms for agricultural commodity derivatives. In this section, we

look at the role of vertical coordination and online transactions to assess the

potential and challenges for small farm linkages to markets.

8.3.1

Ver

tical Coordination inValue Chains—Challenges

andLimitations

Vertical coordination (VC) are modes of exchange in which producers and

buyers bypass existing marketing channels to assure the supply of quality

agricultural goods, in demanded quality at a stipulated time. VC organizes

and orders together activities and information ow to reduce transaction

costs and control for quality and standards specications (Buvik & John,

2000). They are enforced by formal or informal contracts and arise when

P. PINGALI ET AL.

199

existing markets and supply chains are rigid to adapt to changes in demand

for agricultural goods. Under vertical coordination the terms of sale based

on prices, quantity and quality are xed by contracts ex ante between the

producer and buyer to reduce uncertainty. Contract farming (CF) is one

form of vertical coordination mechanisms that have been implemented in

many developing countries to address the changing demand requirements

and inefciencies of existing markets (Barrett etal., 2012; Glover, 1987;

Kumar, 2006; Narayanan, 2014; Singh, 2002).

This model is especially prevalent in highly perishable commodities

such as fresh fruits and vegetables (FFV), milk and meat (Birthal, Jha,

Tiongco, & Narrod, 2009; Chu-Ping, 2010; Swinnen & Maertens, 2007).

Under contract farming, farmers directly supply produce to retailers and

wholesalers under advanced contracts that stipulate time of delivery, quan-

tity, quality and variety (Benziger, 1996; S.Singh, 2011). Early examples

of CF in Spain and Japan in the 1950s indicate a reduction of production

cost, leading to its widespread promotion in these countries (Asano-

Tamanoi, 1988). Empirical evidence has shown contract farming to

address market failures and improve access to commodity markets and

inputs such as seeds, credit, fertilizer and pesticides, technology and exten-

sion services (Bellemare, 2012; Birthal etal., 2005; Eaton & Shepherd,

2001; Glover, 1987; Narayanan, 2014; Wang, Wang, & Delgado, 2014).

However, whether these institutions have beneted small and marginal

farmers have been widely debated. The emergence of supermarkets has led

to the widespread use of such contracts to assure the supply of vegetables

from producers in China (Hu, Reardon, Rozelle, Timmer, & Wang,

2004), Thailand (Boselie, 2002) and Central America (Berdegué,

Balsevich, Flores, & Reardon, 2005) with some success. In India, the con-

tract farming experiences have been varied. The two major challenges in

India and many developing countries with small farm-based agricultural

systems have been the exclusion of small farmers and the cost of organiz-

ing value chains. This has limited the impact contract farming has had in

linking small farms to value chains.

8.3.1.1

Size, Crop Type andGeography asInuence ofV

ertical

Coordination

Exclusion of farmers in VC initiatives or the high entry cost of participat-

ing in them is a concern for small producers. Size of farms and location are

shown to be decisive factors in forming linkages with farms. Some studies

have pointed out that because of high transaction and management costs,

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

200

small farms are discriminated against as it is less costly to make a small

number of contracts with large farmers than a large number of contracts

with small farmers (Dolan & Humphrey, 2000; Hazell, Poulton, Wiggins,

& Dorward, 2010; Reardon & Berdegué, 2002; Reardon, Timmer,

Barrett, & Berdegué, 2003; Swinnen & Maertens, 2007). Others have

noted that small producers have successfully formed contracts in particular

crops such as papaya (Narayanan, 2014), poultry (Chu-Ping, 2010;

Nguyen, Dzator, & Nadolny, 2015; Ramaswami, Birthal, & Joshi, 2009),

gherkins (Narayanan, 2014; Swain, 2011), milk (Birthal et al., 2005;

Holloway, Nicholson, Delgado, Staal, & Ehui, 2000), fresh fruits and veg-

etables (Ito, Bao, & Su, 2012; Rao, Brümmer, & Qaim, 2012; Trebbin,

2014; H.Wang, Moustier, & Loc, 2014), among others. In perishable

commodities with higher asset xity, contract farm seems to work better,

due to sunk costs, investment in infrastructure and limited hold-up costs.

Geographical location and levels of infrastructure can also inuence rmsʼ

choice of farms for procuring agricultural goods. Geography inuences agro-

climatic conditions (that determine the levels of risks, type of crops) and dis-

tance to markets. Infrastructure such as irrigation systems and good roads

with this can mitigate the disadvantages of climatic risks and poor connectivity

of farms. Therefore locations with better connectivity, infrastructure and mar-

ket connectivity are termed as high potential areas and others as low potential

areas (Pingali, Khwaja, & Madelon, 2007). Contracts with farms in high

potential areas are therefore preferred and there is evidence from India that

shows this. A study by Mangala and Chengappa (2008) in Karnataka reveals

that farmers in contract with food retail chains had higher land holding sizes

and irrigated land (6 acres and 4.5 acres) compared to traditional market

farmers (2 acres and 1.5 acres). Trebbin and Franz (2010) highlight that a

Food Chain Partnership (FCP) program

initiated by Bayer Crop Science in

India was highly selective about the farmersʼ eligibility (larger farms), the loca-

tion of farms (areas where retail and processing infrastructure was good) and

the crops they grew (high-value crops). Public goods complementarity of a

location may also inuence the potential of backward linkages to the farms.

Due to higher transaction and administrative costs, higher risks in production,

smallholders may not be preferred for vertical coordination in low potential

areas. Enabling VC and even market linkages for private trade in low potential

areas remains a big challenge.

FCP is a program launched by Bayer Crop Science in many developing countries for

sustainable production of vegetables.

P. PINGALI ET AL.

201

8.3.1.2 The High Cost ofOrganizing Value Chains andIncentives

toForm Linkages

Coordination of production and marketing activities in the value chains

has costs to it. Some of these costs are organizational costs and not trans-

action costs and may be higher in certain conditions. Reducing these costs

is essential to enable and maintain vertical coordination. In agricultural

value chains, buyers use contracts to stipulate ex ante price, quality and

time of delivery of products to producers. Forming contracts and manag-

ing them are fundamentally new costs that may potentially offset the gains

made at the production stages (Pingali etal., 2007). Therefore managing

organizational costs at the contracting stages becomes important in VC.

Owing to the small size of farms in India, aggregation of farmers is essen-

tial to enable contract farming. Here the signicant cost to rms are

(a)political costs or cost of collaborating with the state to set up initia-

tives; (b) bureaucratic costs or the cost of identifying farmers, coordinat-

ing intentions, formation of groups and establishing systems of governance;

the groups, establishing feedback mechanisms and monitoring to reduce

free-rider problems; (d) screening costs that entails cost of identifying

potential buyers (of produce), sellers (of inputs), institutions (banks, R&D

outts, agricultural universities); and (e) transfer costs of movement of

goods to retailers or processors, providing collective goods such as inputs,

credit, technology and extension services to producers. Table8.2 lists the

various coordination costs in forming VCs and their effects and inuences.

Addressing these costs is central to the ability of small farms to make effec-

tive linkages to value chains. High costs of coordinating production and

contracts with small farms often limit the potential of VC to emerge.

Therefore, VC is just one mechanism to rectify the challenges of the mar-

kets and the effective functioning of traditional agricultural markets is

essential for farm-market linkages.

8.3.2

Alternative Marketing Platforms—eMarkets, Future

Markets andWarehousing

The Planning Commission (2011) working group on agricultural market-

ing stated that the signicant challenges for markets were the large number

of intermediaries, inadequate infrastructure for storage and grading, poor

price setting mechanisms and poor competence of market staff. Agricultural

markets and their functioning differ from state to state, as market reforms

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

202

and governance are state subjects or under the jurisdiction of individual

states rather than the center. Although suggestions for making agricultural

markets a center or a concurrent subject to bring uniformity in the transac-

tion have met with many challenges, the electronic portal for agricultural

marketing has been operationalized (Narayanamoorthy & Alli, 2018).

eNAM is an online trading platform formed in 2016 that intends to link

APMCs to create a unied market. The platform has connected 585

APMCs (9% of markets) in 14 states. The electronic portal aims to help

price discovery across markets in India enable a harmonized grading and

standards system for a transparent transaction, bypassing intermediaries.

Figure8.2 shows the schematics of the functioning of an e-portal depicting

the entry, sampling and grading of agricultural produce before being put

on an electronic platform. Here traders from across the country can bid for

the produce and when the bids are nalized, they are weighed and stored

for collection. The payment is then made electronically to the farmer.

Although in principle a unied market is essential for price discovery,

standardizing practices and reducing transaction costs, the uptake and

integration to a virtual platform have been slow. The challenges are poor

infrastructure and systems in the market. The lack of testing machines and

Table 8.2 Coordination costs and effects at the rm level

Costs Characteristics Effects at rm level

Political cost Cost of collaboration with the state

for support and subsidies

Agency of coordinating

organization, social features of

groups. Costs may reduce overtime

Bureaucratic

cost

Initiating groups, formulating

functions and duties

Group leadership, incentive

structures, management expertise.

Costs may reduce overtime

Management

cost

Governing day-to-day tasks of the

groups, establishing feedback

mechanisms, monitoring

Level of benets provided, type of

goods and services, social capital.

Recurring cost

Screening

costs

Cost of identifying potential buyers

(of produce), sellers (of inputs),

institutions (banks, R&D outts,

agricultural universities)

Agency of coordinating

organization, ability to form

contracts, level of linkages to state

and markets. Costs may reduce

overtime

Transfer costs Cost of movement of goods,

providing collective goods such as

inputs, credit, technology and

extension services

Location of farms, crops are grown,

level of infrastructure. Recurring

cost

P. PINGALI ET AL.

203

technicians for grades and standards determination, poor internet connec-

tivity, poor storage facilities, low stakeholder participation and malprac-

tices in the form of misreporting physical auction as online auctions

(Nirmal, 2017). Online marketing platforms are not without success and

the eNAM model is based on Karnataka’s Rashtriya eMarkets Services Pvt.

Ltd., (ReMS). This joint venture between the Karnataka government and

the National Commodity & Derivatives Exchange (NCDEX) eMarkets

Limited. Currently, 157 of the 162 APMCs in Karnataka come under this

unied platform. The success of this platform can be seen in increased

market bids in auctions, reduced collusion among traders and cartels,

increased transparency in transactions and reduced delays in payments

compared to non-eMarkets (Reddy, 2016). Effective functioning of online

marketing platforms can also encourage increased private sector participa-

tion, and low potential areas that do not have the advantage for vertical

coordination can greatly benet from such models.

Commodity futures markets and warehousing of agricultural commodi-

ties are provisions that exist in the agricultural commodity space that is not

widely accessed. The reason for this is mainly due to low economies of scale

for smallholders. Although the government comprehensively banned futures

trading in 1966, based on the recommendations of various committees,

commodity derivatives trading was reintroduced in 2002–03. Through

Fig. 8.2 Functioning of the electronic portal (ReMS model) in India

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

204

commodity exchanges, a producer or aggregator can agree to sell agricul-

tural produce at a pre-determined xed price at a xed location to a buyer.

The position can be a short or long position and the buyer can sell the com-

modity in the spot market. Prot and loss from the commodity increasing

or decreasing in value is borne by the buyer, while the seller remains pro-

tected. Currently the major commodity exchanges are the National Spot

Exchange Limited (NSEL), Indian Commodity Exchange Limited (ICEX),

Multi-Commodity Exchange (MCX), National Commodity & Derivatives

Exchange Limited (NCDEX), National Multi-Commodity Exchange of

India Ltd. (NMCE), Ace Derivatives & Commodity Exchange Ltd. and

Universal Commodity Exchange (UCX) among others. Future markets,

which are private platforms, help in reducing price risks and in price

discovery.

Warehousing systems are essential instruments for agricultural market-

ing especially in the wake of high price volatility in agricultural commodi-

ties. Even when market prices are low, farmers sell their produce due to

cash constraints. In principle, under the warehouse receipt system, farmers

can store their produce in warehouses when the prices are low and sell in

the markets when prices pick up. When storing their produce, they are

issued with a warehouse receipt, which functions as a derivative, which can

be traded or put up as collateral with banks for immediate cash needs. The

advantages of warehousing are reduced handling costs, higher price real-

ization and the ability to buy and sell without physical transfer. Warehouses

can be public such as Food Corporation of India, Central Warehousing

Corporation, State Warehousing Corporation and State Civil Supplies,

cooperative or private.

Alternative markets are spaces where there is increased private sector

participation. A majority of the commodity futures platforms are private

sector driven, the successful ReMS model in Karnataka is a public-private

partnership and both public and private warehousing systems issue the

warehouse receipts. Companies such as ITC ABD one of the largest non-

state procurers of wheat in India uses futures platforms to buy and sell

wheat and soybean (Rajib, 2015). The private sector players also provide

essential services to spot markets. For example, NCDEX works with state

procurement agencies such as National Agricultural Cooperative

Marketing Federation of India Limited (NAFED) and Small Farmers’

Agribusiness Consortium (SFAC) to provide grading and testing services

before transactions. The signicant challenges for smallholder

participation

P. PINGALI ET AL.

205

in these platforms are infrastructure based and related to scale. Access and

connectivity to warehouses and collection points is a concern for produc-

ers in low potential areas. Public goods such as roads and storage infra-

structures are needed for improved participation. Low volumes of produce

is again a concern as agricultural output is highly differentiated and in

small quantities. This often means the crops produced may not be of the

accepted variety or grades and standards. Additional xed costs for grad-

ing, weighing and storage insurance further dissuade smallholder partici-

pation in these platforms.

The scope of different forms of marketing is limited to the type of

crops, location and the levels of risks associated with production. In high

potential areas with irrigation and good access to markets, the scope for

producing high-value crops is strong. In these scenarios, the favorability of

vertical coordination emerging is strong. In lower potential areas where

there are higher production risks and locational advantages are weak, the

effective functioning of APMCs remains crucial. In these locations, the

scope of eMarkets, commodity futures and warehousing are also high.

Also, with non-perishable agricultural commodities, the development of

these alternative markets can help remedy some of the potential challenges

of the APMCs such as intermediaries, lack of grades and standards and

better price discovery and realization. However, for the emergence of

newer forms of value chain linkages, there is still a need to remedy the

issue of economies of scale, access to capital for both producers and value

chain actors and effective governance of value chains and markets. For

this, effective institutions and policy to enable farm-market linkages are

necessary.

8.4 InstItutIons AndPolIcy—VAlue chAIns

Andthefuture offood systeMs

Linking smallholders to markets is essential for commercialization, to

improve household level incomes and provide the incentive for diversica-

tion. Well-functioning value chains are also critical to improving the ef-

ciency of bringing food from farm to table by minimizing food loss and

waste, thus improving access and availability of food. With changing demand,

we see newer channels and platforms of marketing emerging to cater to

the changing need. However for small producers to connect to markets

through these requires policy support, interventions like aggregation models,

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

206

infrastructural development and reform of existing marketing practices that

have led to increasing transaction costs in the market. These measures are

essential for making value chains sustainable and improving welfare.

8.4.1

Ver

tical Coordination andLinkages toAlternative

Marketing Platforms

In a predominantly smallholder-based agricultural sector, aggregation

of farms and effective legislature to enable and enforce contracts are

essential for VC. In Chap. 7, we looked at how aggregation models

have the potential to address issues of scale with accessing factor mar-

kets such as credit, inputs and technology. These models in the form of

cooperative and FPOs can also enable better farm-

market linkages.

Lar

ger farms are preferred to smaller farms as they incur higher costs in

contacting and operations. However, in the case of many developing

countries, buyers often have no choice but to engage with small and

marginal producers due to their predominance in the agricultural sector

(Narrod etal., 2007). The role of producer organizations in this regard

becomes crucial.

Aggregation models and vertical coordination mechanisms such as con-

tract farming go hand in hand in small farm-based economies as they

address the various challenges of the value chain. Although the provisions

for contract farming and formation of FPOs were around since 2003,

both initiatives have had limited success. Contract farming has been lim-

ited to few crops in select locations, and currently, there are few, if any,

examples of self-sustaining FPOs. Linkages between these two institu-

tional arrangements are also now few. However, the main factors affecting

the uptake of contract farming such as locational disadvantages, costs of

selecting farmers, contracting and monitoring and enforcement are poten-

tially remediable through FPOs. Table8.3 summarizes the various cost

characteristics of selection barriers of choosing location and farmers and

adherence problems of contract formation and implementation along with

costs to both rm and individuals/FPO and the incentives to rms to

backward integrate. Aggregation models can reduce search costs (farms

and locations) and contracting and monitoring costs (compliance and

enforcement) and address some of the disadvantages smallholders have in

vertical coordination. In 2018, the government of India introduced the

Model Agriculture Produce and Livestock Contract Farming and Services

(Promotion & Facilitation) Act, to better facilitate contracts between

P. PINGALI ET AL.

207

farmers and buyers. This new law remains outside the jurisdiction of the

APMC act and emphasizes the role of FPOs in contract farming. In the

traditional contract farming model, contracts were mostly informal and

breach of agreements have been common (Dileep, Grover, & Rai, 2002;

S. Singh, 2002; Swain, 2011). The new act now promotes enforceable

legal agreements, with dispute settling mechanisms to enable contract

adherence by producer and buyer.

In alternative eMarket platforms, future markets and warehousing,

economies of scale, information and standardized commodities are essen-

tial. Aggregating can help in reducing xed costs of quality determination,

transportation to physical locations of transactions and enable better link-

ages to nancial services. There are examples of FPOs trading on the

NCDEX and warehousing their products with them. In 2018, NCDEX

has opened accounts with over 151 FPOs in 12 states trading in around

16 mostly non-perishable commodities. These platforms also form the

Table 8.3 Cost and incentives of rm FPO linkages

Features Cost

characteristics

Cost to rm The cost to

individuals/FPO

Incentives to rms

Choosing a

location

Identifying

location specic

to need

One time: Search

and opportunity

cost

Location-specic

transaction costs

Bypass markets,

stable price and

supply, control

grades and

standards

requirements

Selecting

farmers

Identifying

farmers with

specic

characteristics

One time: Search

and opportunity

cost

Household-

specic

transaction

costs,

opportunity

costs

Minimize sear

costs, screening

costs, household-

specic

transaction costs

Contract Forming

contacts specic

to a context

Recur

ring: The

cost of specifying

contracts—terms,

timing, volume

and so on

Bureaucratic

costs, screening

costs,

management

costs (esp.

monitoring)

Reduced

bureaucratic and

management

costs

Compliance

and

enforcement

Monitoring and

enforcing of

contracts by

stakeholders

Recurring:

Coordination

cost of ensuring

compliance

Monitoring

costs

Reduced

enforcement and

monitoring costs

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

208

space for private sector linkages with small farms. Aggregation models,

therefore, have the potential to develop a tie to both VC and alternative

marketing platforms.

8.4.2 Market Reforms andInfrastructure

Although vertical coordination and alternative markets are essential plat-

forms and strategies for improving market access in small farm-based

economies, enabling efcient access to agricultural spot markets is also

necessary. Agricultural markets are fragmented with a large number of

intermediaries functioning in them. These intermediaries, however, per-

form important aggregation roles when agricultural markets are thin and

standardization roles in the absence of established grades and standards.

Better access to markets would require infrastructure to improve connec-

tivity through roads to enable better transportation of goods, cold chains

and goods storage facilities to reduce wastage and proper communication

channels through which price and quality information can be transferred.

These changes will also allow for better functioning of alternative market-

ing platforms, especially eMarkets and warehousing. The role of public

sector investment is essential to create public goods in this sector. Effective

infrastructural development is also vital to elicit a private sector invest-

ment response in the value chain. Despite policy mandating the creation

of backend infrastructure in organized retail, this has not been the case

due to uncertainty about policy regarding FDI in organized retail.

Introduction of grades and standards along with infrastructure and meth-

ods to determine this at markets is essential to bring about objective

grade-based price determination. Policy to enable market reforms, insti-

tutions for the enforcement of enacted policy and infrastructure to

improve physical access to markets are therefore critical for sustainable

value chains.

Ethics in value chains is essential for sustainable development of the agri-

cultural sector. This involves elements of livelihood rights, food and envi-

ronmental safety, reduction of ecological externalities and human and animal

rights. Therefore, ethical supply chains essentially comprise three signicant

components: protability, local development and the environment.

Protability takes into consideration how revenue and prots are shared

within a value chain, where every stakeholder stands to benet. Local devel-

opment considers public and consumer health, welfare and labor standards

while environment ascertains the environmental impact of the value chain

P. PINGALI ET AL.

209

from farm to fork. Another aspect associated with sustainable value chains is

the issue of food loss. Reduction of food loss in the value chain will ease

production pressures when economical, improving access and availability

and reducing environmental externalities from the need to produce more.

Compared to developed economies where a signicant portion of food loss

happens at the retail and household levels, in emerging economies, food loss

often takes place at the post-harvest stages of storage and transportation.

This is usually due to inadequate information regarding best practices or

poor or inadequate infrastructure. Food loss often means loss of macronu-

trients such as fat, calories or proteins, or micronutrient loss such as vitamins

and minerals. Reducing wastage and loss are crucial for food security

through nutrition-sensitive food systems and sustainability as this would

help reduce the strain of population increase and environmental degradation.

