Bihar is in the throes of a severe drought again—the third time in last four years, and so far, the shortfall in rains is worse this year than it was in 2009 and 2010. Rainfall is below normal in 36 out of 38 districts of the state. The total rainfall in Bihar (94.2 mm) has been less than half of the normal (202.8 mm). In 12 districts, the rainfall has been less than 25 percent of the normal. Unless late monsoon makes-up for the early shortfall, we can expect a 30 to 40 percent decline in crop production in the state and gross yields (kharif + rabi) below 2 tons/ha of land. Such low agricultural output would mean that poverty will rise again in Bihar like it did in 2009 and the paradox of increase in poverty in spite of rapid GDP growth will persist.
There is a drought like situation in other states of India too, but agriculture in most other parts of country will not suffer as much. We saw this in year 2009 when rainfall was deficient or scanty in 27 of 36 meteorological sub- divisions of India. In Bihar, rainfall was 40% below the normal. The deficit was comparable in Punjab (35%), and much worse in eastern UP (53%), western UP (68%), Haryana (66%) and AP (46-59%). Yet the percentage reduction in area under paddy was much higher in Bihar than in all these other states. In Punjab, the reduction was barely perceptible in the data (0.7%); in Haryana it was just 10%. The figures were high for AP (29%) and UP (36%), yet significantly lower than in Bihar (46%). At the national level, there was a 20% reduction in area under kharif paddy from 341.44 mha in 2008 to 272.83 mha in 2009; in Bihar the reduction was 46%–more than twice as high (Business Line, 2009). We can expect a similar outcome this year too.
In Punjab (and in many other states too), farmers cope with rainfall shock by resorting to groundwater irrigation, made affordable by free or cheap electricity. In Bihar, irrigation is almost entirely dependent on diesel pump-sets, and hence, expensive. Further, farmers have to make upfront payment for diesel in cash. (Power utilities allow late payments of electricity bills, in effect, extending working capital loan to farmers). In absence of institutional lenders, cash-strapped farmers have to borrow at high rates. Bihar is not only the least electrified state of India; it is also the least banked. High cash outlay of irrigation combined with costly and scarce credit creates economic scarcity of water in spite of physical abundance.
The state government is offering limited subsidy on diesel for farmers to make irrigation more affordable. This is a good initiative, however, this subsidy scheme has been around for a few years now and it has failed to reach most farmers for various reasons. A quick study of the mechanism of subsidy disbursal will be really interesting.
Update: There are reports today that a hike in diesel price is likely after presidential polls on 19th of this month. This is a terrible news for farmers. The drought just got worse for them.