The only time farmers appear on the economic radar screen of the country is when elections are around the corner. I have seen this happening for nearly 30 years now, and all political parties irrespective of their colour and ideology have been following the same approach. The forthcoming elections in the three major agrarian states of Madhya Pradesh, Rajasthan and Chhattisgarh too follow the same trend, and all political parties are vying with one another to lure the farming community.
In the run up to the 2019 general elections, two demands which have now become central to every protest that happens across the country pertains to writing-off farm loans and the implementation of the government’s own promise of providing Minimum Support Price (MSP) plus 50 per cent profit as per the recommendation of the Swaminathan Commission. While every political party is promising to waive all outstanding farm loans, in reality only a fraction of the bad loans is being written off. Irrespective of the party in power, majority farmers in Uttar Pradesh, Punjab, Maharashtra and Karnataka have been left high and dry. Nor I am expecting all bad loans in agriculture to be waived in the three predominantly agricultural states going to elections.
Coming to the second demand, while there is a definite need to implement the Swaminathan Commission’s pricing formula in letter and spirit, the fact remains that even if the enhanced price was announced accordingly it would benefit only a small percentage of the farming community. As per the Shanta Kumar high-powered committee, only 6 per cent farmers get the benefit of procurement prices. In other words, the MSP plus 50 per cent profit that is being demanded, even if it is implemented, will benefit only those farmers who are already getting procurement prices. What about the remaining 94 per cent farmers who do not have enough marketable surpluses or are deprived of procurement operations because of the lack of adequate infrastructure? In Madhya Pradesh, for instance, there are 94-lakh farming families, and in 2017 wheat harvesting season only 10.5-lakh farmers were able to sell at the procurement price. What about the remaining 83-lakh farming families?
While there is a definite need to implement the Swaminathan Commission’s pricing formula in letter and spirit, a higher price does not help unless every produce the farmer brings to the mandis is officially procured. Chhattisgarh, Madhya Pradesh and Rajasthan have failed to provide adequate procurement and defaulted time and again thereby building farmers’ anger. Even under the newly rolled out PM-AASHA scheme, the government has made it clear that only 25 per cent of the marketable surplus will be procured. What about the remaining 75 per cent? Who will bear the loss a farmer incurs in selling his produce at a lower price in the market?
The debate therefore has to move beyond the two demands. Little effort has been made to understand the economic design that hardly leaves any policy space for farmers. To illustrate, soon after the UP Chief Minister Yogi Adityanath announced the farm loan waiver, Finance Minister Arun Jaitley had made it clear that the States will have to find their own resources for farm loan waivers. But between April 2014 and April 2018 more than Rs 3.16 lakh crore of corporate bad loans have been written-off the Finance Minister never asked any State government to take the burden. While both the industry and farmers take loans from the same banks, the question that should be asked by farmer leaders is why the industry bad loans do not become State’s responsibility? And just like the industry, why doesn’t RBI direct the nationalised banks to waive the outstanding farm debt also? Why pass on the burden to State governments?
At the heart of the problem is the Fiscal Responsibility & Budget Management (FRBM) Act, 2003 that restricts the current annual borrowing limit to 3 per cent of the Gross State Domestic Product (GSDP). Look at the budgetary provisions and it becomes obvious that there is little money left for agriculture. Let me explain. In Chhattisgarh, as per the revised budgetary estimates, 93 per cent of the state’s own revenue goes to pay for salaries, pension liabilities and interest payments. Just salaries and pensions eat away bulk of the budget. In Madhya Pradesh, the figure is 87 per cent and in Rajasthan it hovers around 116 per cent. If such is the huge burden of government salaries and pensions, there is hardly any resource left for the rest of the population, including farmers. If it is not for Centre’s contribution, all that the three State governments in reality are left with is to keep its employees and pensioners happy, who constitute only a fraction of the total population. For instance, in MP, of the 8.1-crore projected population in 2017-18, there are only 7.5-lakh government employees, including 4.50-lakh in permanent employment.
Where is the money left for farm loan waivers and for undertaking procurement operations? Unless the farm movements are able to understand the dynamics of fiscal management, the political parties will continue to get away with hollow promises made in their manifestos. They need to seek details from political party leaders on how the new party, if elected, will be able to find adequate resources for what they promise for agriculture. It has to begin by seeking an amendment to the FRBM Act, 2003, and demanding the setting up of a State Farmers Income Commission, with the mandate to provide every farming family an assured monthly income of Rs 18,000. This entails working out the present average income in each district, and then ensuring the gap with the minimum guaranteed income is paid by income transfer. #
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