8.5 conclusIon

Smallholder linkages to commodity markets are essential for agricultural

development and commercialization. These linkages help improve house-

hold level welfare through income growth when commodity prices are

realized in the market. However, the ability of smallholders to access mar-

kets that are characterized by changing demand for higher value and qual-

ity goods is problematic due to farm and market level challenges. The

primary farm level challenge has been rectifying economies of scale prob-

lems, while the main market level problem has been high transaction costs

resulting from poor infrastructure and institutions to regulate and stipu-

late exchange (commodities price being determined by non-price factors

and lack of enforced grades and standards-based transactions is a good

example). Aiding smallholders to address these problems will help improve

market linkages and incentivize production corresponding to chang-

ing demand.

Vertical coordination, alternative private markets such as commodity

futures markets and warehousing and private-public venture markets have

emerged to rectify what traditional spot markets have had limited success

in addressing. Vertical coordination has improved market access in perish-

ables such as fruits and vegetables, while alternative markets have helped

in the marketing of non-perishables such as oilseeds, cereals, pulses, spices

and plantation crops. While these linkages play an essential role, effective

functioning of spot markets remains crucial. Reducing transaction costs

through improved connectivity, development of market infrastructure,

LINKING FARMS TOMARKETS: REDUCING TRANSACTION COSTS…

210

reducing the inuence of intermediaries will be central to this. Aggregation

models to rectify scale disadvantages will enable better participation of

smallholders in different marketing arrangements. The emergence of dif-

ferent marketing platforms are essential as they can address various kinds

of institutional, access and marketing problems. Formulating policy to

better link smallholders to these platforms will prove critical.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_9

CHAPTER 9

Agricultural Technology forIncreasing

Competitiveness ofSmall Holders

9.1 IntroductIon

Agricultural technology plays a vital role in building viable and sustain-

able food systems. The Green Revolution (GR) is a landmark example of

how scale-neutral technology transformed agricultural production, lead-

ing to increased productivity of staple grains, poverty reduction, increased

availability of food grains and lower food prices (Pingali, 2012). It played

an integral part in making many parts of the developing world food

secure regarding caloric access and put to rest concerns of having

reached the carrying capacity where the population exceeds what the

agricultural sector can support. However, as India moves towards becom-

ing the most populous nation in the world by 2050, concerns of agricul-

tural productivity are being revisited. The limitations of GR technologies

were that it was concentrated to high potential regions where irrigation

was readily available, it was limited to wheat and rice and that it has had

environmental consequences due to injudicious use of inputs leading to

reduced soil fertility and water table depletion in some regions. In Chap. 7,

we looked at the institutional factors such as land size and access to land,

credit, technology and infrastructure such as irrigation that inuences the

ability of smallholders to commercialize and diversify. In the wake of

challenges of growing population and climate change along with improv-

ing productivity and protability, sustainability through reduced impact

216

on the environment is central for the future of agricultural development.

Therefore, while technology remains crucial to boosting agricultural

yields and growth, newer approaches to technological interventions need

to help limit environmental externalities such as land and water degrada-

tion and emission of greenhouse gases, expand to low potential areas of

eastern India bypassed by the Green Revolution and bring yield increases

to a more diverse group of crops.

Sustainable intensication is a process by which agricultural outputs can

be increased without increasing inputs such as land, through the judicious

use of agricultural inputs such as water and fertilizers and reducing exter-

nalities such as greenhouse gas (GHG) emissions and land and water deg-

radation (Pingali, 2012; Pretty, Toulmin, & Williams, 2011). Technology

or the use of scientic knowledge and management of inputs are the two

main components of this approach. Technology is essential to improve

yields and increase resistance to climatic risks such as droughts and oods

and mechanization to reduce drudgery and improve efciency, while man-

agement practices are necessary to improve resource utilization and reduce

emissions of greenhouse gases from agricultural production. In this chap-

ter, we highlight the signicant challenges of agricultural production and

the technological and input management interventions that are required

to address them in the context of the Indian food system. The chapter is

divided into three parts. In the rst part, we look at the signicant post-

Green Revolution pr

oduction and environmental challenges of the agri-

cultural sector in different agro-climatic regions of the country to highlight

the various challenges. In the second part, we assess the nature of techno-

logical interventions, specic to the region, that are needed to increase

productivity, while limiting environmental externalities and assuring equi-

table growth. In this section, we look at the shift from conventional plant-

breeding technologies to rst- and second-generation genetically modied

(GM) technologies and the pr

omise they hold for the agricultural sector

and the future of food security. Here we also look at the need for the col-

lation and dissemination of information about the environment, economy

and good practices to enable better decision making at the farm level to

complement technology with effective use of scarce resources. The last

part looks at the policy and institutional support that is required to enable

technological interventions and adoption, especially by smallholder farmers

as we look ahead to 2050.

P. PINGALI ET AL.

217

9.2 the Post-Green revolutIon challenGes

toIndIan aGrIculture—From envIronmental

xternalItIes toclImate chanGe

India’s grain production alone needs to grow by about 42% from the 2015

levels (or by 377 million tons) to meet the projected demand of 2050.

The

rising demand for higher value food products such as fruits and vegetables

and animal products has pressured food systems to increase yields and to

diversify. The Green Revolution (GR) by tripling grain production with only

a 30% increase in land under cultivation (Pingali, 2012) in the 1970s was

able to offset potential shortages arising from population growth. As India

moves towards becoming the most populous nation, technology is again

being sought out for solutions. However, the challenges going forward are

different and there is a need to develop technological interventions to

address them. In this section, we look at the main challenges that sustainable

intensication needs to address to emerge as a solution to boosting agricul-

tural productivity and growth. First, we discuss the limitations of GR tech-

nologies concerning their environmental externalities and not being

resource-neutral, and second we look at the challenges of climate change as

a dominant variable in its inuence on food production.

9.2.1 Going Beyond Green Revolution Technologies

Although GR technologies were scale-neutral allowing small farms to

adopt them, they were not resource-neutral that led to sizeable regional

inequality and low diversication (Chap. 7 details this discussion). Rain-

fed regions, which could not adopt these technologies, did not benet

from productivity growth and development of the agricultural sector. The

focus on wheat and rice led to food self-sufciency and calorie availability,

but crowding out of coarse cereals led to low micronutrient availability in

the food system. The lopsided production incentives in some crops led to

the emergence of intensive mono-cropping in irrigated tracts of India

(Abraham & Pingali, 2019; Pingali, 2012). The environmental impact of

the GR was also mixed. Although it limited conversion of new land for

agriculture, excessive use of inputs led to chemical runoffs, soil degradation

http://www.icrisat.org/yield-gap-and-water-productivity-atlas-launched-for-india/

(Accessed on 10/01/2018).

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

218

and water table depletion (Pingali, 2012). India has one of the world’s

highest rates of water depletion (Aeschbach-Hertig & Gleeson, 2012).

According to the World Resources Institute, 54% of India’s total area faces

high water stress concentrated in the northwestern regions and the eastern

coastal regions (Shiao, Maddocks, Carson, & Loizeaux, 2015), where GR

technologies were most successfully adopted. Much of the eastern part of

India where farm level access to irrigation is low, water stress remains low

to medium.

About 64% of land degradation in India is caused by water erosion

(Mythili & Goedecke, 2016), while the remaining can be attributed to

human-induced and natural soil degradation resulting from deforestation,

pollution, poor agricultural practices, over-grazing and wind and water

erosion. Table9.1 shows that the northwestern and southern regions have

the largest degraded land area; these are also the regions with high water

stress. GR technologies, therefore, came at an environmental cost and as

India looks to increase yields and diversify production, it is important to

consider measures to reduce environmental externalities of technological

intervention and adopt technologies that may require resource use in line

with regional endowments. The potential of eastern India for agricultural

growth will shift the development focus to the region, and the adoption of

technology along with good management practices will be necessary to

reduce environmental stress and keep agricultural production sustainable.

9.2.2 Climate Change, Environmental Degradation

andPr

oduction Risks

Climate change and its effect of agricultural production was not a variable

considered during the GR era, but productivity growth requires higher

energy utilization that inevitably leads to higher emissions. Today there is

ample evidence that high emissions leading to climate change have an

impact on the production conditions of crops and livestock. Agricultural

production, therefore, inuences and is inuenced by climate change. It is

a large emitter of carbon dioxide (CO

)-based and non-CO

-based green-

house gases (GHGs) such as methane (CH

) and nitrous oxide (N

O),

contributing to changes in temperature. The Indian agricultural sector

contributes 18% of the total emissions of India.

Rice and livestock

A detailed discussion on the role of climate change and food systems will be discussed in

Chap. 10.

P. PINGALI ET AL.

219

Table 9.1 Classication of land degradation in India by regions (in ’000hectares)

Region Water erosion Wind erosion Waterlogging Salinity/

alkalinity

Several degradation

types combined

Total degraded

area

Area Degraded

area (%)

North 23,449 9,040 4,396 3,342 335 40,562 101,061 40

Northeast 4,136 – 522 5,534 2,422 12,614 26,219 48

Central 17,883 – 359 6,842 1,126 26,210 44,345 59

East 9,249 – 3,392 2,322 194 15,157 41,833 36

West 16,446 443 599 1,869 1,993 21,350 50,743 42

South 22,330 – 5,031 1,902 1,302 30,565 63,576 48

Union

territories

187 – – 9 9 205 825 25

India 93,680 (64%) 9483 (6%) 14,299 (10%) 21,820 (15%) 7,381 (5%) 146,663 (100%) 328,602 45

Source: Mythili and Goedecke (2016)

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

220

production are the largest contributors emitting 36.9% and 38.9% of

GHGs respectively by way of anaerobic and enteric fermentations (Vetter

et al., 2017). Simultaneously, changing weather patterns and extreme

weather events inuence production conditions and the risks under which

agricultural production takes place.

Yield increasing technology interventions in agriculture were also

supported by policies providing input subsidies to improve and incen-

tivize adoption. Over time, however, continued subsidization of tech-

nologies has led to their overuse. Subsidized electricity for water use

made the agricultural sector energy intensive, and fertilizer subsidies

made agriculture GHG intensive, especially N

O (Vetter etal., 2017).

Urea subsidies have been higher than phosphate and potash-based fer-

tilizers, and this has led to over-application of nitrogenous fertilizers

resulting in lower efciency and soil health (Prasad, 2009). Subsidized

electricity has also shown to lead to over irrigation, severely depleting

groundwater levels (Bhanja etal., 2017; Jacoby, 2017; Raman et al.,

2015). Agricultural practices such as excessive tillage and overuse of

machinery, heavy use of inorganic fertilizers, poor irrigation and water

management techniques, pesticide overuse, low carbon inputs, and

reduced crop cycle planning are signicant contributors to degradation

(R.Bhattacharyya etal., 2015).

The effects of climate change from temperature increase and land and

water degradation will have different effects in various agro-ecological

regions. In marginal areas constrained by water-related challenges, the

impact of droughts and water shortages will have a signicant impact on

productivity through increased agro-climatic risks. In high agricultural

productivity areas, water shortages due to depleting groundwater levels,

water contamination due to runoffs and soil degradation due to over-

application of fertilizers will be detrimental to pr

oduction. Diversication

to higher value agriculture may also require higher inputs in the form of

water, fertilizer and feed, and with it will come increased emissions.

Technology interventions, therefore, have the twin task of improving pro-

ductivity while reducing and managing externalities. However, technol-

ogy interventions come at an energy cost (Soby, 2013), and as agricultural

production moves towards higher commercialization, emissions are bound

to increase. Coupling technology with good management practices to

reduce externalities, efciently utilize water and land resources and chemi-

cal and fuel inputs are essential to mitigate climate change and reduce its

impact on agriculture.

P. PINGALI ET AL.

221

9.3 the new role oFtechnoloGy

andmanaGement ForsustaInable aGrIculture

The biggest technological challenge in agriculture is to increase yields

through intensication, without increasing negative externalities of dimin-

ishing biodiversity, greenhouse emissions and land and water degradation,

among others—this is often referred to as sustainable agricultural intensi-

cation (FAO, 2016; Matson, Parton, Power, & Swift, 1997; Pretty etal.,

2011). With a majority of production taking place on small and marginal

farms, making technology accessible is crucial for income growth, poverty

reduction, food security, gender empowerment and environmental sus-

tainability (Byerlee, de Janvry, & Sadoulet, 2009; Pingali, 2010). However,

the limited capacity of smallholders to manage climatic risks, especially

during adverse events is limited, and this can trap them in chronic poverty

(Carter & Barrett, 2006; Fafchamps, 2003; Kebede, 1992).

Technology, therefore, needs to focus on three aspects: One, technology

needs to be accessible by often resource-poor small and marginal produc-

ers. Two, it should help increase productivity for a growing population

keeping in mind limitations of land and water resource availability. Three,

technology should enable and better manage resource utilization and exter-

nalities from agricultural production to prevent accentuation of climate

change. The impacts of climate change will be felt disproportionately across

India with sub-humid and semi-arid regions prone to droughts, the delta

and coastal regions prone to ooding and storms. Strategies tailored to

regions depending on current agricultural development and climatic risks

are essential to address specic risks. In this section, we look at the role of

plant technology interventions in increasing production and management

practices that make up the core of sustainable intensication and technol-

ogy approaches to improve efciency in the context of Indian agriculture.

We specically look at the increasingly important role of biotechnology in

the form of genetic modication supplementing GR technologies that were

predominantly based on conventional plant-

breeding (CBP).

9.3.1 Yield Gaps and

Resilience—The Role ofPlant Technologies

India has 20 agro-ecological zones (AEZs)

with varying physiography,

precipitation, temperature and soil type determining conditions under

which agricultural production takes place (L.Ahmad, Habib, Parvaze, &

This classication is used by the National Bureau of Soil Survey & Land Use Planning

(NBSS&LUP). These 20 AEZs are further divided into 60 sub-zones.

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

222

Sheraz, 2017). In the sub-humid and semi-arid regions of central and the

eastern parts of the country, agro-climatic risks and availability of water are

signicant challenges to agricultural production. Ninety-four percent of

wheat production and 95% of sugar production takes place under irrigated

conditions. Sixty percent of the area under rice is irrigated while less than

10% of coarse grains and 20% of pulses are grown under irrigated condi-

tions. Figure9.1 shows the relationship between yield and irrigation in

various states for rice, wheat and coarse grains. In the case of rice, wheat

and coarse grains, there is a strong relationship between yields and irriga-

tion, with states with higher access to irrigation having higher yields. In

pulses, this relationship does not hold as the average yield in Jharkhand

and Madhya Pradesh is the same despite a 40% difference in access to irri-

gation for pulses cultivation.

In Punjab, the wheat yields are 2 to 2.4 times higher than in other states,

and rice yields are 1.5 to 2 times that of states such as Odisha, Maharashtra,

Madhya Pradesh and Bihar. Increasing production of major staples sustain-

ably would mean closing this yield gap between regions. Figure9.2 also

shows differences levels of irrigation within a state for different crops. While

close to 90% of wheat cultivation in Madhya Pradesh is under irrigation,

less than 10% of coarse grains come under irrigated conditions. In coarse

grains such as millets and sorghum and pulses, the Indian yields are low in

West Bengal

Uttar Pradesh

Bihar

Chattisgarh

Odisha

Assam

Haryana

Madhya Pradesh

Telangana

Jharkhand

Karnataka

Maharashtra

Gujarat

Kerala

All India

0.0

20.0

40.0

60.0

80.0

100.0

1400 19002400 2900 3400

% area under irrigation

Yield- kg/ha

Rice

Rajasthan

Karnataka

Madhya Pradesh

Uttar Pradesh

Maharashtra

Bihar

Telangana

Gujarat

Haryana

Himachal Pradesh

Jammu & Kashmir

Jharkhand

Chhattisgarh

Odisha

All India

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

5001000 1500 2000 2500 3000 3500

% area under irrigation

Yield- kg/ha

Coarse Grains

Punjab

Tamil Nadu

Andhra Pradesh

R² = 0.6195

3900 4400

Uttar Pradesh

Madhya Pradesh

Punjab

Haryana

Rajasthan

Bihar

Gujarat

West Bengal

Uttarakhand

Maharashtra

Jharkhand

Karnataka

Telangana

All India

R² = 0.3033

40.0

50.0

60.0

70.0

80.0

90.0

100.0

110.0

900 1400 1900 2400 2900 3400 3900 4400 4900

% area under irrigation

Yield- kg/ha

Wheat

Tamil Nadu

Andhra Pradesh

West Bengal

Punjab

R² = 0.5931

4000 4500

Madhya Pradesh

Rajasthan

Maharashtra

Karnataka

Andhra Pradesh

Uttar Pradesh

Tamil Nadu

Odisha

Jharkhand

Gujarat

Chhattisgarh

Bihar

West Bengal

Telangana

Haryana

All India

R² = 0.0334

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

400 500 600 700 800 900

1000

% area under irrigation

Yield- kg/ha

Pulses

Fig. 9.1 Relationship between yield and area under irrigation in selected crops

in India (2015–16). Source: Department of Agriculture, Cooperation & Farmers

Welfare, Government of India; based on authors calculations

P. PINGALI ET AL.

223

Pulses

2500

2000

1500

1000

KG/HA

500

2000

1500

1000

500

Bangladesh

Ethiopia

Ghana

India

Kenya

Myanmar

Pakistan

South Africa

Sri Lanka

3000

2500

India

Myanmar

Canada

China

Brazil

Sorghum and millets

Ethiopia

USA

Russian Federation

Australia

Nigeria

World

Sorghum

Millets

Fig. 9.2 Global variations in yield. Source: FAOSTAT; based on authors

calculations

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

224

comparison to other developing countries (Fig.9.2). Low level of R&D

and limited access to irrigation for coarse grains and pulses restricts the

availability of marketable surplus and increases risks of production, disin-

centivizing production. Increasing the yield of pulses will incentivize their

adoption in the fallows of eastern India helping improve availability and

incomes. Higher yields from pulses that are grown mostly in regions where

access to irrigation is low will enable income growths and incentivize pro-

duction. Increasing coarse grain yields and breeding more climate resilient

varieties will enable its adoption more widely.

Evidence of climate change affecting agriculture is strong. The chal-

lenges agricultural production faces from temperature increases are

decreased yields (Lobell, Schlenker, & Costa-Roberts, 2011; Nelson,

Valin, et al., 2014), higher risks of pest attacks and disease outbreaks

(O’Brien etal., 2004), lower quality and quantity of feed and forage and

water availability depletion. These changes would not only affect the pro-

duction of crops, but also impact the production of livestock and comple-

mentary products such as milk availability (Rojas-Downing, Nejadhashemi,

Harrigan, & Woznicki, 2017). Also, heat stress impacts animal health,

increases parasites and pathogens (Niang etal., 2014; Thornton, van de

Steeg, Notenbaert, & Herrero, 2009) and increases the risk of mycotoxin

contamination in cereals and pulses (Paterson & Lima, 2010). The latter

increases safety concerns in the food supply chains as products move from

farm to plate. Closing existing yield gaps and regional disparities in agri-

cultural production, while simultaneously dealing with concerns of cli-

mate change, will be the signicant aim and challenge of technological

interventions as we look ahead.

Although the role of conventional plant-breeding to improve yields in

coarse grains and pulses remain signicant, genetic engineering advances

have led to opportunities in developing plants that can improve yields,

remain resilient to climate change impacts and also reduce environmental

externalities. Genetically modied organisms (GMOs) can be more pre-

cise, productive and faster than conventional plant-breeding (CPB) and

have found use in biofuels, food, cash and fodder crops, livestock, sheries

and forestry. The primary difference between GM biotechnology and

CPB is that biotechnology transcends species and uses gene manipulation,

gene transfer between species, DNA typing and cloning to develop new

plant varieties (C.N. Rao, Pray, & Herring, 2018). The rst-generation of

GM crops was engineered to have tolerance or resistance to insects, pesti-

cides and herbicides, and examples of these were Bt maize, Bt cotton,

P. PINGALI ET AL.

225

Pat-maize and GT soybeans, among others. In India, Bt cotton was the

only rst-generation GMO that was introduced to the agricultural sector.

Second-generation GMOs are characterized by increased tolerance to abi-

otic stress (drought, ood salinity) and substantial changes in content of

nutrients (protein, amino acids, fatty acids, starch, vitamins, minerals and

enzymes), enabling the creation of resilient and more nutritive crops

(Buiatti, Christou, & Pastore, 2013; Flachowsky & Aulrich, 2001; C.N.

Rao etal., 2018). So far, no second-generation GMOs have been allowed

in the Indian agricultural sector.

Enabling yield increases in coarse grains such as millets and sorghum and

pulses and developing crop varieties specic to sub-humid and semi- arid

agro-ecologies will be the role of technology in production increase. R&D

through CPB to introduce high-yielding varieties (HYVs) of coarse grains

and pulses will help productivity growth in regions of eastern India where

they have an advantage in growing, enabling income growths and increas-

ing per capita availability of these crops that have been decreasing over the

past few decades. Adoption and growth of Bt cotton production in India is

an example of a rst-generation GMO that has been widely adopted and

has had a signicant impact on pesticide reduction, yield gains and income

increase contributing to poverty reduction and rural development (Qaim,

Subramanian, Naik, & Zilberman, 2006; A.Subramanian & Qaim, 2011).

