Challenges Faced by Micro-irrigation Shareholders

At the manufacturing level, the industry is grappling from with cash flow issues due to delays by state governments
Challenges Faced by Micro-irrigation Shareholders
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Chairman and Managing Director, Pinnacle Industries
5 min read
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The world is reeling under water scarcity. Over the past few years, several studies and reports have been released as well as discussions and conventions have been held globally to address the issue. Cities like Cape Town have already witnessed “Day Zero” and likewise many more cities are fast approaching Day Zero situation, where people would have to go to collect water from common collection centres. India too is no exception.

Rising population, unplanned urbanization, industrialization, pollution of water sources and low understanding of water management system are some of the challenges faced by the country, which need immediate attention.

In India, large amount of water is consumed by the agriculture sector. While most of the farming sector is rain fed and highly dependent on monsoon, some farmers depend on groundwater and borewells. Over exploitation of ground water without any strategy for recharging it is leading to rapid dwindling of groundwater in the country.

Agriculture sector, which consumes nearly 80% of fresh water, is on the brink of major water crisis and the Government has been rigorously promoting schemes such as Pradhan Mantri Krishi Sinchai Yojana (PMKSY) to help farmers get maximum yield for every drop of water used. The Centre as well as state governments are promoting micro-irrigation to help farmers save water and boost yield.

While at the concept stage, micro-irrigation is facing challenges like energy crisis, awareness, affordability and declining landholdings and farm income. At the manufacturing level, the industry is grappling with cash flow issues due to delays from various state governments.

Compared with contracted debtor days of 65 earlier, the range has gone up anywhere between 172  days and 453 days, and as of 31 March 2019 there was an outstanding payment of almost INR 5,000 crore, leading to enormous cash flow challenges on the industry. Add to this, the overall process including, identification of farmer application, approval of supply, issue of work order, installation from supplier, and inspection and approval from government agencies is time consuming process by itself. In a nutshell, from application to release of payments, the entire process could take anywhere between 300 days to 600 days.

Micro Irrigation is identified as thrust area under the campaigns ‘Per drop more crop’ and ‘Har khet ko paani’. In the past five years, the coverage of micro irrigation was approximately 4 million hectare. The current central government’s manifesto, the vision of 10 million hectare in the next five years (2019-2024) and its emphasis on popularising water conservation technologies such as micro-irrigation with the mantra of ‘per drop, more crop’ through PMKSY, is a bold step to make impact in reviving water conservation and agriculture.

This year (FY19-20), the budgetary support for this sector is around INR 3,000 crore. The states also have top-up subsidies (in addition to PMKSY mandatory contribution of around INR 1,500 crore) to the tune up to INR 1,500 crore to increase the farmer affordability and micro-irrigation coverage. The total micro-irrigation industry size is roughly INR 6,000 crore. As per government manifesto and vision documents, government plans to cover 10 million hectare in the next five years which is around INR 12,000 crore per annum. The industry has installed capacity and can do more to achieve this. The micro-irrigation industry has over 300 companies working comprising of global multinationals, local reputed brands and lot of MSMEs. It is also supported by the ecosystem of ancillary industrial unit.

There is an immediate need for both, the central as well as the state governments to address the challenges faced by the micro-irrigation industry while concurrently addressing the water challenges faced by farmers. The central government should make funds available to the states and reduce the debtor’s days. Implement technological solutions for tracking, monitoring and data collection for projects implemented and their payment status. Taking inspiration from the passport offices, use outsourced or third-party manpower for various activities, thereby reducing delays in the overall process. Government should initiate a monthly review system to track progress of projects.

Prime Minister Narendra Modi in his recent tweet mentioned that as per a IIM-Ahmedabad study, it is found that only due to micro-irrigation, Gujarat has been able to save 50% of water consumption, 25% use of fertilizers and about 40% in labour cost and add to it, an overall savings in the electricity cost.

Micro-irrigation in India is fraught with perils. At one hand, where micro-irrigation is the only probable solution for addressing the rising water crisis, on the other hand the industry is struggling for survival given the cash flow challenges. Considering the risks, bottlenecks and alternatives identified, governments in India have to review the current micro-irrigation strategy to avoid chaos in India’s water management. Instead, if the status quo is persisted with, then India’s micro-irrigation strategy will falter with severe consequences not only to the exchequer but also exacerbate the worsening water crisis across India.

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