How does Hindustan Unilever deliver a bar of soap to one of its 1 lakh-plus retail outlets, and that too in some remote part of rural India? The soap is manufactured in some central location in Uttarakhand or Silvassa (Dadra Nagar Haveli), enjoying some excise duty concession there. It is then shipped to a carrying and forwarding agent in the State where the rural outlet is located. The latter ships it to a wholesale distributor for the district, who then delivers it to the retail outlet. In short, the bar of soap passes through four layers of intermediation in the supply chain infrastructure, before it gets consumed by the ultimate rural consumer.
But how does the Government deliver water under its irrigation schemes to a cultivator-farmer in the rural hinterland? It has two models of delivery. One is the canal-based irrigation system, in which massive quantities of water are impounded at a convenient location, and the water delivered through a network of canals. One can liken this to a two-layered supply chain infrastructure. But this approach hasn't quite delivered the results one would have liked to see. Canal-based irrigation has gone up from roughly 16 million hectares in 2000-01 to 17 million hectares in 2010-11. In other words, up by a mere one million hectares over a 10-year period. That is just as well.
The money spent on creating the irrigation potential rarely translates into actual irrigation of cultivated land as a comprehensive canal infrastructure is never put in place for a variety of reasons, including administrative inefficiency and corruption in execution. Added to that, there is never enough money for routine and regular maintenance, leading to sub-optimal utilisation of the irrigation potential created. When you throw in the element of siltation that irrigation dams are susceptible to, the potential itself gets degraded over time.
Direct delivery
As things stand now, a mere fourth of the 60 million hectares of farm land that enjoy some irrigation facility draw water from canal-based systems; the rest is actually delivered to the farmers directly. Well, when we talk of direct delivery, it is an over-simplification. If the Government delivers the water directly, that is only in a manner of speaking. What the Government does is to finance the farmer to dig a well or sink a deep bore-well on his farm-land which is then used to irrigate the land. In other words, the direct marketing method of delivering irrigation — namely, funding the construction of wells and bore-wells — has resulted in the addition of irrigation to 8 million hectares of farm-land during the ten years.
While HUL depends on a well-lubricated multi-layered supply chain infrastructure to deliver its products to rural consumers, the Government prefers either a two-tiered logistics solution to deal directly with the end-consumer and deliver irrigation benefits. The problem with this approach is that dealing directly with the consumer (tube-well irrigation) or with just one layer of intermediation (canal-based irrigation) can never ensure that the resultant arrangement is inclusive enough.
HUL too, could have gone in for elimination of the middlemen (C&F agents, distributors, wholesalers and retailers and gone in for direct marketing. But could it have ensured that every one of the 700 million odd rural consumers have access to a bar of soap just when the customer actually needs it? Certainly not. Each of those intermediaries brings something to the table for HUL to log in the quantum of sales it does each year. It is clear they are there for a reason. They perform inventory management, undertake credit appraisal, and so on, all of which add value, and for which they get rewarded.
No assured access
Now, how has the Government acquitted itself with its emphasis on disintermediation? Not very well. Even nearly 70 years after Independence, only 46 per cent of the net cultivated area of 141 million hectares has access to assured irrigation. This was stated by the Chief of the National Bank for Agriculture and Rural Development (Nabard), who was quoting the Finance Minister about the state of play in Indian agriculture ( Business Line , March 19). Nabard is expected to do its bit in refinancing bank lending for private irrigation solutions (wells and tubewells). The news report quoted him as saying that his institution will raise about ₹55,000-60,000 crore, against the normal ₹45,000-50,000 crore mopped up by issuing bonds in the past.
Well as Nabard might pump in more money into Indian agriculture, the task before those managing India’s farm sector is daunting indeed. The Niti Aayog, India's planning body, summed it up quite nicely in one of its recent working papers. As the report claimed, India, which accounts for 17 per cent of the world's population, has access to only four per cent of the total fresh water accretion annually. The problem of poor irrigation infrastructure referred to by the Nabard chief, is compounded by the overall meagre access to fresh water and poor spatial and temporal distribution of rainfall. Barring a few regions, which have the advantage of perennnial rivers flowing through them, the rest of the country gets its quota of rains in just two to three months.
Two-tiered solution
If this was not enough, changes in lifestyles triggered by improved prosperity are adding to the problem of poor water availability. People are consuming more fruits and vegetables, besides meat, all of which is putting added pressure on fresh water availability for agriculture.
On the face of it, a 'direct marketing' approach appears to be an elegant solution to the challenge of proper farm irrigation. More so in an atmosphere of fractious inter-State relations over sharing of water and stiff opposition from environmental activists, apart from popular protests against displacement of people due to submergence of land inevitable in mega irrigation projects. But, much as political expediency demands a policy of favouring a disintermediated water solution for the farm sector, Mother Nature cannot be wished away.
There is a role and place for centralised rainwater harvesting (mega irrigation schemes) integrated with canal systems that feed lakes and small ponds before they reach the farm-lands. Such an arrangement will also result in the underground aquifiers getting recharged and paving the way for sustainable, groundwater-based irrigation systems.