Bt cotton, a genetically modied organism (GMO) using Bacillus thuringi-

ensis, a naturally occurring bacterium that protects from bollworm infes-

tation, was rst introduced in India in 2002. Since then, cotton yields

have gone up almost four times and the total cotton production increased

from 11.53 million tons in 1999–2000 to 32.58 million tons (Fig.9.3).

Pulses CottonRiceWheat

1960

1980

Change in Yields (%)

Since 1950–51

100

200

300

400

500

2000

Fig. 9.3 Yield trends in selected crops in India from 1950–51 to 2016–17.

Source: Department of Agriculture, Cooperation & Farmers Welfare, Government

of India; based on authors calculations

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

226

Due to the reduced use of pesticides, it has been found that the environ-

mental impact quotient of Bt cotton was lower than conventional cotton

breeds (Ashok, Uma, Prahadeeswaran, & Jeyanthi, 2018).

In the wake of climate change, development of second-generation

GMOs that can withstand agro-climatic risks is essential. Development of

heat-tolerant and drought-resistant crops will allow for productivity

growth in regions that were bypassed by the Green Revolution and in

temperate regions susceptible to weather-related risks. Drought tolerant

varieties in staples such as maize, rice and wheat have been in development

and are in various stages of implementation or trials. The International

Maize and Wheat Improvement Center (CIMMYT) and the International

Rice Research Institute (IRRI) have been front-runners in this research.

Research on developing heat-resistant wheat, rice and maize are still ongo-

ing, and they are not yet commercially available (Rosegrant etal., 2014).

Like drought resistance, heat resistance in a plant is an essential trait in the

wake of climate change. In the semi-arid regions, this may prove crucial for

agricultural production. Chapter 10 discusses the effects of climate change

on the nutritive value of crops as there is ample lab-based evidence to show

that rising temperatures can reduce the nutrient contents such as proteins

and vitamins in crops. GMOs allow for the biofortication of crops that

would increase nutrient content, compensating for reduced availability.

Technology to reduce emissions from growing various crops is also

important. Plants with traits such as Biological Nitrication Inhibition

(BNI) that suppresses the loss of nitrogen from the soil can improve

uptake efciency and boost crop productivity (Subbarao et al., 2017).

These technologies coupled with management practices such as zero

tillage can reduce emissions signicantly. The IMPACT models of the

International Food Policy Research Institute (IFPRI) that assesses the

long terms challenges in addressing hunger and poverty forecasts that

thenumber of undernourished people can be reduced by 12% or 124 mil-

lion in developing countries through nitrogen-efcient crops. Further, the

model also predicts that 9% or 91 million and 8% or 80 million of the

worlds under nourished can be reduced though adopting zero tillage and

heat tolerant and precision agriculture methods respectively (FAO, 2016;

Rosegrant etal., 2014). These changes might be signicant in the Indian

agricultural sector. Technological intervention, however, needs to be cou-

pled with management practices for efcient implementation and reduc-

ing environmental externalities as witnessed under the Green Revolution.

P. PINGALI ET AL.

227

9.3.2 Information, Management Practices, Production

andConsumption Efciency forSustainable Intensication

The accessibility and availability of information are crucial to making

agricultural production and marketing decisions needed for agricultural

growth and development. As farms increase their engagement with mar-

kets, information systems are essential to enable them to make proper

planting, harvest and marketing decisions (Aker, 2011; Ogutu, Okello,

& Otieno, 2014). Information communication technologies (ICTs) have

been shown to have great potential in reducing information asymmetries

and improving the efciency of production and marketing. Management

of resources, especially inputs, is essential to bring about sustainable

intensication. Technological measures to increase productivity need to

be coupled with management of resources to reduce externalities such as

emissions and overuse of natural resources. Management practices in

agriculture and availability of information are inextricably linked as one

complements the other. In this section, we look at the importance of

improving access to information, the role technology plays in enabling

this and how information access and good management practices go

hand in hand.

ICTs are any medium or device that allows for the collation and dis-

semination of information. The advantages of ICTs are that they can

enable quick dissemination of accurate information in an information-

intensive activity like agriculture. Table9.2 shows the different stages of

production and the nature of the information that is essential to make

signicant production and marketing decisions. The major types of

information and services producers require are market and price infor-

mation, weather information, technical extension services-based infor-

mation or the combination of the three (Aker, Ghosh, & Burrell, 2016).

The traditional ICTs were the television, radio and newspapers, and in

the last decade or so, mobile phones have emerged to be the dominant

medium. Between 2003 and 2016, the number of mobile phones grew

at a CAGR of 40% from 13.29 million to 1027 million. Mobile phone

penetration and easy access to data plans make ICTs more effective in

making information accessible. There is evidence to show that ICTs can

play a role in the early adoption of technologies such as GM crops and

practices such as zero tillage (Fischer, Byerlee, & Edmeades, 2009).

Studies have also shown that ICTs help in acquiring information about

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

228

seed varieties, weather-related information and diseases (S. Mittal &

Mehar, 2012) and better price realization and less wastage (Aker &

Fafchamps, 2015; Muto & Yamano, 2009; J.Robert, 2007).

ICTs often rely on platforms on which information can be collated.

These platforms would bring together information regarding weather,

technical extension and markets. Creating and maintaining these plat-

forms can be costly. Information platforms need to have a sufcient user

strength and a steady revenue stream in order to be nancially viable.

Information also needs to be reliable, accessible and affordable for it to

have an impact on agricultural production and marketing.

Management of resources that goes into agricultural production needs

to complement technology adoption for sustainable intensication and

reduced environmental externalities. The FAO (2010) describes con-

servation agriculture (CA) technologies as resource-saving agricultural

practices that consider sustainable productivity and prots in enabling

Table 9.2 Stages of production and marketing and type and source of information

Stages Information Source

Pre-

cultivation Cr

op selection Input and output market, technical

extension and meteorological

Land selection Input market

Commodity price Output market

Weather Meteorological

Cultivation Land preparation Technical extension

Access to credit Financial

Access to inputs Input market

Planting Technical extension

Weather Meteorological

Water, fertilizer, pest

management

Technical extension

Labor Labor market

Harvest Labor Labor market

Mechanization Technical extension

Post-harvest Processing Output market

Storage Output market

Transportation Output market

Marketing Output market

Commodity price Output market

Grades and standards/quality Output market

Source: Adapted from Aker etal. (2016)

P. PINGALI ET AL.

229

conservation. Climate-smart agriculture as “agriculture that sustain-

ably increases productivity enhances resilience (adaptation), reduces/

removes greenhouse gases (mitigation), and enhances achievement of

national food security and development goals” (FAO, 2010; Lipper

etal., 2014). Supplementing agricultural programs with agroforestry for

carbon sequestering, soil conservation and watershed management pro-

grams is crucial for sustainable intensication (Lipper, Pingali, & Zurek,

2006; Pretty etal., 2011).

As soils hold the second largest pool of carbon (after the oceans),

changes in the stock of organic carbon in them can affect atmospheric

to a great extent (Chappell, Baldock, & Sanderman, 2015). The type

of soil, nutrient and water management practices adopted by farmers dur-

ing agricultural production inuences these cycles. Maintaining the bal-

ances in the carbon and nitrogen cycles plays a vital role in the reduction

of GHGs and is an integral part of soil management (J.A. Burney, Davis,

& Lobell, 2010; Wollenberg etal., 2016). In India, the use of nitrogenous

fertilizers (urea) is disproportionately higher than phosphate and potash

due to high subsidies, and the use varies from state to state. In irrigated

tracts application rates are much higher, and in states like Punjab, Haryana

and Telangana, urea use ranges between 169 and 185kg/hectare, while

in Madhya Pradesh, Rajasthan and Odisha, the application rates range

between 24 and 53kg/hectare. The amount of fertilizer applied to the

soil, fallowing practices, nitrogen-xing crop cover and tilling practices are

the main determinants of these cycles and the amount of CO

and N

released into the atmosphere. Judicious use of nitrogen fertilizers and fal-

lowing and tilling practices are critical to limiting N

O emissions and pre-

vent soil erosion and loss of organic matter from the soil. Also, integrated

soil fertility management (ISFM) that involves balancing organic and syn-

thetic fertilizer to maintain a balanced supply of nutrients and good land

management practices need to be put in place to ensure the sustainable

increase of yields.

Increasing water use efciency is essential to ensure the availability of

water and mitigate the effects of prolonged drought scenarios. This requires

an institutional and technical change at the farm and national level that

enables conservation, replenishment and effective allocation. In rain-fed

regions of the country, investment in irrigation infrastructure, especially

drip irrigation, and promotion of activities such as water harvesting will be

critical to improving water availability. Water stress and drought are often

exacerbated by land degradation in sub-humid and semi-arid conditions to

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

230

a higher degree than purely arid conditions (Adhikari, 2013). The sensitiv-

ity of a particular food system to climate change increases with scarcity and

degradation of these natural resources. Therefore, systems by which

resources are used and replenished will help manage the impact of agricul-

tural production on the environment. Watershed and aquifer management

in semi-arid regions along with informational services on climatic variability

need to be built into water management practices to help regions cope or

manage water stresses.

Effective management of common-pool resources is critical to conser-

vation agriculture, and this cannot be done without community-based ini-

tiatives that disseminate and implement location-specic interventions in

different agro-climatic zones. Conservation and climate-smart agriculture

are methods of sustainable intervention that works in tandem with tech-

nological intervention. Extension services to improve agronomic prac-

tices, infrastructure and access to technology are essential interventions for

smallholders. However, institutional interventions are required to enable

adaptation by small farms.

9.4 the way Forward: InstItutIonal suPPort

FortechnoloGy adoPtIon

The role of the state and institutions in areas such as biotech policies,

infrastructure and credit systems that can improve smallholder access to

technology is critical to enable sustainable intensication. The successful

diffusion of GR technologies was a result of scale-neutrality of technolo-

gies and state and policy support. State involvement resulted in subsidies

for inputs and their effective distribution along with extension services at

the production stages and assured prices and procurement by the state to

create buffers incentivized their adoption in a big way (Pingali, 2012).

The Indian Council of Agricultural Research (ICAR) and the State

Agricultural Universities (SAUs) adapted the technology that came from

the International Maize and Wheat Improvement Center (CIMMYT) and

the International Rice Research Institute (IRRI) for Indian conditions.

The National Chemical Laboratory in Pune helped with developing ef-

cient methods for pesticide production, the Projects and Development

India Ltd. (PDIL) designed and built fertilizer factories and the Central

Mechanical Engineering Research Institute (CMERI) was instrumental in

designing the economic Swaraj tractors (Pray & Nagarajan, 2014).

P. PINGALI ET AL.

231

The fundamental platform of GR technology was hybrid seeds through

conventional plant-breeding that could improve the yield of crops. Since

GR, there has been a signicant paradigm shift in agricultural R&D, and

newer agricultural technological interventions that have emerged are

based on genetic modication, relying on changing the fundamental traits

of plants (Ramani & Thutupalli, 2015). This brings to the forefront three

concerns of affordability, adaptability and safety. Newer technologies may

require a higher amount of capital, expertise and infrastructure to be

accessed and implemented. For mechanization of farms the issues of econ-

omies of scale and with reference to GM technologies, issues of public

health and safety need to be addressed. Institutional intervention such as

improved access to credit, smallholder aggregation and platforms for

debate and deliberation regarding GMOs need to evolve.

9.4.1 Cost ofTechnology—Affordability, Adaptability

andEconomies ofScale

In the last decade, funds for public sector R&D have reduced glob-

ally and private sector involvement in this space has been growing

(Jaruzelski, Staack, & Johnson, 2017). In the case of China, India

and Brazil, however, public sector investments have been increasing,

although not at the pace of private sector investments. Signicant

investments are being made in seed and plant biotechnology, agricul-

tural machinery, pesticides and fertilizers (Pray & Nagarajan, 2014). In

India, the public sector is a signicant player in R&D with regard to

self-pollinated crops such as rice, wheat, pulses and oilseeds (Ferroni &

Zhou, 2017). The public sector has a 50% share in fertilizer and 20%

share in seed production and sales. As the majority of seed production

and sale and mechanization and pesticides take place through the pri-

vate sector, it has come to play a signicant role in agricultural inputs

since the 1980s. At the same time, public sector R&D under the ambit

of the ICAR has been under considerable stress due to lack of nancial

resource, research clarity and collaboration between different public

research institutions (GOI, 2015).

Smallholder access to seed technologies, mechanization, information

and extension services will determine their ability to be economically via-

ble and sustainable. Traditionally the state has played an enabling role in

agricultural production as policies and R&D institutions have determined

smallholder access to credit, information and extension services, subsidies

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

232

and price support. These measures favored the major staple grains such as

wheat and rice, incentivizing their widespread adoption at the cost of

other crops such as pulses and coarse grains. Leveling the policy playing

eld by removing distorted support and improving marketing infrastruc-

ture can encourage the emergence of R&D in other crops such as coarse

grains and pulses and enable diversication. The state support and encour-

agement in the formation of community-based development programs

such as water user groups, agroforestry and aggregation models are needed

and essential to enable smallholders to better adapt and implement newer

interventions for conservation agriculture and to rectify economies of

scale disadvantages.

The role of aggregation models in smallholder agricultural systems

like India is vital in accessing credit and mechanization. This is discussed

in more detail in Chap. 7. Mechanization is emerging to be an essential

aspect of production, especially concerning rising farm and non-farm

wages. It plays a crucial role in improving the efciency of labor by

reducing drudgery, time savings (Ibarrola-Rivas, Kastner, & Nonhebel,

2016) and also improving the nutritional status of individuals by diver-

sifying household level time use (D.Johnston, Stevano, Malapit, Hull,

& Kadiyala, 2018). Women face signicant labor productivity con-

straints, and often conservation agriculture may increase womenʼ s work-

load (from weeding and other labor-intensive activities) and reduce the

burden on men (Kaczan, Arslan, & Lipper, 2013). Rental market for

farm machinery is a fast growing service (Binswanger & Singh, 2017),

and women’s self- help groups (SHGs) jointly owning and leasing out

machines are successful models that can be seen in many locations.

Therefore, productivity-enhancing technologies and interventions need

to be

gender- neutral and in some cases gender-specic (Carrand &

Hartl, 2010). The policy challenge we highlight here is how to promote

(a) context-specic, (b) environmentally sustainable, (c) affordable and

(d) gender-neutral technologies.

9.4.2 The GM Debate

Genetic modication entails the creation of cr

ops with desired characteris-

tics such as herbicide tolerance, disease and pest tolerance, quality improve-

ments, reduced emissions, tolerance to biotic stress and quality enhancements

(Nelson, 2001). The process often involves moving genes between (sexu-

ally incompatible) organisms to create ‘transgenic’ crop species that can be

P. PINGALI ET AL.

233

conducive to resilient agricultural development. In the wake of climate

change, natural resource degradation and the need to increase food pro-

duction, the potential of biotechnology is promising. However, the longer-

term side effects of technology can seldom be predicted with accuracy.

Even with GR technologies, externalities such as environmental degrada-

tion and erosion of biodiversity, among others, emerged only later, making

GMO a contentious topic in India as around the world. Despite no veri-

able evidence of adverse effects on the environment, human or animal

health, there has been a strong opposition to GM technology in India

(C.N. Rao etal., 2018). Bt cotton, the only GM crop allowed in India, is

a cash crop, and the lines of the debate were soft. However, resistance by

civil society to introducing GM crops for human consumption has been

inuential within India. Although the biosafety regulatory mechanism in

India is robust with every organization involved with recombinant DNA

research requiring Institutional Biosafety Committees (IBSCs) and having

the Department of Biotechnology under the Ministry of Science approving

any new technology, the debate on GM crops is still polarizing.

The existing and future challenges of the Indian and global agricultural

systems to increase production and adapt to climate change require tech-

nological interventions in both the rst- and second-generation GM

crops. As discussed earlier in this chapter, the impact of Bt cotton on

incomes and the environment in India have been positive as a result of

lower cost of production from reduced pesticide use and higher yields. In

2009, an attempt to introduce Bt brinjal in India failed due to pressure

from civil society organizations despite being approved by the Genetic

Engineering Approval Committee (GEAC) under the Ministry of Science

(Herring, 2015). The government has since introduced a moratorium on

GMOs until sufcient evidence proved they were safe. In 2014, the gov-

ernment proclaimed GM crops to be in the national interest which

approved further eld trials for GM rice, mustard, cotton, chickpea and

brinjal (Ramani & Thutupalli, 2015). Categorization of GM as a special

risk has created an uncertain investment climate that has driven out small

players in the biotechnology sector (C.N. Rao etal., 2018).

The NITI Aayog in the Economic Survey of 2015–16 came out in

favor of GMOs and in the years to come India can expect a shift to GMOs

in food crops. However, there are signicant issues that still need to be

addressed regarding trust in regulatory mechanisms, platforms for dia-

logue and information dissemination and reporting. With the deviation

from the state being the center of R&D in agriculture, its approaches to

AGRICULTURAL TECHNOLOGY FORINCREASING COMPETITIVENESS…

234

regulating biotechnology to assure biosafety are essential. Central to this

regulation is building trust in these institutional processes. For this, in

India, there is a need for platforms for debate between science communi-

ties, civil societies, farmers groups, state and citizens. Misinformation and

inadequate translation of scientic research impact on society can often

skew or polarize debates of such kind. The need to promote translation

services to inform debates is also vital as we move ahead. Effective plat-

forms of addressing such concerns are central to encourage R&D and

innovations especially in the private sector that can address specic prob-

lems related to crop yield, resilience and quality to meet the food security

challenges of the future.

9.5 conclusIon

Technology in the past has played a critical role in enabling food secu-

rity in the developing world. The Green Revolution helped in increasing

yields of wheat and rice, making many countries like India self-sufcient

in these grains. One main reason the Green Revolution was successfully

implemented was that it was scale-neutral, allowing small and marginal

producers to adopt them. However, as these technologies were not

resource-neutral, only regions with access to irrigation and rainfall were

able to adopt them. The limitation of these technologies was that they

were limited to signicant staple grains and in regions where irrigation

resources were available, leading to inter-regional and intercrop dispari-

ties. The impact these technologies had on the environment because of

poor management was also high, leading to depletion of water tables and

land degradation.

Technology remains critical for the new food security challenges India

will face as we move towards becoming the most populous country in the

world. Adding to production challenges is the issue of climate change. As

agriculture inuences and is inuenced by climate change, the need to

reduce emissions and other environmental externalities as the sector

grows become essential. Therefore, the new role of technology is sustain-

able intensication—or increasing productivity by limiting or reducing

externalities such as land and water degradation and emissions. First- and

second- generation GM technologies hold promise in improving returns

to farming through reduced cost of production and increasing resilience

and the nutritive value of crops in the wake of global warming and

climate change. Coupled with the effective management of resources

P. PINGALI ET AL.

235

(nutrient, water, natural resources) to improve efciency and reduce

their overuse is necessary in India.

However, assuring access and availability of technology to smallholders

is vital to ensure sustainable intensication. Unlike Green Revolution

technologies, newer technologies are private goods, and access to capital

and scale to implement are essential. Institutional interventions to pro-

mote aggregation models and improve access to credit are essential to

enable adoption by smallholders. There has been much debate about the

safety of GM crops in India and around the world. Despite no evidence

being found that GMOs are detrimental to human, animal and environ-

mental health there has been much opposition to it, discouraging invest-

ments and innovation in agricultural R&D. India needs to have more

forward- looking biotechnology policies and institutions that can address

some of the concerns regarding the safety of GMOs and lay to rest misin-

formation. This is essential to bolster innovation and investment from the

private sector and also enable institutional support for the adoption of

biotechnology in agriculture.

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P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_10

CHAPTER 10

Managing Climate Change Risks

inFood Systems

10.1 IntroductIon

Through this book, we have presented arguments for developing a robust

and equitable food system which is anchored on the goal that all indi-

viduals who depend on it have to be able to secure food and nutrition

for greater welfare. Food and nutrition security in its broadest deni-

tion refers to the ability of individuals to access good quality, nutritious

foods that are affordable and available at all times. In addition to provid-

ing access to nutritious foods, food systems have to account for external

conditions, such as vagaries of the weather, and political stability, which

moderate the ability of individuals to access nutrition. In this context, cli-

mate change has been identied as one of the greatest threats to food and

nutrition security. This complex phenomenon, which involves changing

weather patterns, increased incidence of extreme weather events and the

reduction in the quality of natural resources, is expected to impact food

systems through multiple channels. One, by changing optimal grow-

ing conditions for crops and increasing uncertainty in extreme weather

events, climate change is expected to impact the availability of food and

nutrients. Two, at the current level of technology, climate change will

increase uncertainty in production. This can lower access to nutrients

and nutrition in the food that is already available for consumption. In

combination with its effects on overall health quality of individuals, cli-

mate change will reduce the ability of individuals to absorb nutrients,

242

thus impacting labor productivity. This, in turn, would reduce future

economic growth prospects. Finally, climate change is expected to nega-

tively impact economic development by increasing the vulnerability of

different regions and different population groups. For example, for those

with social disadvantages, lower ability to cope with climate changes will

further increase their risk of hunger and food insecurity. Similarly, regions

with low rural development andhigh poverty rates will be less capable of

adapting to climate change.

