Water scarcity: Why government must expand micro-irrigation coverage

The focus of the government has to be on expanding micro-irrigation coverage

India is home to 17.5% of the world’s population, but only 4% of its fresh water resources. Agriculture consumes some 78% of the country’s fresh-water supply. With increasing urbanisation and industrialisation, India will not only have to augment supply, but also use the same more efficiently.

Budget 2017 allocates R7,377 crore towards the Pradhan Mantri Krishi Sinchayee Yojana (PMKSY), a 42% jump over the revised estimates for the current fiscal. Further, finance minister Arun Jaitley has made a smart move in providing R20,000 crore as corpus for the Long Term Irrigation Fund, on top of R20,000 crore in FY17, to bring 7.6 million hectares of land under irrigation by fast-tracking the completion of 99 prioritised projects in the four years between 2016 and 2020. The corpus is to be created by Nabard through borrowings from the market; this will keep the government’s own fiscal deficit in control! Jaitley has created a dedicated Micro-Irrigation Fund with an initial corpus of R5,000 crore, again through Nabard on similar lines.

Within the allocation for PMKSY in this budget, R3,400 crore or 46% has been set aside for the ‘per drop more crop’ component—an increase of more than 70% over the FY17 allocation of R1,990 crore. In real terms, the budget allocation for micro-irrigation in FY18 works out to be 22% higher than the revised estimates of FY11, and nearly 57% more than that for FY16, as is shown in the accompanying graph.

Micro-irrigation has gradually expanded in the country and stands at around 8.73 million hectares in FY17. But, this is just 13% of the total coverage potential of 69.5 million hectares. Micro-irrigation systems deliver water savings of up to 40% over conventional flood irrigation methods, along with appreciable crop productivity increases, thanks to the application of water at the right place (root zone) and right time. Piped water facility connecting dams and micro-irrigation system in fields can help reduce water losses; they can ensure roughly 70% conveyance-efficiency and 90% overall water-use efficiency. There can be no better step towards bringing about sustainable water use in agriculture.











A case in point is the impact of drip irrigation on sugarcane and cotton cultivation in the water-stressed Marathwada region. In FY15, Marathwada accounted for over a fifth of the sugarcane area in Maharashtra. Since this crop consumes about 2,000 litres of water for every kg of sugar produced, many experts have questioned whether it should be grown at all in areas such as Marathwada. But the fact is that Marathwada has prospered because of sugarcane, with the mills creating several thousand jobs both upstream and downstream. Farmers, too, are unlikely to go back to growing jowar or bajra. It suggests that adopting better water management through micro-irrigation may be what is really required.

Jain Irrigation Systems Limited, the world’s second-largest irrigation solutions company, has demonstrated that drip irrigation systems in sugarcane cultivation can save around 66% irrigation water as well as raise crop yields by a third. Water saved through drip irrigation in one hectare sugarcane area can bring some five hectares under cotton. Increased sugarcane yields from drip irrigation, coupled with higher returns from irrigated cotton crop, will thus help augment farmers’ incomes and, at the same time, promote sustainable agriculture.

At an estimated cost of R75,000 per hectare for installation of drip systems, R7,722 crore will be needed to bring Maharashtra’s entire sugarcane area under drip. But in FY16, the state’s budget allocation for micro-irrigation was a mere R176.75 crore. It basically shows how our priorities in irrigation are rather perverted. Nabard is raising R20,000 crore from the market for completion of major and medium schemes having a water-use efficiency of
35-40%, but only R5,000 crore for micro-irrigation where effciency is 85-90%! Why not float micro-irrigation bonds for R20,000 crore or more?

The future revolution in agriculture is going to come from precision farming. Micro-irrigation can be the stepping stone towards achieving the goal of making Indian farming sustainable, profitable and productive. Can we expect Jaitley and, of course, prime minister Narendra Modi to take bolder steps in this direction?

Source: financialexpress

South Africans among the world’s worst savers

Cape Town – At 15.4% of its GDP, South Africa has one of the worst savings rates in the world. And it’s getting worse, according to statistics released by the Reserve Bank.

And it’s not just that our salaries are low and our cost of living is high – the Chinese earn less than we do, and they manage to save over 50% of their GDP, according to the Financial Services Board (FSB). India manages to save about 30%, Brazil around 25%, and Australia about 22.5%.

The highest this figure has been in South Africa in the last 13 years is 17.2%, which was recorded in 2002. The lowest was 14.7%, which was recorded in 2009, shortly after the worldwide recession on 2008.

These savings include pension contributions, and all forms of investment. In short, says the FSB, to save means spending less than you earn, and it encourages people to adjust their lifestyle so that they can contribute a part of their income to a savings scheme.

But, according to SA government statistics, South Africans are now borrowing more money than they are saving. Household debt as a percentage of household income now stands at approximately 80% (this includes loans, overdrafts, credit card debt, home loans, accounts). In the United States, the household debt-income ratio stands at 138%.

Only a quarter of those between the ages of 18 and 30 are saving for retirement, according to the Old Mutual Savings and Investment Monitor. Only 31% are saving for possible emergencies, while 35% are saving for a car and 26% to pay off debt. But the rising cost of living is also affecting this sector of the population, as 68% of them have said they had to reduce their expenditure in 2014, up from 55% the previous year.

The South African Savings Institute gives a number of reasons for the low savings rate in SA:

* low disposable income growth;
* low employment growth;
* a rising tax burden;
* an inflationary environment; and
* lack of confidence in the future.

The Old Mutual Savings and Investment Monitor published in July 2014 provided some interesting statistics on South African households and their savings and spending habits:

* 65% of income is spent on consumables and living expenses;
* 38% of those interviewed said they were saving less than in 2013;
* 50% believe that death, funeral and disability cover are more important than retirement savings;
* 18% of households in the R40 000+ income category have unit trusts, mutual funds or exchange-related funds;
* 32% of parents are saving for their children’s education; and
* 45% of black households contribute to at least one stokvel per month.

The attitude to retirement savings mentioned above also explains why only 6% of SA retirees are financially independent at retirement. The rest are dependent on their families, friends, or the government, according to the FSB.

The savings rate is determined by looking at household savings, savings in the public sector and savings in the corporate sector. According to stats from the Reserve Bank, both the public and private sector were actually ‘dis-savers’ (borrowing more than they were saving) and the corporate sector was the only net contributor to gross savings. But that, at 4.2% was also not as high as it could be, according to the South African Savings Institute.

The reasons they give for this low rate in the corporate sector include the following:

* a lack of profitable investment opportunities;
* high cost of capital;
* labour market inflexibility;
* high corporate taxes; and
* short-term behaviour.

So if and when South Africans do save, what are their priorities? The following statistics from Old Mutual paints an interesting picture, especially as retirement savings and saving for funeral expenses come in at the same rate:

* 43% save for a rainy day;
* 37% save for retirement;
* 37% save for funeral expenses;
* 22% save for children’s education;
* 18% save to pay off debt;
* 16% save for home improvements; and
* 13% save for a vehicle.

In an effort to encourage South Africans to save more, National Treasury has introduced the Tax Free Savings Account from 1 March 2015.

Source: fin24

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