Groundwater irrigated agriculture in India

Overpopulated (~12.78 persons/ha in rural parts) and poor (... the armpit, remember) Bihar faces land and capital constraints. Bihar is the only state in India that registered an increase in absolute numbers of people living below the poverty line between the last 2 NSSO rounds. Together with the semi-feudal landholding system (yes, a couple of land-reforms, i.e. consolidation, have been tried in Bihar - all were a terrible failure), this has lead to a situation of low or even decreasing returns from land relative to labour.
Of course and since this is no magic, governmental policy from the mid-eighties onwards was increasingly geared towards the use of shallow tubewells for the intensification of irrigation. The million wells scheme was only one of these initiatives. Public push, an eased access to capital, the portability of diesel pumps lead to a four-fold increase of shallow well density in Bihar from 1986 - 1993. As of 2003, a thirty-fold increase was observed in selected places in the state. Unfortunately, the increase in wells was not based on efficiency considerations but rather also dictated by the ever increasing land fragmentation (in all India and based on the NSSO surveys, average area operated per holding in 2002-03 was 1.06 hectares compared to 1.34 hectares during 1991-92 and 1.67 hectares in 1981-82. Marginal holdings (of size 1 hectare or less) in 2002-03 constituted 70% of all operational holdings, small holdings (size 1 to 2 hectares) constituted 16%, semi-medium holdings (2 to 4 hectares), 9%, medium holdings (4 to 10 hectares), 4%, and large holdings (over 10 hectares), less than 1%. The share of marginal holdings in total operated area climbed by 6-7% since 1991-92 to reach 22-23%, drawing level with the shares of the semi-medium and medium holdings, which had the largest shares in 1991-92.).
Now, these developments have provided a feast for microscale academic studies. Conclusion, access to capital and technologies has, in fact, increased and strengthened the inequity between rich landholders and small-scale farmer in this pre-capitalist agrarian economy. However, a recent village and household level study by IWMI shows that marginal and small-scale landholders own 55% of all wells while they only cultivate 25% of the total land owned by the sample farmers. This study also refuted the tail-ender problem first described by Wood, 1995, i.e. that farmers close to water points get their water first with better conditions. Mainly due to an ever increasing density, supply points (wells) and their relative location to demand have enabled the broadening of water markets (remember the farmers we saw, selling their water to distant fields by means of those long, flexible tubes). In fact, monopoly power by the few has been strongly reduced and buyer power increased correspondingly. As an example, while diesel prices have risen three-fold between 1995-2003, irrigation water prices increased only by a factor of 2.5. (A further interesting finding of the IWMI study was that water buyers use less hours of pumped groundwater for irrigation to reap comparable levels of profits as pump owners.).
Even though almost universal access to groundwater has been facilitated over the years and markets started to operate efficiently, the intensity of GW irrigation has remained low. It appears that due to low gross yields ( e.g. 40% of Bihari farmers realize less than 6t/ha of annual wheat and rice yield), adequate amounts of irrigation water often cannot be afforded (e.g. average annual irrigation depth for the Rabi crop is estimated to be .175m, way below the recommended level by the state). Hence, further intensification is precluded.
Remarkably and very unlike in other states or even Bangladesh, tubewell irrigation did not live up to it's promise in Bihar and whatever production increase was observed, it got eaten up by population growth. Given the absence of support prices, the persistence of agrarian stagnation is also caused by the continuous increase of fuel prices (diesel) which, over time, lead to a decline in out to input price ratios since it was not matched by a corresponding increase of output prices. The reduction on fertilizer subsidies as well as the rise in agricultural wage labor prices has contributed to this correspondingly. The decrease in terms of trade has actually been shown to have slowed down agro growth in Bangladesh during the nineties. Unfortunately, public expenditure in infrastructural development in Bihar was largely non-existent. Thousands of villages remain with electrification and adequate roads. So, while in other states such as Punjab and Haryana private costs of irrgation was falling to to ever increasing electricity subsidies, many Bihari farmers were left with no choice and had to face the steady increase in production factor prices. The widespread lack of cold storage, difficult over land access, adequate flood protection and high production costs have all contributed to the uncompetitive nature of ag in Bihar and farmers remain practicing nothing more than what Tushar Shah calls cost-covering agriculture.
In fact, in Jordan we saw a similar phenomenon. In order to escape that whatever-you-want-to-call-it trap, you need to take care of every single element in the production and distribution chain. Value-adding at the source is only one element of interventions necessary to enable development in real terms. An interesting question, of course, remains, why collective action in Bihar never happened like in other states, where farmers with different status came together to extract concessions from their respective state. So, Banerjee definitely hits on something interesting. However and with regard to Brenda's last statement, I do not think that the organization of water is due to lacking collective action but rather due to those darn prices.
So, what do we conclude? Two things from my side. There is, of course, the possibility to embark on the same startegy as e.g. Haryana and Bihar and jump-start development by free-of-cost groundwater pumping. Or, alternatively / additionally wait for rising food prices as has been described in a recent article in Foreign Affairs. There, the authors claim that this likely development due to ongoing degradation of ag land, the ever increasing production of ethanol-crops and an overall growing global demand, poses an imminent threat to the poor farmers. However, I would argue that if access to international markets was provided, it might very well be that rising food prices are effectively a blessing and not a curse for the local farmers.