In this chapter, we review climate change related risks on food systems.

We outline the various pathways through which climate change impacts

food systems and emphasize evidence from India. We discuss policy and

institutional measures that are currently in place to mitigate and manage

these risks. Keeping in sight the food security needs of the future, we also

discuss some guiding principles for mitigation and adaptation strategies

that can be included in these policies that can help in creating robust

food systems.

10.2 What Is IndIa’s ExpErIEncE ofclImatE

hangE thus far?

At its core, climate change refers to the fallout of the phenomenon of

increasing global temperatures, due to increased greenhouse gas (GHG)

emissions,

on human welfare. Increase in global temperature has been

associated with the melting of glaciers, changing intensity of precipitation

cycles, melting of permafrost in the arctic, depletion of the ozone layers

and the acidication of oceans (Cruz etal., 2007; IPCC, 2014; Schuur

etal., 2015; Shrestha, Gautam, & Bawa, 2012; Speers, Besedin, Palardy,

& Moore, 2016). Extreme events such as high-intensity

hurricanes,

GHG contributes to warming of temperatures by their ability to absorb and emit radiant

energy from thermal infrared radiations. The primary GHGs in the earth’s atmosphere are

carbon dioxide (CO

), ozone, nitrous oxide methane and water vapor. Human activity in the

post-industrial era is the prime contributor to CO

increasing from 280ppm in the early

1800s to around 400ppm in 2014 (ppm—parts per million). This is a 40% increase over the

250years, the highest ever in the paleo experience of the earth. Nearly 80% of these CO

emissions come from industrial processes and the burning of fossil fuels while the rest of the

20% comes from deforestation, land clearing and degradation of soils. Increase in global

GHG emissions have increased average global temperatures by around 1 degree Celsius

(IPCC, 2014).

P. PINGALI ET AL.

243

ooding, droughts, forest res, extreme heating of lakes, changing coast-

lines and so on are perceivable and measureable outcomes of climate

change. These have been increasing in both frequency and intensity over

the last decade, and the distress caused to human health, economic devel-

opment and agricultural systems has been well documented across the

globe (IPCC, 2014).

Experts have also brought to the fore the more immediate impacts of

global warming in the Indian subcontinent. In the last 50years, satellite

data suggest that maximum temperature increases have been around 1

degree Celsius across the country (Fig.10.1). Current projections estimate

further increases by around 2 to 4 degree Celsius by the end of the century.

Also, projections also show regional variation in the impacts of tempera-

ture. For example, the western and the southern parts of the country are

expected to see the greatest increases with regard to temperature. Increase

in the mean temperature and increases in the number of hot days have been

documented across the country as well (IMD, 2018; K.R. Kumar, Kumar,

& Pant, 1994). Changes in precipitation patterns such as increased oods,

increased incidences of severe droughts, changing optimal growing seasons

and changes in rainy period start dates have created already increased

Fig. 10.1 Temperature (degree Celsius) and rainfall (mm) change. Source:

AidGeo Data; based on authors calculations

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

244

uncertainty for agricultural systems (Kothawale & Rupa Kumar, 2005;

K. S. K. Kumar & Parikh, 2001; S. N. Kumar, Yadav, Jee, Kumar, &

Chauhan, 2011; A.K. Misra, 2014; O’Brien etal., 2004; A.Sharma &

Pingali, 2016). Figure10.1 also shows us some of these signicant changes

in the rainfall pattern across the country.

Here we see that parts of the

north and northwest have seen a decline in precipitation while southern,

eastern and northeastern regions have seen an increase in precipitation over

time. There is also evidence that increase in the rate of glaciers melting in

the Himalayas has increased downstream ooding thus impacting the pro-

ductivity of lowlands (Kattelmann, 2003; Shrestha etal., 2012; Vedwan &

Rhoades, 2001; Watanabe, Ives, & Hammond, 1994). Excessive deforesta-

tion and indiscriminate land clearing have also contributed to ooding and

have increased air pollution (Sinha & Swaminathan, 1992; E.Somanathan,

Prabhakar, & Mehta, 2009). Increased trafc, urban congestion, poor

waste management and land degradation have also been linked with

increasing pollution and higher carbon emission rates across the country’s

landscape (Auffhammer, Ramanathan, & Vincent, 2006; J. Burney &

Ramanathan, 2014; R.Gupta, Somanathan, & Dey, 2017; O’Brien etal.,

2004). Even in current folklore, the urban rich complain about buying new

air conditioners since summers have become too hot and also complain

that pollution prevents them from enjoying the cool winter breeze. In rural

areas, farmers now concede that they can no longer accurately predict

changing rainfall patterns and intensity and their ground water sources are

drying up. These anecdotal conversations nd themselves validated in jour-

nalistic articles that further reinforce the importance of both accepting and

also addressing the problem that climate change poses to us as a popula-

tion. However, aside from these directly perceived changes to welfare, cli-

mate change creates additional challenges to food systems as we look ahead.

10.3 pathWays throughWhIch clImatE changEs

mpact food systEms

By increasing the probability and frequency of extreme weather events,

climate change can impact food systems in the following ways (Fig.10.2).

First, by reducing access to water,

increasing unpredictability of weather

In the paper by (Mall etal., 2006), authors show evidence that changes to temperature

and rainfall will become evident by 2040in India.

In Chap. 8, we discussed the problem of lack of water access in more detail. Hence we do

not delve further into the topic in this chapter.

P. PINGALI ET AL.

245

conditions and reducing the quality of natural resources on which crops

depend, climate change can increase uncertainty with regard to food pro-

duction. This, in turn, can reduce food and nutrition availability and

increase food price volatility. Two, climate change can reduce labor pro-

ductivity by affecting individual’s health both directly and indirectly. By

increasing morbidity and the severity of communicable and non- commu-

nicable diseases, climate change can reduce an individual’s capability to

absorb nutrients from food, thus reducing health. Through the channel of

increased volatility of food prices and decreased food and nutrient avail-

ability, climate change reduces access to food. This too impacts the health

of individuals and hence their labor productivity. In the absence of safety

nets, lower labor productivity reduces the affordability of individuals and

hence reduces their economic growth prospects for the future. Finally,

climate change can directly reduce economic opportunities by increasing

the vulnerability of certain regions and population groups. Vulnerable

groups such as people living in coastal areas, poor rural agricultural house-

holds and women and older individuals may experience the negative effects

of climate change by more if they do not have the appropriate capabilities

to adapt to its negative effects. This, in turn, lowers long-term economic

growth prospects for both individuals and food systems. Decrease in food

availability, labor productivity and lower long-term economic growth may

Fig. 10.2 Pathways: Impact of climate change on food systems

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

246

create a vicious cycle of low adaptation capability towards climate change

which can worsen its impacts on individuals. In the next section, we pres-

ent evidence on these pathways and we bring forth evidence from India

on the same.

10.3.1

Impacts onFood andNutrient Availability

Climate change impacts food and nutrient availability by r

educing agricul-

tural productivity both directly and indirectly. Inthe absence of crop tech-

nologies to tide over the vagaries of weather, climate change can increase

production uncertainty as well as decrease crop and livestock productivity.

With lower amounts of foods available, climate change can directly impact

total nutrient availability within a food system. Climate change can also

impact the quality of natural resources on which human food production

depends. Soil degradation and acidication of oceans can reduce the qual-

ity of nutrients by impacting the health of crops, livestock and sheries.

Finally, an indirect method through which climate change can impact food

and nutrient availability is through increasing price volatility. As food and

nutrient availability decreases and extreme events threaten their produc-

tion, increasing prices and increased price volatility will reduce access if

income increases cannot keep pace with these changes. Also, if actors

along the food supply chain do not store food properly or distribute sur-

pluses across times of shortages, this can further reduce the availability of

foods and nutrients for individuals. In this section, we highlight some of

the research on this pathway.

10.3.1.1

Impact onAgricultural Productivity

Plant scientists agree that quantifying the impact of increasing tempera-

tures on crop yield is not straightforward. For example, temperature

increases have been found to have benecial impacts if it combined with

other optimal growing conditions. Increase in atmospheric CO

(a GHG)

too, can improve crop growth performance by increasing the rate of pho-

tosynthesis and water use efciency (Challinor et al., 2014; Lobell &

Burke, 2010; Nelson, Mensbrugghe et al., 2014). However, there few

important caveats that need to hold for the conclusion that yield changes

can be positive. One, agricultural systems require adequate ground water

management systems and enough access to irrigation to tide over changes

in precipitation patterns that come with climate change (A.K. Misra, 2014;

Qadir etal., 2008; R.G. Taylor etal., 2013). Two, temperature need to

P. PINGALI ET AL.

247

remain increase below 30 degree Celsius during the growing season. After

this threshold, temperature increases are considered to be extremely dam-

aging to yields for crops that are rain fed (IPCC, 2014). Even across crop

groups, total impacts on yields are found to differ. For example, climate

model projections nd that with adequate irrigation, rice crops may actu-

ally benet but crops such as wheat and maize will lose out (Challinor

etal., 2014; Nelson, Mensbrugghe etal., 2014). Also, much of the research

on the impacts of climate has been conducted in developed countries,

which are located in temperature zones where increases in temperature will

be benecial. However, many developing and emerging countries are in

tropical zones. Due to their geographical locations, these areas are expect-

ing to see an unfavorable increase in temperature which has greater impacts

on food production and hence food security. Three, scientists have also

established that even if there may be net benets to calorie availability

through greater yields, a major fallout of climate change will be lower bio-

availability of protein and micronutrients such as iron and zinc which are

more sensitive to changes in plant physiology due to climate change

(Dietterich etal., 2014; Müller, Elliott, & Levermann, 2014).

In India too, projections of climate impact on yields and production

have shown there are differences in outcomes both by crops and by region.

Table10.1 summarizes the more recent projections for different crops in

India. Overall, we see that by 2050, projections estimate between 4% to

8% decrease in yields of crops at the minimum and around 25% decrease at

the maximum. Regarding staple crops, we see that rice yields are expected

to decrease by 4% and the productivity in the northwestern region, which

is currently the high productivity belt for rice production, is extremely

vulnerable to temperature changes. For wheat and sorghum too, experts

estimate 6–7% decrease in overall productivity by 2050 due to increases in

temperatures. Due to low adaptation capability of agricultural systems in

the east, there are expected decreases in the productivity of horticultural

crops such as coconut, potato and mustard. On the positive side, these

productivity decreases may be offset by increases in productivity of the

same crop groups in the south. Regarding staples, production and yields

of wheat, maize and chick pea are thought to be most vulnerable especially

in areas where crops are rain fed (Mall, Singh, Gupta, Srinivasan, &

Rathore, 2006; A.Sharma & Pingali, 2016, 2018). However, for some

non-

staple crops such as pearl and nger millets, A.Sharma and Pingali

(2018) nd that climate change may be more detrimental due to the lack

of availability of heat- and drought-resistant crop technology. Threats to

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

248

Table 10.1 Climate change impacts on yields in India

Literature Crops Temp threshold Projections (2020,

2050, 2080)

Strategies for adaptation Regional disparities

S.N. Kumar etal. (2015) Potato 17 degree Celsius Declines by

2.5%, 6%, 11%

Changing planting

period & nitrogen

application

Northwest +

East −

Boomiraj, Chakrabarti,

Aggarwal, Choudhary,

and Chander (2010)

Mustard 25 degree Celsius Declines by

2%, 7.9%, 15%

Changing planting

period & fertilizer

application

Punjab +

Central −

East −

P.Singh etal. (2014) Groundnut Yield gains to be

expected

Drought-resistant

variety

Project site

Anantapur,

Junagadh

S.N. Kumar and

Aggarwal (2013)

Coconut 4% to 5% increase by

2050

1% to 4% increase by

2080

Soil moisture

conservation, summer

irrigation, drip irrigation

South +

Northeast +

East −

Hebbar, Venugopalan,

Prakash, and Aggarwal

(2013)

Cotton Regional increases

in temperature

No changes for A1B

Reduction in yield for

other scenarios

Water management North −

Central + or same

South + or same

S.N. Kumar etal. (2014) Wheat 27 degree Celsius Declines by 6% to 23%

by 2050,

15% to 25% by 2080

Timely planting,

heat-tolerant varieties,

input efciency

Central −

South −

P. PINGALI ET AL.

249

Soora etal. (2013) Rice Sensitive to min

temp> 19 degree

Celsius

Declines by

4%, 7%, 10%

Heat-resistant variety,

irrigation

All India −

Northwest large

decrease

A.Srivastava, Kumar, and

Aggarwal (2010)

Sorghum Sensitivity increases

after 2deg. Celsius

temp increase

Decreases by

7%, 11%, 32%

Changing sowing dates

of monsoon- dependent

varieties

South Central −

Central −

Southwest zone −

Byjesh, Kumar, and

Aggarwal (2010)

Maize Temperature

increases can be

offset by rainfall

In some areas, it is

expected to increase

South −

Central −

Upper Indo-

Gangetic Plains +

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

250

their production will have important implications for nutrient security as

these crops (millets) are known to be the most important source of pro-

teins and micronutrients in the diets of the poor.

The othercaveats to keep in mind while talking about the benets from

climate change are the following. One, while many of the climate models

used to make projections based on estimates to changes in seed technol-

ogy and water availability, they do not account for increases in tempera-

ture that will make environmental conditions favorable for new pests,

weeds and pathogens to thrive. The increased pestilence and pests resis-

tant to current treatment options can have a major negative impact on

crop productivity. The productivity impact of heat stress on agricultural

inputs such as labor and livestock are also not accounted for in the projec-

tions. Two, in India, nearly 60% of all agricultural land continues to remain

rain fed (Mall etal., 2006). Without appropriate groundwater manage-

ment practices such as construction of aquifers, improvement of irrigation

channels and prevention of acidication of soils, the impact of the changes

on crops yields may be more devastating than what the models predict

(Abraham & Pingali, 2017; Brenkert & Malone, 2005; Guhathakurta,

Sreejith, & Menon, 2011; O’Brien etal., 2004; Sinha & Swaminathan,

1992). Three, while a large part of the scientic discourse has been focused

on calorie security through investments in staple grains, the impacts of

climate on the yields of non-staples and hence impacts on protein and

micronutrient availability is less understood (A.Sharma & Pingali, 2018).

Many of the poor (and vegetarians) in India rely on non-staple crops for

enhancing their nutritional diversity. Given the lack of technologies cur-

rently available to safeguard productivity and the lack of information

about climate impacts on these types of crops, the vulnerability of non-

staple crop production becomes a major food security concern for the

future. Safeguarding the production of these crops will be important in

the goal of achieving nutrition security. This argument also extends

towards yields of non-staple crops as well as yields of livestock and sher-

ies. For example, increasing sea temperatures are known to decrease yields

of small shes and increase the incidence of harmful cyanobacteria that will

impact nutrition availability from these sources (Brenkert & Malone,

2005; Paerl & Paul, 2012). Changes in temperature are also expected to

bring forth new pathogens that will affect zoonotic pathways within which

human and livestock interact with each other, thus further impacting

yields and productivity of livestock (Myers etal., 2017). These factors too

may impact nutrient availability and hence the quality of food.

P. PINGALI ET AL.

251

10.3.1.2 Impact onBiodiversity

Forests, grasslands, marshes and their related ecological species play an

important role in protecting food systems. The most important is their

ability to mitigate some effects of climate change through carbon seques-

tration. For example, even though agriculture is thought to contribute to

nearly 25% of the world’s GHGs, nearly 20% of these emissions are reab-

sorbed by the bio-ecosystems around them (IPCC, 2014). Mature eco-

logical systems are thus key to reducing the GHGs in the atmosphere and

reducing the intensity of climate change on inputs in the food systems.

Regarding benets to agriculture and food production, bio-ecosystems

play a major role in soil conservation. Forests prevent soil erosion and

produce organic matter that can improve nutrient content in soils around

them (R.R. Banerjee, 2015; Steiner, Briske, Brown, & Rottler, 2018).

Coastal marshes are also known to prevent excess ooding and acidica-

tion of soils in areas around them (Wigand etal., 2017). However, there

are currently no market tools that can value the contributions of ecological

systems services towards climate health and hence their value in food sys-

tems is underestimated. Even climate scientists do not account for the role

of these systems in mitigation and adaptations strategies for global climate

change, thus reducing global discussion on their preservation. This

increases the vulnerability of bio-ecosystems to climate change which spills

over as a greater vulnerability for food security.

10.3.1.3 Impact onPrice Volatility andFood Access

In a country like India, having access to food is complicated by food price

volatility (from production uncertainty) and inefcient food distribution

systems. The former reduces the affordability of foods and the latter

reduces access due to high rates of food loss and waste. Both these factors

reduce access to nutrition in diets. With regard to the former, in combina-

tion with rising per capita demand for food, changing preferences towards

more diverse diets and shrinking productivity and (or) food production,

climate change increases uncertainty in the food supply and hence increases

volatility in associated food prices. While a trend of rising prices may

reect increasing demand for food, increase in price volatility in the short

run (due to shortfalls in production from extreme weather events) addi-

tionally widen the gap of access for the poor who have limited abilities to

smooth consumption in times of price volatility. Another major contribu-

tor to price volatility is inefcient supply chains that are associated with

high levels of food and nutrient loss as food moves from farm to plate.

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

252

Inareport by the FAO in 2011 on food loss and waste, it was estimated

that nearly 90% of all food losses occurs in the supply chain process

between the farms and the urban markets in South Asia. These losses con-

tribute to the reduction in food and nutrient availability, thus exacerbating

production shortfalls. Even as late as 2014, inefcient supply chain pro-

cesses of the PDS that were meant to supply adequate calories to individu-

als could not reach 194 million hungry people in India.

This was in a year

where the country produced a surplus of 40 million tons of staples.

Unexpected spikes in prices of food have been associated with increased

incidence of conicts (Bellemare, 2015; D’Souza & Jolliffe, 2013;

Hossain & Green, 2011; J.Swinnen & Squicciarini, 2012; C.P. Timmer,

1989), reduction in welfare of net consumers of food (Wodon & Zaman,

2010) and lower diet quality in households (D’Souza & Jolliffe, 2013).

The unprecedented spikes in world food prices in 2008 due to energy

related constraints was thought to have been an underlying factor in food

riots across 23 countries. India, too, is also not a stranger to food ina-

tion risks. Research has documented that food price volatility can impact

an incumbent’s political position during election cycles (Besley & Burgess,

2002). In the past, when there have been production shortages, either

locally or globally, the government of India has smoothened prices

through the release of its own stocks as well as procuring from interna-

tional markets to avoid such political upheavals (Besley & Burgess, 2002;

C.P. Timmer, 1989).

10.3.2

Impacts onHealth andThus Future Labor Pr

oductivity

Having good health has been linked to better educational outcomes, wages

and labor productivity. More healthy individuals are more productive and

can access opportunities to better their own and their family’s circum-

stances. Climate change can affect the health of individuals, and hence labor

productivity, by (1) increasing risks for malnutrition and by (2) increasing

morbidity that spills over into poor health through the same channel. With

regard to its direct effects, by reducing access to good quality food and

foods with micronutrients, climate change can increase undernutrition,

hidden hunger and obesity risks. Indirectly as well, by increasing risks of

https://www.reuters.com/article/us-india-food-hunger/as-millions-go-hungry-india-

eyes-ways-to-stop-wasting-14-billion-of-food-a-year-idUSKBN1ET07Y (Accessed February

2018).

P. PINGALI ET AL.

253

vector-borne diseases (due to changes in temperature or precipitation) and

non-communicable diseases (due to the changing health environment), cli-

mate change can increase risk factors related to malnutrition. These changes

can lead to a vicious cycle of poor health and increased exposure to climate

risks. As the health of individuals deteriorates, labor productivity of indi-

viduals will fall and this increases their exposure to income shocks that cli-

mate change may pose.

10.3.2.1 Direct Impact onMalnutrition

A more nuanced assessment of the impact of climate on food and nutrition

security involves unpacking its implications on food quality. Quality, here,

refers to access to a diet that reduces the incidence of the triple burden of

malnutrition. Food system related interventions in the past have focused

singularly on increasing the access to calories in order to reduce hunger

and undernutrition. However, even as we have had some successes towards

meeting the SDG targets of reducing calorie-related undernutrition, cli-

mate change has brought new problems to the center stage. First is the

impact of climate change on undernutrition and hidden hunger. The

majority of the poor in India depend on plant-based foods for proteins

and micronutrients. With lower bio-availability of protein due to climate

change, this can adversely affect protein related undernourishment (Myers

etal., 2014). Lower micronutrient content in plants too will manifest itself

in higher rates of anemia (Brabin, Hakimi, & Pelletier, 2001; Kalaivani,

2009; Rasmussen, 2001; Yip, 2000). Two, prices of foods generally reect

calorie availability and not value from its nutrition content. Without an

appropriate way to signal the value of nutrient diversity, prices of food will

never reect nutrition scarcity. Without this information, the research and

business community may continue to focus on developing adaptive strate-

gies to maintain calorie content for foods rather than developing nutrient

rich crops. Lack of support for increasing diversity in diets by incentivizing

greater production and consumption of non-staple foods (such as live-

stock, sheries and non-staple crops) may lead to further degradation of

diet diversity within households (P.Pingali, 2012, 2015; P. L. Pingali,

Spielman, & Zaidi, 2014). Three, without the proper incentives to develop

nutrient rich food, individuals may face increases in obesity due to over-

consumption of nutrient poor foods. All these factors would, in turn,

impact nutrient absorption capability of individuals and hence affect the

health of individuals.

