Riding on the popularity of the Rythu Bandhu scheme, which provides Telangana farmers with a direct income support of Rs 8,000 per acre per year, Chief Minister K Chandrashekhar Rao romped home sweeping the electoral verdict in recent Assembly elections. Encouraged by the positive response, and knowing it could pay him rich dividends, he had raised the amount to Rs 10,000 per year just before the elections.
The first of its kind in the country, and what essentially began as an exercise to work out an input subsidy scheme to offset the cost of seed, fertiliser and pesticides, the Rythu Bandhu scheme has finally turned into a direct income support for the debt-ridden farming community. Under the novel investment scheme, land-owning farmers will get a support of Rs 4,000 each for kharif and rabi crop season. Benefitting nearly 58 lakh farmers, Telangana government has made a budgetary provision of Rs 12,000-crore for this scheme for 2018-19. More than the budget provisions, what makes this scheme effective is the way it was implemented. Within a month the land records were put in order, and the distribution of money has been as per the promise. Buoyed by the public response, and the appreciation it has received from a wide array of experts, economists and others, KCR is now keen to replicate it across the country. “This will require an additional Rs 3.5-lakh crore. It shouldn’t be a problem allocating the amount for farmers. It will be fruitful for them,” he said.
It is a question of priorities. Finding financial resources for a terribly distressed farming community should not be a problem, if the intent is clear. According to the 2016-17 NABARD All India Rural Financial Inclusion Survey, Telengana (79%), Andhra Pradesh (77%) and Karnataka (76%) are among the top in the chart in the list of States with highest indebtedness. That farmer’s had expressed their gratitude for a slender income support of Rs 8,000 per year, which narrows down to roughly Rs 666 per month, is only a reflection of the acute rural deprivation that prevails. This shows the urgent need to pullout majority households from indebtedness. Writing-off outstanding loans is one way to address the complicated issue, providing direct income support is perhaps less distorting and more beneficial in the long run. After the loan waiver, direct income support followed by a more comprehensive assured income programme must begin.
Several years back, when I first called for providing farmers with direct income support, mainline economists had laughed it off. At a time of globalisation and economic liberalisation, where markets ruled the roost, a number of questions were thrown up. It has taken some years for the people to grasp the implications, understand what I meant, and while the idea was sinking in, KCR certainly set the ball rolling. There are gaps but with the passage of time the scheme will get better. I am sure tenant farmers will subsequently be included, and there will be mechanisms to draw out absentee landlords and government/private sector employees who also hold agricultural lands.
Telangana’s example was soon followed by Karnataka in a much truncated form. Just before the last Assembly elections in May, the outgoing Karnataka Chief Minister Siddaramaiah launched a new scheme, called Raitha Belaku, extending a direct income support of Rs 5,000 per hectare for dryland farmers, with an upper cap of Rs 10,000. The scheme entailed an expenditure of Rs 3,500-crore every year, and around 70-lakh farmers would directly benefit, he had claimed. And with news reports of Congress toying with the idea of providing Rs 3,000 per month by way of income transfer to small and marginal farmers in Madhya Pradesh, I am sure assured farm income will eventually become a norm rather than an exception. Even in Punjab, considering that every third farmer is below the poverty line, direct payments for marginal farmers should be tried.
Agriculture has been on the receiving end for over four decades now. As per Economic Survey 2016, the average income of a farming family in 17 States of India, which means roughly half the country, stands at a meagre Rs 20,000 a year. According to Niti Aayog real farm incomes in the five year period, between 2011-12 and 2015-16, grew at less than half a percent every year, 0.44 per cent to be exact. No wonder, the rural landscape remains equally depressing – falling incomes, mounting rural indebtedness, rising farm suicides, unmanageable glut at the time of harvest, and swelling rural to urban migration. At a time when tax concessions to the tune of 5 per cent of GDP are given to big business, public investment in agriculture has remained as low as 0.3 to 0.5 per cent of GDP.
With declining farm incomes and public sector investment shrinking over the years, agriculture has been a victim of a deliberate bias in economic thinking. For all practical purposes, agriculture is considered to be a non-economic activity. The macro-economic policies are heavily tilted against agriculture. While farm loan waivers, for instance, are considered to be a drag on the national economy, it is believed that huge corporate write-offs lead to economic growth. Unlike farm loan waivers, which become a State government’s headache, the corporate loans are the responsibility of banks and are seen as non-performing assets (NPAs) of the banking sector.
Direct income support will to some extent help in addressing these glaring disparities. At a time when farmers face extreme volatility in markets at times of harvest, and price distortions because of unwanted imports, direct payments will act as an agricultural safety net. It has to be accompanied by several initiatives in agricultural reforms, including redesigning credit, markets and cropping patterns and finally leading to an assured monthly income package to make an everlasting impact.
To begin with, two steps are important:
2. The Commission for Agricultural Cost and Prices (CACP) which fixes the MSP for 24 crops, needs to be now renamed as Commission for Farmers Income and Welfare with the mandate to ensure an assured monthly farm income of at least Rs 18,000 per month per family. This should be based on the average income derived from direct payments, MSP, FPOs etc, at a district level and the balance should be paid by income transfer. #
Direct payment to farmers is a safety net. The Tribune. Dec 20, 2018.
https://www.tribuneindia.com/
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