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

254

10.3.2.2 Other Impacts onHealth andNutrition Access

In addition to the direct climate impacts on nutrition availability, acces-

sibility and quality, there are some indirect pathways through which

climate can impact food security. With temperature increases across the

globe, experts have predicted that there will be a spatial redistribution

in the incidence of vector-borne diseases. Zoonotic diseases, diseases

transmitted from animals to humans, that were traditionally found in

warmer climates will become more common in colder areas (Patz,

Campbell-Lendrum, Holloway, & Foley, 2005). This includes the inci-

dence of diseases such as malaria and other vector-borne diseases that

are dependent on temperature, water, humidity and so on (Dhiman,

Pahwa, Dhillon, & Dash, 2010; Lindblade, Walker, Onapa, Katungu, &

Wilson, 2000; Paaijmans etal., 2010; Sutherst, 2004; Tanser, Sharp, &

le Sueur, 2003). Increase in morbidity from these diseases tends to

affect the nutrition absorption capacity of individuals, thus impacting

access to nutrition. In addition to the associated mortality risks, these

diseases are also known to impact the health and productivity of indi-

viduals and thus economic development and food security (Watts etal.,

2015). Climate stressors such as res, heat waves, droughts and oods

may bring with them heat stress, more particulate pollution, pollen

allergens and change the composition of the ozone. These changes have

been associated with increased risk of diseases of the respiratory sys-

tems, cardiovascular system and chronic and acute diseases such as can-

cer (Ebi & McGregor, 2008; McMichael, Woodruff, & Hales, 2006;

Watts etal., 2015; Ziska etal., 2003). It has also been established in the

literature that heat stress is a major cause for reduction in productivity

(Ciais et al., 2005; Kjellstrom, Holmer, & Lemke, 2009; Xiang, Bi,

Pisaniello, & Hansen, 2014). In the current research from India, air

pollution and heat stress have been associated with reductions in crop

yields (Auffhammer et al., 2006; J. Burney & Ramanathan, 2014;

R.Gupta etal., 2017), health effects such as increase in respiratory dis-

orders and increases in mortality (Greenstone & Hanna, 2014; Majra &

Gur, 2009; Ziska etal., 2003) as well as reduction in labor productivity

(E.Somanathan, Somanathan, Sudarshan, & Tewari, 2015). All these

factors may contribute to affecting the health of individuals which may

spill over as lower labor productivity.

P. PINGALI ET AL.

255

10.3.3 Impacts onLong-Term GDP Growth

In the previous two sections, we have presented evidence that climate

change can have negative impacts on health and agriculture. In the short

term, labor productivity losses from poor health and poor access to food

reduce an individual’s ability to access opportunities for enhancing their

welfare. In the long term, by reducing the labor dividend from young pop-

ulations, GDP growth prospects that depend on this resource will be nega-

tively affected. Also, when agricultural systems perform poorly, structural

transformation (ST) processes may be stunted as well. This, in turn, leads

to some areas lagging behind and makes catch-up growth in the long term

difcult. These spillovers aside, climate change can directly impact GDP

growth. From a regional perspective, by changing comparative advantages

of resources (land quality, labor quality, etc), climate change poses a major

threat to ST prospects within the country. In the absence of access to

appropriate adaptation technologies, some households may be more vul-

nerable than others. For example, households that are poor, households

that depend on low-skilled labor for income generation and households

headed by women may be more vulnerable to climate change if they cannot

cope with its impacts. Within households as well, women and girl children

may be more vulnerable if their human capital investments depended on

good weather outcomes. These factors contribute to increasing income

inequality across the country, thus reducing prospects for equitable growth.

Further, as GDP growth stagnates, lower capacity to tide over events related

to climate change may be reinforced. In this section, we bring together

evidence with regard to climate impacts on economic growth prospects.

10.3.3.1 Regional Losses fromClimate Change onGDP

From a global perspective, changes in climate have been linked to decreas-

ing GDP growth rates under all scenarios of climate change. In some

regions in the tropical South—such as countries in Africa—the effects are

likely to be more severe. In scenarios of high adaptation to climate change,

these growth rate declines are expected to be smaller, but overall, the cli-

mate community is of the opinion that the decreasing GDP growth rates

are the reality of the future (Burke, Hsiang, & Miguel, 2015; Dell, Jones,

& Olken, 2012; Lobell & Burke, 2010; Nelson, Mensbrugghe et al.,

2014). In India, vulnerability studies that assess the impact of climate

change nd that the northwest regions, the southern coastlines and hilly

regions are especially vulnerable to climate change. Even though these

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

256

regions are thought to have better adaptive capacity due to better educa-

tion and higher incomes of the individuals living in these areas, changing

weather patterns and increases in the sea levels are expected to negatively

impact these regions more than the rest of the country (Jacoby, Rabassa,

& Skouas, 2011; Skouas, Rabassa, & Olivieri, 2011; E.Somanathan &

Somanathan, 2009). A regression of GDP on climate variables, controlling

for the structural transformation experiences across states as well as histori-

cal advantages in development, shows us that increases in temperature of

about one degree Celsius may have reduced GDP growth by more than 19

percentage points over the last four decades (Table10.2). There are also

differences across regions. For example, for states that are poor, increases

in temperature and precipitation may have been benecial for growth. For

agricultural states, increases in precipitation may have reduced growth, and

for urbanized states, temperature increases may have been benecial.

10.3.3.2

Impact onCommunities andHouseholds

Even though the prospects for economic gr

owth are dire for the future, the

literature on the impact of climate change on poverty rates has shown that

climate change may come with heterogeneous impacts for different groups.

The two main channels through which climate is expected to impact

household incomes is through prices and cost of production (Hertel,

Burke, & Lobell, 2010). If climate change increases the earning potential

of the household relative to their costs, then some models do nd that

poverty rates of certain groups of individuals may decrease. In a paper by

Hertel etal. (2010), the authors integrate household survey data into eco-

nomic and climate change models to estimate the future impact on pov-

erty. They nd that in scenarios of low productivity where prices of food

increase, poverty rates of farmers who are net sellers of food may reduce.

Even in cases low prices, appropriate adaptation strategies may lower the

burden of climate change on the agriculture communityif agricultural pro-

ductivity is high. For agricultural laborers, the results from the literature

are mixed. L.Banerjee (2007) and E.Somanathan and Somanathan (2009)

nd that in times of ood, wages of hired help tended to increase in

Bangladesh and India in the short term. However, E.Somanathan and

Somanathan (2009) also found that in the medium term, these benets are

eroded as unemployment increases in these areas. In India, the impacts of

increasing vagaries of the weather are known to negatively impact incomes

and increase the vulnerability of those depending on the natural environ-

ment for their food security. Subsistence farmers or sher folk with little

nancial capabilities to smooth over the production shortfalls created by

P. PINGALI ET AL.

257

Table 10.2

Regional impacts of climate change between 1970 and 2014

Variables (1) (2) (3) (4)

Mod1 Mod2 Mod3 Mod4

Mean_temperature −6.309e+06*** −6.309e+06*** −0.193*** −0.193***

(1.117e+06) (1.117e+06) (0.043) (0.043)

Poor×Temp 1.946e+06 1.946e+06 0.131* 0.131*

(1.868e+06) (1.868e+06) (0.071) (0.071)

Ag×Temp 6.982e+06*** 6.982e+06*** 0.0350 0.035

(1.368e+06) (1.368e+06) (0.053) (0.053)

Urb×Temp 1.063e+07*** 1.063e+07*** 0.109* 0.109*

(1.786e+06) (1.786e+06) (0.063) (0.063)

Mean_precipitation −2,859 −2,859 −0.001 −0.001

(7,489) (7,489) (0.00) (0.00)

Poor×Precip −13,884 −13,884 0.002*** 0.002***

(19,517) (19,517) (0.001) (0.001)

Ag×Precip −27,257** −27,257** −0.001** −0.001**

(12,511) (12,511) (0.001) (0.001)

Urb×Precip 50,569** 50,569** 0.000 0.000

(25,584) (25,584) (0.001) (0.001)

Constant −1.310e+08*** 6.459e+07 16.51*** 21.58***

(4.949e+07) (5.418e+07) (1.402) (1.617)

Observations 1,340 1,340 1,340 1,340

R-squared 0.818 0.818 0.992 0.992

State FE Yes Yes Yes Yes

Region year FE Yes Yes Yes Yes

Poor state year FE Yes Yes Yes Yes

Robust SE Yes Yes Yes Yes

HAP dummy No Yes No Yes

URB dummy No Yes No Yes

Poor dummy No Yes No Yes

Robust standard errors are in parentheses. Models are panel xed effects with the state being the key cross-

sectional variation while year being the time series variation. Stars indicate the following: ***p<0.01,

**p<0.05, *p<0.1

This table uses a panel of information on state-wise climate and GDP data (annual) between 1970 and

2013 coming from multiple sources. [This dataset includes all years for which there is complete informa-

tion for constructing the panel. Union territories of Dadra and Nagar Haveli, Lakshadweep and Daman

and Diu did not have GDP data. For states formed only after 2000, the GDP of the parent state was

assigned before it was formed. The climate data has already accounted for this transition of the state.]

Temperature and precipitation data were downloaded using the AidGeo dataset available at http://geo.

aiddata.org/query/#!/. For state GDP data, I have used the information collated from the EPW Research

Foundation. [http://www.epwrts.in/index.aspx GDP values have been converted to constant prices in

2004–05 rupees for comparability across years.] State FE captures within state variation. Region year FE

captures changes across regions and years. Here states are coded as being in north, south, northeast,

northwest and west based on their geographical location. Poor state year xed effects control for the dif-

ferential experience of states which have had low ST experience (also referred to as lagging states) due to

their inherent disadvantages. The Ag dummy captures the experience of states which have highly produc-

tive agricultural systems (as dened in Chap. 2), URB dummy captures those states with high levels of ST

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

258

weather-related risks are often forced into debt when they borrow high

interest loans from the informal sectors (R. M. Townsend, 1994). The

recent protests in Delhi that were organized by farmers to discuss relief

packages for extended drought cycles in Tamil Nadu reect on the inten-

sity of this problem.

Among the class of individuals who are expected to

be the most vulnerable to climate change are the urban wage laborers.

Regardless of whether the world realizes high or low adaptation scenarios,

authors have found that this group will be negatively impacted both in

terms of their earning shares and cost of living (Ahmed, Diffenbaugh, &

Hertel, 2009; Hertel etal., 2010; Pettengell, 2010; Skouas etal., 2011).

Most estimates of the impacts of climate change, however, tend to under-

estimate the negative impacts. There are many reasons for this. For one,

many of these models assume too simply that the poverty line of today is a

good representation of the poverty line for the future. Reducing poverty

rates by moving people above the current poverty line does not account for

their increased vulnerability to extreme events and the increasing costs that

are associated with the same. Two, these models have simplistic assumptions

on the nature of the damage functions and assume the low probability of

catastrophic events. This leads them to underestimate the risks involved

(Pindyck, 2013; Pindyck & Wang, 2013; Weitzman, 2014). Three, climate

models do not account for changing urbanization patterns and thus tend to

underestimate how many people will actually be vulnerable and poor in the

future and hence the depth of the problem. Four, effects of climate changes

are believed to impact different areas with different intensity. For example,

many of the studies have shown that the northwest of India, that is tradition-

ally associated with high agricultural productivity, may be more vulnerable to

climate changes than the east (Jacoby et al., 2011; O’Brien et al., 2004;

E.Somanathan & Somanathan, 2009). Hence, agricultural households in

these areas may be more vulnerable. Also, the southern states are more vul-

nerable to changes in sea levels which will affect the livelihoods and poverty

rates of populations subsisting on the coastlines (Brenkert & Malone, 2005).

These differences in experiences will complicate the policy landscape on how

to bolster the livelihoods of groups who are impacted by climate change.

10.3.3.3

Impact onIndividuals Within Households

ithin households, gender, age, cultural norms and social and economic

constraints tend to exacerbate the problem of food access in the face of

climate change. Women in households are particularly disadvantaged in

http://www.bbc.com/news/world-asia-india-39650496

P. PINGALI ET AL.

259

these situations since inaccurate economic values associated with their

contributions to the household, cultural norms and social expectations

tend to exacerbate the problem of poor access. Without appropriate safety

nets such as conditional cash transfers and so on in the event of major

weathershocks, such as rainfall shocks, women of the household often

bear the brunt of the reduction in food security of households (Demeke,

Keil, & Zeller, 2011; Gladwin, Thomson, Peterson, & Anderson, 2001).

For those women who survive through tough times such as droughts and

famines with limited access to resources, the intergenerational impacts of

poor health are transmitted to their children, thus perpetuating disadvan-

tages of these events (Dyson & Maharatna, 1992; J.Hoddinott & Kinsey,

2001; Shah & Steinberg, 2012). Microeconomic analysis of households

shows that nutrition outcomes of children too tend to be drastically

affected during times of droughts and famines. These poor outcomes tend

to persist into adulthood, where children who have been through fam-

ines have lower educational outcomes, wages and health (Chen & Zhou,

2007; C.Huang, Li, Wang, & Martorell, 2010; Luo, Mu, & Zhang, 2006;

T.Roseboom, de Rooij, & Painter, 2006; T.J. Roseboom etal., 2001).

Girls are often at higher risks to these shocks. The literature has shown,

for example, that only when there are good years for rain, farming house-

holds increase investments in education and health for female children. In

times of drought, authors nd that household members reallocate scarce

human capital resources away from female children towards male chil-

dren within households (Baird, McIntosh, & Özler, 2011; Bonesrønning,

2010; J.Hoddinott & Kinsey, 2001; Maccini & Yang, 2009; Verwimp,

2012). This is often reected in poorer health outcomes of girl children

regarding malnutrition indicators. Thus, these groups tend to be more

vulnerable to climate change.

10.4 managIng currEnt andfuturE clImatE

Isks forIndIa

Looking ahead, we see that climate change risks pose a major threat to

current and future food systems in India. Evidence documented on its

risks on health, agriculture and economic development suggests that it is

important to take this threat seriously as we envision food systems of the

future. Also, the Indian subcontinent has seen a rapid increase in extreme

weather events and unprecedented changes to weather and pollution rates.

These events call upon the urgency to address the impacts of climate change.

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

260

Inthis section, we outline India’s commitment to climate change mitiga-

tion and provide some recommendations on how climate policies can be

focused towards enabling nutrition-secure food systems. In the next

chapter, we provide a more detailed discussion on policy options in

this regard.

10.4.1 Quantifying India’s Contribution Towards

Climate Change

Based on data from the World Bank DataBank, India was the third largest

emitter of carbon dioxide, following China and the United States in 2014

(Fig.10.3). Within India, the MoEF (2010) report

concluded that the

energy sector contributed to around 60% of the total emissions with nearly

two-thirds of the emissions coming from electricity generation through

the use of coal. Emissions from the transport and residential sector made

up around one-fourth of total emissions from the same sector. While the

Note that there have been no updates to these numbers since then. All the new MoEF

reports continue to refer to these numbers.

Japan

Russian

Federation

India

United States

15%

China

28%

RoW

43%

Fig. 10.3 Share of CO

(total) emissions by country in 2014. Source: World

Bank DataBank; based on authors calculations

P. PINGALI ET AL.

261

agricultural sector contributed to around 18% of the emissions, nearly 64%

of the emissions came from the livestock sector and 21% from rice cultiva-

tion (Fig.10.4). Construction materials accounted for nearly 60% of the

total industrial emission. Municipal, domestic and industrial waste made

up around one-third of the emissions from waste. Among other factors

that have contributed to GHGs are excessive deforestation and land

clearing that have reduced the number of carbon sinks

across the country.

In 2009, less than 10% of all emissions from the country were reabsorbed

by these carbon sinks. This rapid growth of emissions is documented in

Fig.10.5, where one sees that both total emissions and per capita emis-

sions have been increasing over time. In a projection exercise conducted

by the Ministry of Environment, Forests and Climate Change (MoEF,

2008), it was estimated that per capita emissions in India would be around

4–5 tons per capita by 2030, a threefold increase after 2009. This would

Carbon sinks are natural or articial reservoirs that absorb and store atmospheric carbon

with physical and biological mechanisms. Forests and land covered with vegetation are one

type of carbon sink.

ENERGY

719.31

(37.8%)

142.04

(7.5%)

Note:

LULUCF: includes GHG emissions and removals from changes in forest land, crop land, grass land, wet land,

settlements and combustion of fuel wood in forests.

Figure ES1: GHG emissions by sector in 2007 (million tons of CO

eq). Figures on top indicate the emissions by sectors

and in brackets indicate % of emission of the category with respect to the net CO

equivalent emissions. See glossary for

definition of CO

equivalent.

Waste: includes GHG emissions from municipal solid waste (MSW), industrial and domestic waste water.

Agriculture: includes GHG emissions from livestock, rice cultivation, agricultural soils and burning of crop residue.

Other Industry: includes GHG emissions from production of glass and ceramics, soda ash, ammonia, nitric acid, carbides,

titanium dioxide, methanol, ethylene oxide, acrylonitrile, carbon black, caprolactam, ferro alloys, aluminium, lead, zinc, copper,

pulp and paper, food processing, textile, leather, mining and quarrying, non specific industries and use of lubricants and paraffin wax.

Other Energy: includes GHG emissions from petroleum refining, manufacturing of solid fuel, commercial & institutional sector,

agriculture & fisheries and fugitive emissions from mining, transport and storage of coal, oil and natural gas.

Electricity

Transport Residential Other

Energy

Cement

Iron &

Steel

Other

Industry

Agriculture WasteGross

Emissions

LULUCF Net

Emissions

500

1500

1000

2000

137.84

(7.2%)

100.87

(5.3%)

129.92

(6.8%)

117.32

(6.2%)

165.31

(8.7%)

334.41

(17.6%)

57.73

(3.0%)

1904.73

-177.03

1727.70

INDUSTRY

Fig. 10.4 Emission by sectors. Source: Ministry of Environment & Forestry

report, 2009

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

262

imply that global emissions from India would be around 6 billion tons

(higher than United States emissions for 2014). Given the climate sensi-

tivity to these irreversible emissions, Indian and global food systems face a

major threat from the current Indian economic growth experience.

10.4.2 Overview ofIndia’s Commitment TowardsMitigation

andReduction ofGHG Emissions

In recognition of the local and global impacts of climate change and the

role of India as one of the largest emitters of GHGs, policy makers have

been working towards creating policies to reduce GHG emissions across

its economic sectors. After ratifying its commitment towards climate

change mitigation in the Paris agreement, the central government and the

state governments haveput forth comprehensive action plans that outline

strategies, goals and priorities towards reducing GHG emissions to cut

India’s emissions by 25% in 2020. To do so, policy makers have committed

to promoting clean and efcient energy use in the power sector, industrial

sectors and urban housing, increasing a number of carbon sinks and invest-

ing in sustainable agricultural practices. With regard to the power sector,

replacing the current capacity for coal-generated power with solar energy

and renewable energy provision has become a national priority. Large

investments have been made in the wind and solar energy sector, which

0.5

1.5

500000

1000000

1500000

2000000

2500000

3000000

3500000

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

Kilo tonnes per capita

Kilo Tonnes

CO2 emissions (kt)

Total greenhouse gas emissions (kt of CO2 equivalent)

Fig. 10.5 Overview of GHG emissions in India. Source: World Bank DataBank;

based on authors calculations

P. PINGALI ET AL.

263

now provides around 14% of all power within the country.

With regard to

household level clean energy production, the government has taken

important steps to reduce rewood dependence by introducing alternative

cost-effective clean energy technologies such as biogas fuels and solar-

dependent cooking stoves in rural areas. Urban-focused initiatives that

seek to reduce emissions through investments in green infrastructure

housing projects and reduce solid waste in cities through investments

proper disposal infrastructure are under way in many areas.

There have

been efforts made towards fully converting public transport vehicles to

using low emissions fuels, and subsidies towards adopting clean energy

private vehicles are in place. The government has also introduced a pro-

gram called the “Perform, Achieve and Trade” that sets caps on GHGs and

particulate emissions on industries across the country. Industries can trade

their E-Certicates through a regulated exchange to achieve compliance

obligations and reduce non-compliance penalties. In states where health-

related concerns from communicable diseases are a threat to population

health, investments in improving health infrastructure, services and access

to health technology have been proposed. Many states have also proposed

moving agricultural systems towards organic farming practices, investing

in water conservation technologies, improving management practices with

regard to livestock and investing in research and development focused on

technologies for climate adaptation in the agricultural sector as a means to

reduce damages from climate uncertainties. At the national level, improv-

ing biodiversity and vegetation cover through initiatives for reforestation,

protecting forest areas from exploitation as well as working with commu-

nities through decentralized forms of governance of natural resources have

been proposed. Also, there have been proposals to develop climate-smart

strategies that nance research in developing heat- and drought-resistant

varieties of crops, setting up disaster management systems, instituting

weather-based insurance programs and desilting irrigation systems to

improve water management and to improve management of forest and

coastal ecology. These investments are also thought to play a role in GHG

reductions from the agricultural sectors as well as help in increasing the

India is one of the largest producers of electricity through wind energy in the world.

Building regulations to construct environment friendly urban infrastructure that are

energy efcient have been encouraged and regulations for industrial waste management and

recycling of solid waste have been introduced as a part of mitigation strategies (MoEF,

2008). A comprehensive commentary on the policies under the NAPCC and the actions

taken by the government can be found in the reference (J.Ahmad, 2013).

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

264

capacity to adapt. The commitments made towards various initiatives both

at the national and the state level can be found in national and state action

plan towards reducing the impact of climate change, respectively. In these

comprehensive documents, a summary of these actions proposed and the

funds allocated towards each topic can be found. These strong commit-

ments made have put India in a leadership position in talks on tackling

climate change on the global stage.

10.4.3

Refocusing Climate Change Policies TowardsT

ackling

Risks forFood Systems

While India’s climate mitigation strategies have been extremely progres-

sive, in this chapter, we have highlighted the risks that climate change

poses to current and future food systems. Extreme weather events in the

country have increased the urgency to design and implement adaptation

strategies in response to climate change. The process involves assessing

vulnerabilities of different stakeholders in food systems and supporting

them to develop capabilities to respond to the uncertainties both in the

current time and as we look ahead. The ability to adopt strategies to deal

with climate change is known to be a function of an individual’s wealth,

capabilities, access to market and access to knowledge and technology.

These factors determine the individual’s vulnerability to climate change,

that is, how much they are likely to be affected, and their resilience against

uncertainties, that is, how much they can cope with these changes

(Hallegatte, 2009; Pettengell, 2010; B.Smit, Burton, Klein, & Wandel,

2000; B.Smit & Wandel, 2006). From a food systems perspective, ensur-

ing food and nutrition security of individuals thus requires strategies that

both increase the availability of welfare-enhancing goods and ensure that

adequate safety nets exist to improve current levels of access (Campbell

et al., 2016; Lobell et al., 2008; Myers et al., 2017; Vermeulen et al.,

2012). Investmentsin reducing production uncertainty, improving labor

productivity through investments in health and food access and introduc-

ing policies to reduce inequities in access will be important for future

adaptation policies meant to reduce the negative impact of climate change.

Part of the challenge for adaptation strategies is to prioritize which policies

will yield immediate returns and which policies are expected to yield ben-

ets in the long run. This requires consolidating the evidence of adapta-

tion strategies within India currently as well as identifying new ways to

P. PINGALI ET AL.

265

evaluate and compare the relative benets of different strategies. Investing

in research and development for technologiesthat increase productivity

while reducing GHG emissions, encouragingparticipation of local com-

munities in biodiversity preservation, sharing technology and resources

across regional and national borders and encouraging investments in cli-

mate smart businesses will also be key features of successful mitiga-

tionstrategies for the future. In the next chapter, we discuss some of the

options available for moving the country towards a more nutrition-secure

future as climate change increases food systems risk.

10.4.4 Moving BeyondStrategies andTowards Concrete

Measureable Actions

A major concern for many intellectuals has been the lack of commitment

to pursue these strategies to their full potential. For one, many of these

strategies remain top down with the government setting goals without

involving the communities affected. This approach has increased inef-

ciencies in implementation and in many cases caused well-meaning proj-

ects to fail. Even despite their best efforts, the government has not been

able to reduce the rate of deforestation in the country since it has not

involved the forest communities in conservation efforts (J.Ahmad, 2013;

E. Somanathan et al., 2009). Two, due to corruption and the lack of

transparency, well-designed plans to contain and recycle waste often fall

to the wayside. The environmental protection agency in India is often not

considered to be reliable in monitoring industries and has been known to

turn a blind eye towards health concerns of communities who are affected

by the location of the industrial plants (Dutta, Ghosh, Gopalakrishnan,

Bijoy, & Yasmin, 2013). This has affected the compliance of industries

and increased inefciency in carbon trading. Three, many of these plans

on close reading reveal that there are no measureable outcomes dened in

these action plans that would help monitor climate centric efforts and their

outcomes. Without metrics to measure mitigation, it becomes difcult to

measure progress. This reduces the incentive to commit and participate in

the mitigation strategies for both individuals and industries. Four, without

property rights, communities that subsist on the environment have no

incentive to lobby for better environmental practices in their areas. This has

prevented the integration of individuals into trading carbon credits in the

climate market, a potentially important channel through which

mitigation

MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

266

can be integrated globally (J.Ahmad, 2013; E.Somanathan etal., 2009).

Five, there has been very little commitment towards developing technol-

ogy or investing in business driven solutions that reduce climate depen-

dence. Introducing climate-smart agricultural services that increase yields

and reduce environmental degradation has not found their way into main-

stream mitigation and adaptation strategies. Developing cost-effective

technology or supporting businesses that invest in environment-friendly

urban development has not taken off. This has prevented well-conceived

strategies for mitigation from becoming self-

sustaining (J.Ahmad,

2013;

Dutta etal., 2013; Ray, 2011; E.Somanathan etal., 2009).

10.5 conclusIon

In this chapter, we identify the pathways through which climate change

will impact nutrition security in India. Synthesizing the scientic evidence

on climate change and its ongoing and future impacts on food availability,

labor productivity and long-term economic growth in India, we highlight

its role in reducing the effectiveness of food systems in ensuring nutrition

security. For food availability, for example, we present evidence that chang-

ing temperature and rainfall patterns have begun to impact crop and live-

stock productivity across the country. Without adequate adaptation

capabilities, future production capacity will decrease and the probability of

facing production shocks will increase. Lower availability of food and thus

nutrients will increase malnutrition by reducing access to food diversity.

Similarly, by increasing susceptibility to communicable and non-

communicable diseases, climate change will increase malnutrition by

educing individual’s capacity to absorb nutrients from food that may be

available for consumption. These factors will combine to reduce the over-

all health and hence labor productivity. Poor health, low labor productiv-

ity and low productive agricultural systems will in turn impact long-term

growth prospects by reducing the ability of economies to undergo a struc-

tural transformation, thus leading to stunted growth. Finally, we present

evidence that climate change will increase vulnerability of regions by

changing their comparative advantages, will increase the vulnerability of

households by affecting health and will reinforce intra-household inequi-

ties in access. Continuing down the current path of development without

integrating appropriate adaptation strategies, we argue, will have serious

negative repercussions on nutrition security within the country. Side by

side with adaptation strategies, integrating mitigation strategies that

P. PINGALI ET AL.

267

reduce the overall carbon foot print will not only contribute to the global

goals of GHG mitigation, it will thus help reduce food systems risks related

to nutrition security.

Currently, India is one of the countries leading discussions on climate

change mitigation due to its forward-looking policies that encourage

investments in clean energy sources, climate-smart infrastructure, preser-

vation and conservation of biodiversity and ground water management

processes. Both the central and state governments have focused attention

on addressing this development challenge by increasing investments in

renewable sources for energy generation. However, many other policies

remain academic and their implementation has been slow. In order to

cement India’s position as a leader in climate change discussions on the

global stage, moving these policies from desk to eld will be important. As

we look ahead, we also argue that climate policies for the future should

allow diversication of the food system in ways that enhance the environ-

ment while improving the nutrition content of foods produced and ensur-

ing equity in access. This discussion is currently lacking in the policy

circles. To truly create a food system that ensures nutrition security of all

individuals, we submit that climate change risks must not be understated

and appropriate actions towards its mitigation need to be urgently adopted.

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MANAGING CLIMATE CHANGE RISKS INFOOD SYSTEMS

P. Pingali et al., Transforming Food Systems for a Rising India,

Palgrave Studies in Agricultural Economics and Food Policy,

https://doi.org/10.1007/978-3-030-14409-8_11

CHAPTER 11

The Way Forward: Food Systems

forEnabling Rural Prosperity

andNutrition Security

11.1 IntroductIon

Why is malnutrition so persistent in India despite the country’s self-

sufciency in food production? This book explores this policy conundrum

through the lens of its food systems. Laying out a formal exposition of the

food systems, we esh out the linkages between achieving equitable eco-

nomic growth and agricultural development and improving nutritionout-

comes: the bedrock of India’s malnutrition challenge. This book adds to

the literature by stringing together, for the rst time, the inter-linkages

between these overlapping themes. We highlight the importance of eco-

nomic growth for the affordability of nutrition, agricultural development

for nutrition availability and the role of improved nutrition access. In this

chapter, we deliberate upon the importance of the type of regional devel-

opment in propelling economic growth. We move away from a national

framework to highlight variegated subnational development trajectories.

We argue that regions which leveraged agriculture as the engine of

growth—through commercialized and market-oriented agricultural

systems—havefared better in addressing the problem of undernutrition.

In this book, we have classied regional development patterns as lagging,

agriculture-led and urbanizing. Agriculture-led growth states are those

where a highly productive agricultural sector leads growth. Urbanizing

states leveraged agricultural development to kickstart structural transfor-

mation (ST). Now their development is driven by non-agricultural growth

278

and urbanization. Urbanized states have largely succeeded in addressing

the undernutrition problem, but are increasingly facing the problem of ris-

ing obesity and the rise in non-communicable disease incidence. Regions

with lower agricultural productivity—lagging states—fare worse than the

rest of the country and catch-up growth policies are of importance. In

these areas, tackling undernutrition continues to remain the dominant

nutrition challenge. Thus in this book, we argue that any policy on nutri-

tion should consider these disparate subnational developmental patterns.

The food systems approach provides us with an organizing framework to

link the goals for economic growth, agricultural development and nutrition.

Taking the food systems approach, this book offers multiple policy rec-

ommendations. We bring agricultural sector-led developmental approach

at the center of any policy formulation to ensure greater nutrition security

and rural prosperity for greater welfare. Our policy recommendations are

also tailored to the subnational variations in the process of structural trans-

formation. While the share of agriculture in India’s GDP has declined con-

siderably, agriculture still employs a large share of the labor force. In some

states, this is more so and those are the ones where developmental out-

comes including malnutrition are poorer. National level policy goals were

useful while formulating policies in the immediate aftermath of ourinde-

pendencefrom the British. In the seven decades that followed, states of

India have exhibited distinct and disparate developmental patterns because

of various factors which include climate, soil, water facilities among other

factors. Despite agriculture being under the purview of state government,

one unied national policy blind to the geographical variation and differ-

ences in resource endowments is likely to further widen these disparities.

Our policy recommendations explicitly factor in these subnational con-

texts. For example (Table11.1), we recommend that in the lagging regions,

creating new comparative advantages for catch-up growth in agriculture,

encouraging diversication of agricultural production systems and reduc-

ing undernutrition and hunger should be the main policy focus. For the

states which fall under the category of agriculture- led, policy should priori-

tize agricultural diversication and commercialization and enabling adop-

tion of sustainable agricultural production techniques. These states would

continue to focus on their comparative advantage in agriculture but with a

shift in emphasis from their traditional strength in staple grains to higher

value crop and livestock production systems. In the urbanizing regions, the

challenge lies in urban planning and developing strategies which support

the process of commercialization of agriculture. The

government should

P. PINGALI ET AL.

279

simultaneously enact policies which aim at reducing obesity while address-

ing the issue of urban food insecurity. Our policy recommendations aim at

allowing states to choose policies which address their unique nutritional

and agricultural challenge while factoring in their state of structural trans-

formation. The end goal of our policies would be to facilitate to states to

move into a structural transformation pathway which addresses the con-

text-specic development challenge while ensuring high growth. In this

context, agricultural and economic growth policies grounded in critical

regional concerns for nutrition are the key to ensuring greater nutrition

security and rural prosperity.

Inthe past, in recognition of the role of state in facilitating its own

development, the Indian constitution allotted the subjects of agriculture,

health and industries to states and concurrent subjects, respectively. For all

substantive development issues, the state government was envisioned to

be the main implementation agency of policy while the central government

was assumed to support in funding and providing technical support. Due

to the scarcity of resources and a low savings rate after independence from

Table 11.1 Policies for enabling nutrition security and rural prosperity

Main goal: Enabling

nutrition security

and rural prosperity

by 2050

Lagging states Agriculture-led

states

Urbanizing states

Agricultural

development policies:

Increasing rural

prosperity and

nutrient availability

Growing crops

based on

comparative

advantages provided

by agro-ecological

zones

Sustainable

agriculture

production to

rectify input

overuse from staple

grain production

Commercialization of

agricultural

production

Nutrition policies:

Improving nutrient

access and absorption

and labor productivity

Reduction of

undernutrition,

communicable

diseases and hunger

Reduction of over

nutrition,

non-communicable

diseases (NCDs)

and hunger

Reduction of

over-nutrition, NCDs

and urban food

insecurity

Economic growth

policies: Improving

nutrient affordability

through the creation

of new economic

opportunities for

catch-up growth

Policies for a Green

Revolution 2.0

Diversication to

the non-agricultural

sectors

Policies for planned

urban development

and growth

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

280

the British, the central government had to play the leadership role in both

aggregating scal resources nationally as well as in designing and imple-

menting development programs with critical national security concerns.

However, over time, we have seen that this approach has led to an inad-

vertent divergence in economic development across states. States which

have been most successful in structural transformation have reduced their

dependence on the central government for scal transfers and have imple-

mented their own state run initiatives for tackling the most pressing devel-

opment concerns. This has facilitated greater structural transformation

in these regions. Thus, in our approach, we advocate for the greater

decentralization of resources to state governments and greater exibility in

designing and implementing policies that best tackle their unique develop-

ment challenges while also facilitating greater growth based on their com-

parative advantages. In our model, for example, the central government

plays the role of a coordinator in the development process. It is responsi-

ble for setting national goals, monitoring progress towards these goals,

bolstering nancing of the various interventions and programs and creat-

ing synergies across the various stakeholders including the private sector,

the federal government and the farmers. In its new role, the central gov-

ernment would improve coordination across departments which oversee

the development of economic sectors as well as reduce inefciencies in

implementation. The primary role for the central government would be to

invest in research and development to improve the quality of services pro-

vided and increase access to technology for use in human capital produc-

tion. To encourage innovation, increase efciency and increase the capacity

to scale initiatives, greater private sector participation needs to be encour-

aged as well.

11.2 PolIcIes forAgrIculturAl develoPment:

AcIlItAtIng greAter nutrIent AvAIlAbIlIty AndrurAl

rosPerIty throughcommercIAlIzAtIon

AnddIversIfIcAtIon

The key to success for the agricultural sector in general and farmers speci-

cally lies in commercialization and diversication. There exists a tremendous

opportunity for farmers in catering to the rising urban demand for higher

value agricultural products (T.Reardon & Timmer, 2007). Diversication

of production not only improves the availability and access of nutritious

P. PINGALI ET AL.

281

food for the consumers but also provides a greater capacity for the farmers

to grow out of poverty and share in the benets of economic growth (Pingali

& Rosegrant, 1995). Diversication of the agricultural sector however fun-

damentally hinges on the ability of smallholders—which make up the major-

ity of Indian farmers—to overcome constraints to accessing input and

product markets and increase production efciency. Smallholders often face

disadvantages in accessing input markets such as credit, quality seeds, fertil-

izer, pesticides, farm machinery and R&D to diversify and generate a mar-

ketable surplus (Abraham & Pingali, 2017). They also lack access to output

markets to sell their produce at fair prices. In the absence of commercializa-

tion in lagging regions, smallholders continue to practice low risk, low

return production of basic staple grains. Traditionally smallholder produc-

tion had the advantage of higher labor utilization and low monitoring costs

through the utilization of family labor. In recent years, increasing non-farm

wages have led to a rise in seasonal migration, which has led to reduced

utilization of family labor. Additionally, poor economies of scale limit the

scope and ability of smallholders for mechanizing or adopting new tech-

nologies and linking to urban value chains. These factors have contrib-

utedto declining farm productivity, especially in the lagging states.

The role of climate change in agricultural production is another major

challenge for smallholder production. In the past two decades, the increas-

ing uncertainties from changing weather patterns and resource degrada-

tion from the overuse of land and water have emerged to be additional

concerns. Addressing these will be necessary for policies focused on agri-

cultural growth in the future. In this section, we look at the interventions

needed to rectify smallholder disadvantages for commercialization and

improved access to technology and sustainable intensication, making

agriculture climate-smart and effectively managing value chains to improve

efciency and reduce wastage.

11.2.1

Promoting Aggr

egation Models andRectifying

Smallholder Disadvantages ofScale

Institutional interventions can offset scale disadvantages faced by small

farms and enable improved agricultural production. By reducing the risk

associated with the adoption of new crop technologies and reducing

transaction costs in market access, these interventions could help in farm

diversication as well as in achieving better price realizations in the out-

put market. Aggregation models such as FPOs and cooperatives are

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

282

examples of these types of interventions. At the farm level, aggregation

helps smallholders to access credit and other inputs at a more competitive

cost. Access to extension services is also increased through these models

at very low costs. Joint marketing of produce opens up avenues for verti-

cal coordination (VC), access to electronic markets, trading in commod-

ity futures and benet from warehousing platforms.

In Table11.2, we highlight some recommendations that differ by the

type of regional development. In the lagging states with low agricultural

productivity, FPOs have the potential to enable greater commercializa-

tion, enabling greater yields. Linkages to output markets will help incen-

tivize the production of pulses and coarse grains, given their comparative

advantage. In agriculture-led states and urbanizing states, alternative mod-

els such as contract farming are more likely to succeed since they already

have higher yields. Enabling conditions for contract farming through

mechanisms to enforce contracts and allowing retailers and processors to

transact directly with farmers, especially in the cash crops, could be the

way forward. Here, aggregation models can help reduce organization

costs of engaging with a more signicant number of small farms and

reduce contracting costs that often exclude small farm contracts. Policy

measures to nancially support FPO emergence, extend nancial and

insurance-based services, link them to information and extension services

and enable market linkages by improving connectivity will further incen-

tivize group formation and establish linkages across the value chain.

11.2.2 Reforming Markets toImpr

ove Farmer Participation

andIncrease theEfciency ofTransactions

Traditional markets or mandis are the main platforms for agricultural mar-

keting. In lagging states, the primary challenge for smallholders is access to

traditional markets. With small surplus produce, large distances to markets

and poor rural connectivity, market participation is lower. Intermediaries

benet from the missing market and expropriate a large part of the small-

holders’ prot. Improving connectivity and infrastructure, therefore, is

critical. Farmers also nd it difcult to sell in the markets without appro-

priate grading and standardization of their produce. Establishing systems

of grades and standards determination, checks on malpractices in weigh-

ing at the mandis, and information on prices further encourage market

participation. These measures are vital for developing agricultural mar-

keting systems to stimulate greater agriculture-related development in

lagging states.

P. PINGALI ET AL.

283

With changing demand for quality and high-value agricultural produce,

alternative value chains and newer marketing platforms have emerged.

Vertical coordination (VC) by which retailers form direct linkages with

farms and bypass traditional markets has been growing in agriculture-led

growth states and urbanizing states. Newer marketing platforms where

farmers can participate in online auctions and trading such as eNAM and

Table 11.2 Policies for enabling diversication and commercialization of farm

systems

Agricultural

sector

Lagging states Agriculture-led states Urbanizing states

Promoting

aggregation

models and

rectifying

smallholder

disadvantages of

scale

Promoting FPOs

and cooperatives to

rectify smallholder

farmer

disadvantages in

accessing input and

output markets

Linking farms to

markets through

contract farming. FPOs

enforcing contracts and

monitoring and

evaluations

Creating opportunities

for contract

enforcement, direct

procurement etc. for

export-oriented

production in cash

crops

Reforming

markets to

improve

participation and

efciency

Improving

connectivity and

marketing

infrastructure

Enabling vertical

coordination models

Promoting alternative

platforms—E-trading,

commodity futures and

direct procurement for

retail sectors

Increasing access

to technology

adoption for

sustainable

intensication

HYV in coarse grain

and pulses, adopting

other high-value

crops and foods

Diversication out of

staple grains towards

high-value agriculture

(fruits, vegetables,

livestock)

Integrating ICT into

agricultural systems,

precision farming, to

conserve natural

resources

Making

agriculture

production

systems

climate-smart

Drought, heat,

ood, disease-

resistant

technologies for

crops, irrigation

infrastructure and

natural resource

management groups

Sustainable

intensication of

agricultural systems,

reducing land

degradation through

input management

Drought, heat, ood,

disease-resistant

technologies for crops,

irrigation infrastructure

and natural resource

management groups

Increasing

bio-availability of

nutrients in the

food supply

chains

Increasing farm

diversication and

development of

non-staple

production systems

Increasing bio-

availability of

micronutrients in staple

crops, creating

fortication industries

for processed foods,

increasing demand for

micronutrient-rich foods

Creating urban markets

for bio- fortied crops,

organic foods and

foods rich in

micronutrients,

reducing food loss and

waste through supply

chain interventions

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

284

Rashtriya e-Market Services Pvt. Ltd. (ReMS) in Karnataka and ware-

housing platforms such as the National Commodity & Derivatives

Exchange (NCDEX) eMarkets Limited can be viable alternatives to exist-

ing traditional markets (Reddy, 2016). VC can be more relevant for per-

ishable crops and farmers in regions with good linkages to market

(agriculture-led growth states) while futures and warehousing platforms

can be useful for nonperishable commodities and can emerge in low

potential areas such as those in lagging states. Different marketing arrange-

ments can help serve specic purposes of farms, conditioned on geo-

graphical and crop characteristics.

11.2.3

Increasing Access toT

echnology Adoption forSustainable

Intensication

Technology has played a critical role in enabling food security in the devel-

oping world. The Green Revolution (GR) helped in increasing yields of

wheat and rice, making many countries like India self-sufcient in these

grains. GR technologies were conventional plant-breeding (CPB) tech-

nologies that were limited to wheat and rice in the context of India.

Additionally, implementation of GR technologies was limited to regions

with access to irrigation and (or) consistent rainfall. This led to inter-

regional disparities in agricultural development wher

e states with com-

parative advantages in staple crop production beneted disproportionately

in comparison to other states. Another fallout of these technologies was

their impact on the environment. Because of poor management of natural

resources and overuse of subsidized inputs such as fertilizers and pesti-

cides, the Green Revolution has also resulted in depletion of water tables

and the degradation of land and soil quality. The role of technology in the

wake of new production challenges for diversifying food systems in the

presence of climate change and environmental degradation is thus to

increase yields while reducing environmental externalities through sus-

tainable intensication.

New agricultural technologies have gone beyond conventional plant-

breeding technologies of the Gr

een Revolution to the genetically modied

organisms (GMOs). The rst generation of genetically modied (GM)

crops have traits that give them tolerance or resistance to insects, pesti-

cides and herbicides. In India, Bt cotton, which has an inbuilt resistance to

boring pests, is the only rst-generation GMO that was introduced to the

agricultural sector. Second-generation GMOs are crops engineered to

P. PINGALI ET AL.

285

have increased tolerance to abiotic stress (drought, ood salinity) and

increased nutrient (protein, amino acids, fatty acids, starch, vitamins, min-

erals and enzymes) content, enabling the creation of resilient and more

nutritive crops (Buiatti, Christou, & Pastore, 2013; Flachowsky & Aulrich,

2001; C. N. Rao, Pray, & Herring, 2018). Both rst- and second-

generation GM technologies will prove to be critical in the wake of the

food systems challenges India is facing. In lagging states, agriculture-led

states and urbanizing states, GMOs can help in the reduction of climate-

related risks through heat and drought resistance crops, and they can

increase yield and reduce the cost of production in crops through built-in

pest resistance. So far, no GMOs except Bt cotton have been allowed in the

Indian agricultural sector. There has been much debate about the safety of

GM crops in India and around the world. Despite no evidence being found

that GMOs are detrimental to human, animal and environmental health,

there has been much opposition to it, discouraging investments and inno-

vation in agricultural R&D. India needs to have more forward-looking

bio- technology policies and institutions that can allow the introduction of

these new technologies into the agricultural sector. This is essential to bol-

ster innovation and investment from the private sector and enable institu-

tional support for the adoption of biotechnology in agriculture.

11.2.4 Making Agriculture Production Systems Climate-Smart

Given the close relationship between poverty, agriculture production and

weather, developing adaptation strategies to protect smallholders from cli-

matic risks is essential. Climate-smart agriculture (CSA) to ensure

enhanced productivity, increased resilience and limited environmental

externalities require a combination of technology, management practices,

infrastructure and information systems that can help mitigate, reduce or

withstand the effects of climate change (Lipper etal., 2014). The core ele-

ments needed for the transition to CSA are: (a) information, evidence

gathering and assessment, (b) strengthening of national and local

institutions, (c) evidence-based policy making and (d) nancing transition

(ibid). The accessibility and availability of information ar

e crucial to mak-

ing proper planting, harvesting and marketing decisions needed for agri-

cultural growth and development. Information communication

technologies (ICTs) have shown to have great potential in reducing infor-

mation asymmetries and improving the efciency of production and mar-

keting (Aker & Fafchamps, 2015; Fischer, Byerlee, & Edmeades, 2009;

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

286

S.Mittal & Mehar, 2012). ICTs often rely on platforms on which infor-

mation can be collated, analyzed and disseminated. These platforms need

to be put in place to bring together context-specic information regarding

weather, technical extension and markets.

Evidence-based policy making is central to the implementation of CSA,

especially about biotechnology policies to enable technology adoption.

Second-generation GMO crops that are heat, drought and ood resistant

can play a role in reducing crop failure and improving nutrient content in

plants that will be affected through climate change (C. N. Rao et al.,

2018). Policy to allow the introduction of GM crops will help reduce

climate-

related risks and cost of pr

oduction and also increase the bio-

availability of nutrients that can potentially be lost due to global warming.

Management of r

esources that goes into agricultural production needs to

complement technology adoption for sustainable intensication and

reduced environmental externalities. Removal of input subsidies for elec-

tricity and fertilizers is important, as these measures in the past have led to

overuse of groundwater and over-application of nitrogenous fertilizers.

Supplementing agricultural programs with agroforestry for carbon seques-

tering, soil conservation and watershed management initiatives is essential

for replenishment of common-pool resources used for agricultural pro-

duction. Institutional strengthening through community-based collective

actions is needed to enable conservation programs. Empowering aggrega-

tion models to take up the task of common-pool resource management

will reduce the cost of organization and incentivize cooperation aligned

with primary economic activities. Supporting adoption of CSA and transi-

tioning from conventional agriculture requires nancing and credit sup-

port. The role of the government and policies to improve access to nancial

services and build infrastructure is going to be critical.

11.2.5

Increasing Bio-availability ofQuality Nutrients

intheFood Supply Chain

Modernizing supply chains is essential to reduce loss and waste and ensur-

ing greater food and nutrient availability in the food systems. Infrastructure

investments in connecting farms to markets through the construction of

good quality roads, developing infrastructure in cold chains and ware-

houses to reduce spoilage and creating testing facilities to establish grades

and standards will be important steps towards this goal. Given the experi-

ence of other developing nations and emerging economies, encouraging

P. PINGALI ET AL.

287

the participation of the private sector and sustainability-oriented busi-

nesses to increase efciency along the supply chain is one possible channel

to facilitate this transition.

Climate change poses a major threat to agricultural production and

nutrient availability in the future (Myers etal., 2014). Rising temperatures

during the growing season have been found to reduce nutrient availability

in plants and reduce yields of crops (P.K. Aggarwal & Mall, 2002; Lobell,

Schlenker, & Costa-Roberts, 2011; Schlenker & Roberts, 2009).

Increasing access to good quality nutrition requires interventions that

tackle this problem at multiple levels. First, improving soil quality through

crop management will be important to ensure greater nutrient availability

in crops. Policies that encourage diversity in production reduce depen-

dence on rain water and research on the application of nutrients based on

real time soil quality will be important. Agroforestry initiatives supported

by the appropriate decentralization of common property rights have been

found to be effective in enabling conservation practices such as watershed

management (R.R. Banerjee, 2015; Gross-Camp, Few, & Martin, 2015;

Myers etal., 2017; Sinha & Swaminathan, 1992; Steiner, Briske, Brown,

& Rottler, 2018). Second, encouraging research on improving the bio-

availability of nutrients in crops will also be required going forward.

Currently, research and development still focus on biofortication of sta-

ple crops since staples constitute a large portion of most individuals’

dietary requirements (Meenakshi etal., 2010; Qaim, Stein, & Meenakshi,

2007). Moving forward, fortication of non-staples, increasing micronu-

trient availability through current food safety net programs and climate

technology to prevent micronutrient loss from crops due to erratic weather

conditions will need to become part of the Indian agriculture and food

policy innovations. Third, a more innovative approach is to create new

markets for nutrition that can properly signal the value of nutrition and

health in foods, especially in urbanizing states (Costa-Font, Gil, & Traill,

2008). This would create a demand pull for growing more nutritious

crops, thus encouraging research and development into the same. For this

to happen, developing food safety standards, the demand for organic

products and demand for other nutritious non-staple foods through edu-

cation will be important. Fourth, investments in improving nutrition con-

tent of food through fortication of processed foods will play an important

role in increasing micronutrient availability in diets (Pinstrup-Andersen,

2009). Incentivizing private sector participation in developing and mar-

keting bio-fortied foods will be important in this context.

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

288

11.3 PolIcIes forthenutrItIon trAnsItIon:

ncreAsIng Access togood QuAlIty foods

AndnutrIents

In India, undernutrition and micronutrient deciency simultaneously

coexist with the phenomenon of rising obesity, leading to the triple bur-

den of malnutrition. In Chap. 5, we described the multitude of pathways

inuencing malnutrition and the nutrition challenges different regions are

faced with. In lagging states, the main goal for improving nutrition would

be to reduce hunger and diet-related undernutrition in addition to micro-

nutrient deciencies among children. For agriculture-led states and urban-

izing states, the main challenge would be tackling obesity and micronutrient

deciencies in both children and adults. For urbanizing states, in addition

to reducing obesity,the policy focus needs to be on creating safety nets for

reducing urban food insecurity, especially around food access because

poor urban residents completely rely on purchased food (Maitra & Rao,

2015). As the nature of nutrition challenges varies across regions, a

regional approach to tackle the specic problem of malnutrition should be

the way forward. In Table11.3, we provide a summary of how policies

could be tailored to reduce region-specic malnutrition.

11.3.1 Intra-Household Safety Nets toImprove Nutrient Access

forWomen andChildren

Even when healthy foods are available within the household, intra-

household distribution of access to quality and quantity of nutritious foods

could be differ

ent by age and gender. In countries such as Mexico and

Brazil, cash transfers and conditional cash transfer (CCT) programs have

been found to have positive impacts on overcoming intra-household level

dynamics that reduce nutrition access. Targeting conditional cash transfers

to girls in households increases their access to nutrition in addition to

increasing educational outcomes (Attanasio, Gomex, Heredia, & Vera-

hernández, 2005; Behrman, Parker, & Todd, 2011; Handa & Davis,

2006; Leroy, Ruel, & Verhofstadt, 2009). These CCTs are also effective in

preventing the worsening of nutrition outcomes of girl children when

households undergo health-related or income-related shocks (Attanasio

etal., 2005; Fernald, Gertler, & Neufeld, 2008). In agriculture-led growth

states where women’s empowerment is low and incomes are relatively

high, implementing labor market reforms to increase women’s labor force

P. PINGALI ET AL.

289

Table 11.3 Policies for reducing the triple burden of malnutrition

Health and

nutrition

Lagging states Agriculture-led states Urbanizing states

Implementing

intra-household

safety nets to

improve nutrition

access for women

and children

Conditional cash

transfers to

encourage women to

purchase nutritious

foods, increasing

women’s access to

the ICDS and

MDMS

Conditional cash

transfers consumption

to encourage women

to purchase nutritious

foods, increasing

women’s access to

the ICDS and

MDMS

Unconditional cash

transfers and CCTs to

ensure that women

can access diverse

foods from markets,

increasing women’s

access to the ICDS

and MDMS

Investing in

health-related

infrastructure such

as water, sanitation

Improving water

quality, building

toilets, interventions

for reducing new

diseases that climate

change may bring

Improving water

quality, building and

encouraging toilet

use, interventions for

reducing mosquitoes

and pests from

climate,

Increasing urban

water availability,

building and

encouraging toilet

use, interventions for

reducing mosquitoes

and pests from

climate,

Encouraging

behavior change

towards more

healthy nutrition

consumption

practices

Taxes on unhealthy

foods, promoting

organic foods,

encouraging hand

washing and proper

sanitation practices,

along with BCC on

nutrition

consumption

State focused:

Behavior change

(reduction in

obesity), taxes on

unhealthy foods,

promoting organic

foods, food labeling,

grades and standards,

with BCC on

nutrition

Urban focused:

Behavior change

(reduction in obesity),

taxes on unhealthy

foods, promoting

organic foods, food

labeling, grades and

standards

Increasing health

service capacity

and improving the

quality of care

CDs: Vaccines usage

promotion, health

insurance (reducing

burden for children)

NCDs: Health

insurance, tertiary

hospitals (reducing

burden for adults)

NCDs: Health

insurance, tertiary

hospitals (reducing

burden for adults)

Bolstering other

safety nets to

address urban

food security and

improve access to

nutrients

Procuring and

distributing

non-staples,

bio-fortied crops

and fortied foods

through the PDS,

universal health

insurance

Health insurance

programs to improve

access to care,

improving quality of

the urban PDS

Health insurance

programs to improve

access to care,

improving quality of

the urban PDS

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

290

participation and increasing women’s remuneration along with CCTs

could be important interventions. The effectiveness of these interventions

lies in redening the roles of women as active income-generating members

within households. In urbanizing states, reforms in the labor markets to

increase women’s engagement in the labor markets and unconditional

cash transfers to women will be essential interventions. Since women are

relatively more empowered in these states, these changes will further

increase the bargaining power of women both at home and in the work-

place, thus improving child health outcomes (E. Kennedy & Peters,

1992). In lagging states, a combination of CCTs and in-kind transfers will

remain important. In-kind food transfers through the ICDS and the

MDMS programs have been found to be effective in improving nutrition

outcomes within households, but they require better monitoring and

effective governance in the lagging states (Anjana et al., 2015; Khera,

2006; P. Pingali, Mittra, & Rahman, 2016). Finally, interventions that

increase the education of girl children and women, delay child marriages,

provide households information on economic opportunities for women

and increase safety at workplaces have been known to impact both nutri-

tion outcomes for women and their children (R. Jensen, 2010, 2012).

Improving labor conditions, investing in schools, and educating parents

on investing in their girl children will thus have to remain priorities for

intra-household safety net development.

11.3.2 Water andSanitation Infrastructure

forBetter Health Outcomes

Poor hygiene environments increase disease burden and sickness and affect

nutrient absorption. Improving water and sanitation infrastructure are

essential to reduce the spread of disease, especially waterborne diseases

(Mengistie, Berhane, & Worku, 2013). Infrastructure provisions for clean

water and sanitation facilities also require behavior change. Unless there is

a change in beliefs within households about cleanliness related to toilet use,

individuals tend to avoid the use of the constructed toilet, thus defeating

the purpose of improving the health environment (Spears, Ghosh, &

Cumming, 2013). Behavior change programs that seek to improve the

household health environment by encouraging water storage practices,

encouraging hand washing before water use and after toilet use, and

P. PINGALI ET AL.

291

encouraging cleanliness in the surrounding environment have been effective

in reducing malnutrition around the world (Biran etal., 2008, 2014; Lee,

Rosenzweig, & Pitt, 1997; Mangyo, 2008; J.H. Rah etal., 2015). There

are currently experimental trials being conducted in rural villages in India

to identify the constraints and challenges for households in adopting

these practices.

Looking into the future, rapid urbanization of states increases the need

to invest in water and sanitation infrastructure required to improve urban

food and nutrition security. This is a pressing concern in major cities where

higher population density and the existence of slums—with little or no

sanitation facilities—increase household vulnerability to air or waterborne

communicable diseases. Climate change further threatens to worsen the

potency of diseases in urban areas where water and sanitation infrastruc-

ture are inadequate. Without proper urban development strategies that

incorporate both food and nutrition policies into development, the human

costs of urban growth may outweigh its benets.

11.3.3 Encouraging Behavior Change TowardsMore Healthy

Nutrition Consumption Practices

With changing incomes and lifestyles, over-nutrition that manifests as obe-

sity is an emerging health-related concern, especially in urban areas and

among women. Greater obesity is correlated with lower productivity,

health and wages of individuals and hence this phenomenon should be of

increasing concern (Cawley, 2004, 2010; Cawley & Meyerhoefer, 2012;

Thow etal., 2018). Greater consumption of processed food and a seden-

tary lifestyle can be attributed to this emerging phenomenon in urban

areas. To combat the problem, behavior change communications and

nutrition education could be used to nudge individuals towards healthy

eating habits. Policy instruments such as taxes on unhealthy sugary foods,

like in Mexico, could be useful to reduce consumption of the same

(Cawley, 2015; M. A. Colchero, Salgado, Unar-Munguia, Hernandez-

Avila, & Rivera-Dommar

co, 2015; M.A. Colchero, Rivera-Dommarco,

Popkin, & Ng, 2017). Other interventions such as nutrient labeling, the

introduction of food safety standards as well as the certication of organic

and healthy foods have been found to increase consumer demand for such

products (Padel & Foster, 2005). Publishing scientic research on the

nutrition content of foods and its effects on health has also played an

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292

essential role in increasing public awareness of consuming balanced diets.

These factors can play a signicant role in increasing household diet diver-

sity as well as reducing obesity.

Tackling undernutrition within households through education inter-

ventions requires understanding the information gap and the intra-

household dynamics that impact nutrition access. Information campaigns

on the

importance of breastfeeding, the importance of eating healthy and

adopting healthy nutrition practices within households, the importance of

consuming micronutrients in diets and so on could be the essential inter-

ventions to improve nutrition consumption within households. Research

has shown that when women are empowered to make decisions with

regard to these household goods, the health of the household improves

(Bennett, 1988). However, it is often the case that decisions are taken

either by the male members or women in positions of power. Thus involv-

ing these men and mother in laws in these behavior change campaigns

while discussing women’s empowerment is also crucial in ensuring greater

access to nutrition within the household’s threshold.

11.3.4

Increasing Health Ser

vice Capacity andImproving

theQuality ofCare

A major health threat is the rising incidence of non-communicable dis-

eases (NCDs). NCDs such as heart disease, diabetes and some cancers, if

diagnosed early, can be treated and managed. The onset of these diseases

requires palliative care and lifestyle changes to manage these conditions.

Thus, managing the problem of NCDs that are specic to India requires

investment in research and development into preventive care, palliative

care and development of diagnostic practices and treatment protocols.

Sales taxes collected from unhealthy food consumption or tobacco and

alcohol usecan be useful in raising resources to help build such systems.

These public policy tools are also known to encourage more health

behaviors in individuals.Additionally,interventions that increase quality

of health services provided through the public health systems, building

capacity of health service providers and regulating discriminatory private

health services practices will be important in ensuring the health system

remains fair and equitablefor those who access it.

Climate change has been associated with changing the potency of

communicablediseases within locations as well as with the growth of new

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293

disease burdens inlocations that were previously not susceptible to the

same. In areas where water and sanitation are poor and climatic shocks

threaten infrastructure services, changes to the health environment are

expected tofurther derail progress made towards tackling communicable

diseases. Thus in addition to implementing appropriate interventions

that increase the quality of water and sanitation infrastructure, climate

change mitigation and adaptation strategies that involve the development

of vaccines and treatment protocols fortreating communicable diseases

are alsorequired. Children in lagging states would be most vulnerable

due to their lack of access togood quality healthcare services. In such

situations, implementing epidemiological disease monitoring units in

addition to interventions to provide timely care in the event of disease

outbreakwill be extremely important for reducing malnutrition. In more

developed states, integrating monitoring technology with health services

provisions will be essential inputs into controlling the spread of commu-

nicable diseases as well. However, cost effective interventions need

greater exibility built into the process of preventative care and treat-

ment. For example, eachstate needs to be equipped with funds and tech-

nology that will best help them tackle the communicable diseasewith the

highest disease burden.

11.3.5 Bolstering Safety Nets toAddress Urban Food Security

andImprove Access toNutrients BeyondCalories

A robust safety net architecture has emerged in India over the last two

decades (Drèze & Khera, 2017). It is a welcome change given the rising

inter-personal inequality and improved scal capacity of the government.

The policy challenge lies in the issue of the direction and design of these

initiatives. The existing social protection paradigm is structured around

the idea of reducing poverty and vulnerability. While this will continue to

be an essential idea behind safety nets, a futuristic policy should also con-

sider thinking about designing programs which reduce the likelihood of

people falling into poverty. Social support for the poor is palliative or cura-

tive, preventive policies like insurance programs could be a new policy

direction. Efcacy of such policies is also bolstered by the fact that eco-

nomic shocks, like health and weather, are one of the major causes of

households falling into poverty in India. Rising informal employment,

where income is highly variable, has been a signicant concern of late

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

294

across many countries. Social protection, therefore, of various kinds, with

various objectives, provide a safety netto the disadvantaged.

The design of safety net programs also needs to be linked to the

changing nature of structural transformation (Croppenstedt, Knowles,

& Lowder, 2017). Much of these policies currently focus on the rural

areas. By 2050, India is expected to be more urban, even by the most

conservative ofcial gures. Concerns of “urbanization of poverty”

have already begun to dominate scholarly debates and news headlines

(Ravallion, 2002). Combined with a large share of informal urban

employment structure, unhygienic living conditions, especially for the

poor, make the urban food systemssusceptible to malnutrition. Being

net consumers of food, urban food systems are more susceptible to food

price

uctuations& thus gr

eater food insecurity during climate change

events. Urbanization and NCDs have a clear associationas well.In these

contexts, NCDs are likely to rise faster in poorer communities—as is

happening in middle- and higher-income countries (Bollyky, Templin,

Cohen, & Dieleman, 2017). The role of safety nets in urban areas, there-

fore, will be of critical importance as India grows. The issue of labor

mobility and reduced quality of life of migrants further adds to the clar-

ion call for a robust urban safety net program (Gentilini, 2015). Debates

aroundintroducing UBI andthe importance of cash transfers willthere-

fore be a welcome addition to urban safety net discussions. In urban

areas, where banking infrastructure is well-developed, cash transfers can

be effective in increasing households ability to purchase diverse food.

In lagging states, market development needs toprecedea move to cash

transfers. UBI, while in its inception, shall progressively become a useful

social assistance program.

Health insurance schemes are denitely a welcome addition in reducing

the likelihood of poverty and mortality. More developed states in south

India have done well on the take-up of government health insurance pro-

grams while the underdeveloped regions have fared poorly. Greater nan-

cial literacy among the population and well-developed insurance markets

should precede these interventionsin order to increase its effectiveness.

Also,interventions for crop or livestock insurance should be introduced as

they improve the ability of smallholders to adopt new technologiesand

hedge risks against climate related shocks. Collectively, these risk-

absorbing

interventions enhance households’ abilities to tide over pr

oduction &

consumptionshocks, thus increasing household food security and

reducing

their risk of malnutrition.

P. PINGALI ET AL.

295

11.4 PolIcIes foreconomIc develoPment:

reAtIng economIc oPPortunItIes forcAtch-uP

rowth AndlInkIng food systems totheJob AgendA

We have argued throughout the book that economic development pat-

terns are varied across different Indian states. Urbanizing states have been

able to leverage their comparative advantages and grow with the local

and global economy. The agriculture-led growth states reaped the benets

of the Green Revolution and hence reduced poverty and malnutrition

successfully. The lagging states, however, need to catch up in order to

stay competitive. Aligning agricultural development to overall economic

growth is essential to ensure equitable and sustainable development in these

areas. In lagging states, the main goals will be to ensure the development

of rural infrastructure, stimulate non-farm growth and reduce labor mar-

ket frictions to enable better labor utilization in the economy. Dovetailed

with equitable growth strategies is the importance of sustainable growth

policies. Climate change has had a signicant impact on all sectors of the

economy and measures to mitigate its effects will require climate-smart

interventions in all sectors. In agriculture-led states and urbanizing states,

institutional interventions to ensure good governance (especially urban

and peri-urban areas), creating the climate for sustainability- oriented

investments and interventions, encouraging private sector participation

and creatingan environment for technological innovation will help in sus-

taining economic and agricultural growth. In this section (see Table11.4

for an overview), we discuss policies that can facilitate opportunities for

economic growth based on patterns of development with the intention of

creating institutions to encourage climate-smart investments and boost

private sector participation.

11.4.1 Improving Rural Infrastructure toStimulate

Non- farm Growth andImprove Connectivity toUrban Areas

toStimulate Rural Development

Diversicationof rural livelihood sources is a critical household strategy to

hedge income security risks associated with agricultural production and

increase food security (Ellis, 1998). As countries structurally transform

and labor transitions out of the agricultural sector, household income

sources from the non-farm sector also grow (Timmer, 1988). In India, a

majority of rural households have a mix of farm and non-farm income

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296

Table 11.4 Policies for creating economic opportunities for catch-up growth

Economic growth

and development

Lagging states Agriculture-led states Urbanizing states

Improving rural

infrastructure and

connectivity to

urban areas

Investing in roads,

power, irrigation,

supply chains etc.

focused on rural

development

Upstream supply

chain linkages to

agriculture

Downstream supply

chain linkages to

agriculture

Reducing labor

market frictions that

prevent the ow of

underemployed

labor towards more

productive

economic

opportunities

Women’s safety,

education of the

labor force, creating

rural employment

exchanges, upskilling

the labor force

Women’s safety,

education of the

labor force, creating

urban unemployment

insurance, rural

employment

exchanges, reskilling

the labor force for

the non-agricultural

sector

Women’s safety,

education of the

labor force, urban

unemployment

insurance, urban

employment

exchanges, reskilling

the labor force

towards high-skilled

jobs

Improving the

capacity of urban

governance bodies

to facilitate urban

development and

climate proof major

cities

Improving

governance systems

for small towns,

investing in drinking

water, infrastructure,

migration, resource

use etc.

Improving

governance systems

for small towns,

investing in drinking

water, infrastructure,

migration, resource

use etc.

Improve urban

infrastructure and

urban amenities,

stimulating urban

growth, urban export

growth, drinking

water, infrastructure,

migration, resource

use etc.

Encouraging the

private sector to

participate and

innovate in the

growth process

Developing

incentives for

businesses that make

use of low-skilled

labor force,

encouraging the

growth of the

informal economy,

businesses that

innovate in value

addition of

agricultural products

Developing

incentives for

businesses that

innovate in value

addition of

agricultural products,

businesses that

innovate on

agriculture input

development

Developing

incentives for

high-tech businesses

that innovate on

climate and

environmental issues

to increase global

competitiveness

P. PINGALI ET AL.

297

sources in their income portfolio (Chandrasekhar & Mehrotra, 2016).

Livelihood diversication is acommon strategyamong the smallholders to

ensure that they can make a basic living and insure themselves against

unanticipated shocks. However, since the rural non-farm sector has not

grown as fast as the urban non-farm sector, households that are locked

into the rural non-farm sectordue to credit or labor market constraints

have not seen their non-farm incomes rise as quickly.

One of the simple ways to increase access to non-farm goods and labor

markets is through investments in rural infrastructure (S. Aggarwal,

2018). Infrastructure investments such as roads that connect villages to

towns or the development of interstate highways lower costs of transport

and reduce costs related to relocation when laborers move between low

productive and high productive regions. Also, investments in infrastruc-

ture such as power and irrigation help improve labor productivity on the

farm, thus creating the impetus to move underemployed labor out of agri-

culture (Asher & Novosad, 2018). In lagging states, rural infrastructure

along with investments in human capital are critical for enabling catch-up

growth. Programs such as the MGNREGA have been vital to improving

the bargaining position of agricultural laborers in these areas and increas-

ing income security. However, without proper credit markets, individuals

may not be able to save, invest or spend these incomes (R.M. Townsend,

1994, 1995). Thus programs that seek to provide UBI for individuals may

not prove useful for rural development if there is no rural infrastructure

development. In agriculture-led states and urbanizing states, creating

upstream and downstream market linkages to enable the ow of goods

and labor from agriculture to the non-agricultural sectors is essential. For

the agriculture-led growth states, incentivizing the food processing indus-

try, the food fortication industry and other allied food and feed indus-

tries will help redistribute agriculturalsurplus towards more productive

uses. In urbanizing states, linking technology development with agricul-

tural inputs development and innovations along the food supply chain will

provide stimulus for agricultural development (McCullough, Pingali, &

Stamoulis, 2008). Introducing labor-saving technologies will increase

agriculture productivity and hence agriculture-related incomes. Food sup-

ply chain innovations will reduce food waste and increase price determina-

tion of agricultural produce, thus strengthening the linkages between

urban growth and rural prosperity. Rural infrastructure that connects mar-

kets across states will be essential to facilitate greater ow of goods and

labor in response to demand for the same.

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298

11.4.2 Reducing Labor Market Frictions That Prevent theFlow

ofUnderemployed Labor TowardsMore Productive

Economic Opportunities

In many countries across the world, urban growth due to ST brought

with it an increase in rural to urban migration. In India, this rural to

urban transition has beenlow even though urban wages have continued

to increase faster than rural wages. There are four reasons for this. One,

low availability of skills due to low human capital investmentshas led to

greater underemploymentin the agriculture sector. Two, the absence of

appropriate human capital skills, rms tend to rely on signals such as

access to caste networks rather than signals of worker productivity in

their hiring process. In the absence of these networks, abled bodied

youth may not nd it feasible to migrate towards urban jobs.Three, the

inability to nd sources for reskilling based on market demand alsopre-

vents those who are underemployed to move towards more productive

job opportunities that require complementary skills. Lastly, women’s

labor force participation has been reducing due to the lack of availability

of good quality jobs, lack of child care support facilities as well as low

safety during their commute and at their workplaces in urban areas

(Lipton, 1980; Munshi, 2011; Munshi & Rosenzweig, 2006).These fac-

tors tend to inuence the ability of migrants to permanently move out of

rural economy as well.

As we look ahead, reducing labor market frictions by imparting job

skills to the rural population, increasing investments in human capital

development through quality education and setting up employment

exchanges to reduce the search costs will be required. One of the signi-

cant challenges to leverage the non-farm sector for rural prosperity is to

improve the quality of jobs and to reskill the population. The rural non-

farm sector mostly contains odd jobs and petty employment opportuni-

ties that hire low-skilled workers. A large portion of urban workers,

especially migrants, are mostly involved in informal employment. Greater

investment in improving human capital, especially vocational skills tai-

lored to thelocal industry requirements, is thus essential for the complete

transformation. In the lagging states, creating employment exchanges

that channel workers towards vocational training and up-skilling their

populations will be important. In agriculture-led states, the key would be

to incentivize entrepreneurship and reskill the agriculture labor force to

P. PINGALI ET AL.

299

work in the non-agricultural sector. In urbanizing states, increasing

capacity of the education sector to absorb more students and improve the

quality of education would be signicant for creating a globally competi-

tive labor force.

Regarding improving matches between labor and rms, employment

exchanges in developed countries have enabled greater employment

through the use of information and communication technologies (ICT).

In developed countries, the gig economy, where people transact short-

term personalized labor services, has become a useful meansfor reducing

search costs for labor services (Burtch, Carnahan, & Greenwood, 2018;

Graham, Hjorth, & Lehdonvirta, 2017). In the longer term, investing in

higher education institutions that contribute to national growth through

R&Dis essential to maintain global competitiveness. Reducing labor mar-

ket frictions that prevent women from participating, such as increasing

safety enforcement in transport and the workplace, changing gender

norms around what constitutes women’s work and increasing child care

facilities to reduce their opportunity costs will be required. Bringing

women into the economic growth process gives us an additional 50%

chance of success.

In the food systems approach, the non-farm sector can create jobs

through the development of modern agricultural value chains. Employment

in logistics like aggregation, storage, processing, and so on at the agri-

business upstream and food-related services such as restaurants down-

stream could potentially be leveraged as the channel of employment

generation. Higher demand for agricultural inputs and related technolo-

gies would generate other livelihood avenues. As NCDs and climate

change create new challenges for health, having access to good quality

healthcare service providers will be important. This implies that there will

be a need for more service providers and research and development into

treating and curing NCDs. This will increase the demand for educational

institutes that provide these services. Involving the private sector to orga-

nize resources for education sector development while monitoring their

quality will be a crucial step in this direction. Also, investments in develop-

ing an R&D focused labor force and creating opportunities for innovators

to benet from intellectual property rights will stimulate innovation by

individuals and (or) research organizations. All these sectors will also be

able to provide women with enhanced opportunities to be a part of the

labor force.

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300

11.4.3 Improving theCapacity ofUrban Governance Bodies

toFacilitate Urban Development andClimate Proof Major Cities

Many rural settlements in lagging states now exhibit urban characteristics

as reected in the quality of dwelling or changing occupational patterns

(Pradhan, 2013). The government, however, continues to govern them as

rural areas, which not only inhibits their overall development but also

presents a slower rate of rural transformation. These middle spaces, along

with the rural-urban continuum, offer enormous growth potential. Since

they are the center through which much of the non-farm livelihood cre-

ation happens, these spaces are essential in facilitating the labor transition

during structural transformation. These spaces—many of them far from

the metropolitan cities—could themselves turn into agglomeration econo-

mies, encouraging both the migration of labor and capital from

surr

ounding

areas (Mukhopadhyay, Zérah, Samanta, & Maria, 2016). By providing

services such as technological inputs to the neighboring rural areas, these

peri-urban economies often bring greater economic dynamism into the

local economy. India’s subaltern urbanization, with the right provision of

public infrastructure, could thus attract investment near the rural areas,

create jobs, reduce the burden on major cities and provide a lifeline to the

farmers to markets and modern technologies, thus stimulating economic

growth, especially in lagging states.

Over the next 30years, the key challenge for India will be to build sus-

tainable cities. Cities, especially in urbanizing states, would need to host

burgeoning urban populations and provide new avenues for non-farm

growth while also ensuring food security for those who live in them. With

regard to economic growth, supporting investments in public goods such

as construction of a good quality transport sector and investments in

developing climate-friendly and sustainable water and solid waste disposal

systems, developing a city-wide disaster fund to reduce damages from

uncertain climatic events and providing investments to develop human

capital through health and education investments will be required. These

types of investments will improve the quality of life in cities and thus

encourage participation by businesses that drive urban growth and

employment opportunities. As coastlines move inwards due to climate

change, governments would also have to be prepared for urban displace-

ments and its impact on urban food security. Relocation of those who are

poor but live near the coastline should be a focus on urban develop-

ment plans.

P. PINGALI ET AL.

301

Urban food security is another major issue for the future (Tacoli,

Bukhari, & Fisher, 2013). As weather changes increase uncertainty in food

production, an increase in volatility of prices will also impact urban food

security. Creating an investment climate that develops efciencies along

the urban food supply chains will be essential to reduce food and nutrient

loss. Also, connecting local urban supply chain to the global food supply

chain will be an essential strategy for maintaining urban food security. As

incomes per capita in these areas increase, instituting safety net measures

for the urban poor, such as UBI, employment insurance and health insur-

ance, will be essential to ensure overall urban development and food secu-

rity as we look ahead.

11.4.4 Encouraging thePrivate Sector andClimate-Smart

Citizens toParticipate andInnovate intheGrowth Process

Hart (1995, 1997) shows that businesses pursuing sustainable develop-

ment strategies and developing environmentally and socially responsible

products have the potential to increase their long-term protability and

hence it is socially optimum for them to do so. As consumers become

more conscious of sustainability as a brand and consumers demand more

accountability from companies in their supply chain and labor hiring prac-

tices, developing the investment climate to encourage environmentally

friendly business practices should be encouraged in India. Currently, many

experts in India wrongly argue that the country should be allowed to con-

tinue along its emissions pathways since we cannot have economic devel-

opment opportunities void of emissions. This type of short-term thinking

can lead to signicant economic losses in the future.

With regard to creating new employment opportunities for growth,

creating an investment climate that encourages sustainable businesses and

business practices is required. The private sector can play a role in both

helping with climate change mitigation and economic development as

long as they are incentivized with appropriate intellectual property rights

and are guaranteed returns to their investments. Currently, regulation on

the part of the government in the form of urban land ceiling rules, inex-

ible labor and employment policies and stringent bankruptcy laws create

opportunities for rent-seeking on behalf of the government and increase

the cost of doing business. Removing these hurdles while also incentiviz-

ing venture capital investments in developing sustainable businesses will

be an essential step towards ensuring long-term economic development.

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

302

Pingali and Aiyar (2018) suggest the integration of all individuals, rms

and governments across countries into global carbon markets. The authors

envision that this would help in climate mitigation in the following ways.

First, individuals when nancially motivated may be more likely to invest

in climate-friendly technologies and purchase climate-friendly production.

For example, farmers who invest in organic farms or sustainable agricul-

ture practices can earn points from the carbon markets in addition to the

revenues they make through the sales of these products. This, in turn,

would incentivize rms to invest in environment-friendly technologies

that lead to the development of low emissions goods and services (Lal

etal., 2007; Lehmann, 2007; Lohmann etal., 2006; Montagnini & Nair,

2004; Jindal etal., 2008). However, to benet from such a decentralized

process, governments need to play a role in monitoring and measurement.

Research and development into satellite technology to monitor progress,

providing public research services in areas where business development is

not possible and penalizing those who cheat on these markets will encour-

age greater compliance in& credibility of carbon trading (Fawcett, 2010;

Lohmann etal., 2006). At the global level, governments can discuss prog-

ress made and set agenda on emissions reductions and clean up as we

look ahead.

11.5 conclusIon

Through the various chapters in the book, we have shared the contradic-

tions that have come to represent the India growth story. To start with,

fast-growing per capita incomes have not been met with a similar pace in

the reduction of either undernutrition or micronutrient deciencies in the

country. These nutritional deciencies are outcomes of inadequate access

to food (and nutrients), which are outcomes of low incomes per capita.

Even as policy makers continue to ght the battle against this undernutri-

tion, on the other end of the spectrum, the prevalence of obesity, an out-

come of over-nutrition, has been on the increase. Obesity rates are keeping

close pace with the growth in per capita incomes even as undernutrition

reduction remains a sticky challenge. The signicant fallout of increasing

obesity is the risk it poses for the growth of non-communicable diseases

(NCD). In combination with the growing triple burden of malnutrition,

increasing incidence of NCDs poses an exponential threat for economic

and health security for the future food systems in India. Second, economic

P. PINGALI ET AL.

303

growth and increasing household incomes are known to be necessary for

improving nutritional outcomes. Higher purchasing power enables a bet-

ter command over household resources and hence improves access to bet-

ter quality food. In line with this hypothesis, in states with high economic

growth, policy makers have been successful in improving food security

and reducing undernutrition. However, these states now face the chal-

lenge of tackling over-nutrition and NCDs related to this malnutrition. In

states with low incomes per capita, on the other hand, high undernutri-

tion persists. Even though there have been a large number of interven-

tions focused on reducing this nutrition burden across the country,

progress towards achieving the sustainable development goal of zero hun-

ger and malnutrition has been slow. Thus, this regional inequality in nutri-

tional outcomes is also reected in the regional (state-wise) disparities in

economic growth.

Third, within a state, the pace of household income growth and eco-

nomic development has been determined by the structural transformation

strategy chosen by the state for its development. The success of these strat-

egies in enabling state-wise economic transformation has depended upon

resource endowments of the states, global and local demand as well as

their political priorities. Stark differences in regional development patterns

have arisen in part due to differences in comparative advantages across

states that have been based on access to agro-ecological zones, natural

resource endowments, differences in institutional capacity and preferences

for certain types of development strategies. These differences have medi-

ated the speed of economic transformation across states. This has caused

the country to develop such that some states now resemble low-income

countries from sub-Saharan Africa while other states look more similar to

high-income countries from Latin America. Fourth, the primary driver of

this growing regional inequality has been the continued reliance of agri-

cultural development strategies on staple grain production-driven growth.

By focusing on staples as the foundation for agricultural development and

therefore economic growth, national economic development policy has

inadvertently created and entrenched regional disparities in growth. While

the national staple grain promoting policies played an important role to

ensure calorie sufciency across the country, it also inhibited diversica-

tion of the food systems, reduced local nutrient availability and led to the

faster development of regions with comparative advantages in staple crop

production vis-à-vis others. Widening regional income inequality has

THE WAY FORWARD: FOOD SYSTEMS FORENABLING RURAL PROSPERITY…

304

reducedaccess and affordability of different nutrients in household diets

and contributed to the phenomenon of undernutrition in some parts of

the country and rising obesity in other parts. These differences are also

reected in disparities in regional development trajectories, employment

patterns, occupational patterns and incomes.

Looking ahead, we see new opportunities and challenges for the cur-

rent food systems. First, higher demand for diet diversity will create new

avenues for growth through diversication in the agricultural sector.

Continued reliance on the staple grain policies that often lock smallholder

farmers into staple grain production will prevent them from realizing net

benets from diversifying their farm production in response to the new

demand. Thus, we have provided recommendations on how to facilitate

the commercialization and diversication of the farm sector given these

challenges. This commercialization and diversication, we believe, will be

necessary for increasing on-farm nutrient availability. Technologies in agri-

culture can ease the land and labor constraints and increase nutrient avail-

ability in food systems provided that threats from climate change are

adequately addressed. Investing in both staple and non-staple production

technologies that are climate sensitive and environmentally friendly will be

an important adaptation measure against the threats of climate changeon

the viability of theagricultural system. Improving efciency in food supply

chains is also vital for increasing nutrient availability and for linking urban

growth with rural prosperity. Second, given the projections of falling fer-

tility and an increase in aging population in the country, health technolo-

gies will be useful in reducing NCD burden only if the malnutrition

pandemic is put in check. This will require additional interventions that

address access to good quality food, increasing dietary diversity, improving

hygiene practices and increasing access to social protection policies. Third,

in order to reduce economic disparities across regions, developing region-

specic growth strategies that are based on comparative advantages in

states will be required. Also, investing in new comparative advantages that

rely on the labor dividend and interventions that stimulate greater urban

development will be required to maintain global competitiveness. For this

to take place, increasing human capital through health and education

interventions, reducing inequities in access to current labor markets and

creating new avenues for the growth of the non-agricultural sector through

entrepreneurship will be required.

P. PINGALI ET AL.

305

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