Pic courtesy: Hindustan Times
Finally, the government has admitted in Parliament that it is not possible to double farm income by 2022. Replying to a question by Samajwadi party leader Ram Gopal Verma in Rajya Sabha, the Minister of State for Agriculture Purshottam Rupala, categorically stated: “We agree with Ram Gopalji’s query that it is not possible to double farm incomes with the current growth rate in agriculture sector. “
With a growth rate in agriculture hovering at less than 4 per cent annually, the minister agreed it wasn’t possible to double farmers’ income in the stipulated period. The Dalwai committee on Doubling Farmers Income (DFI), set up in April 2016, had projected a farmer income growth rate of 10.4 per cent to achieve this, and many economists say this would require a very high economic growth rate. Knowing this may sound too ambitious, I am glad the minister has finally put a lid on a promise that wasn’t so easily workable. He agrees to follow other approaches, including enhancing non-farm income.
This should hopefully put an end to endless series of seminars, conferences and workshops on Doubling Farmers Income that are being held in universities, institutes, colleges and by civil society organisations for over two years now knowing very well that it wasn’t possible to do so. At a time when real growth in farm incomes had remained ‘near zero’ in the past two years, and prior to that the Niti Aayog had estimated real farm incomes to be growing at less than half a percent every year during the five year period 2011-12 to 2015-16, not many talked of the radical structural transformation that agriculture is crying for. Instead the emphasis remained on following upgradation and refinement of available approaches by focusing on schemes like soil health cards, neem coated urea, Fasal Bima Yojna, National Agricultural Markets (e-NAM), more crop per drop etc., which are important but surely not enough for doubling farm incomes. What is needed is direct income support, which is a better way of income augmentation.
Although the government has set up an Empowered Committee for implementation and monitoring of the recommendation of the DFI Committee report, submitted in Sept 2018, the acknowledgement that doubling farmer income in the next two years is not possible, it will certainly help in initiating long-term reforms that the sector is in dire need of, and where the focus needs to shift to. The first and foremost is the need to boost public sector investment in agriculture. The continuing bias against agriculture becomes apparent when one looks at the Reserve Bank of India statistics, which tells us that the public sector investment in agriculture had remained close to 0.4 per cent of the GDP between 2011-12 and 2016-17. Considering that nearly half the population is dependent on agriculture, this speaks volumes of the deliberate neglect of farming.
I don’t think any economist can vouch for a miracle in agriculture without adequate investments flowing in. Not even half a per cent of the GDP is being invested in agriculture year after year, primarily because the dominant economic thinking does not consider agriculture to be an economic activity. The entire effort therefore has been to move people out of agriculture rather than to focus on making farming a viable and sustainable enterprise. This has to change, and an indication to this came from the BJP manifesto which promised an investment of Rs 25-lakh crore in agriculture. But the Budget 2019-20 makes a provision for Rs 1,30,485-crores for agriculture, including Rs 75,000-crore allocated for the remaining three instalments of PM-Kisan scheme. Besides direct income support, agricultural market infrastructure (including warehouses and godowns) needs appropriate budgetary allocations along with investments for village link roads connecting villages with new upcoming APMC mandis.
Interestingly, while agricultural scientists and economists normally shy away from spelling out the radical reforms agriculture needs for enhancing real farm incomes as well as to restore the lost pride in farming, the Punjab and Haryana High Court has in a judgement said the Minimum Support Price (MSP) for agriculture should be three times the cost of production to save farmers from distress. “Though the MSP is being announced since 1965, but the stark reality is that it has not boosted the income of farmers to bring them out of abject poverty. Time has come when MSP be given legal force by granting legal rights to the farmers to get fair value for their crops.” The direction to provide a legal status to MSP by bringing in an appropriate legislation came from a division bench of Justices Rajiv Sharma and H S Sidhu who also spelled out a series of reforms measures, including removing middlemen, setting up warehouses, weather-based crop insurance, using internet technology, debt servicing, farmer suicides and so on that agriculture requires.
Earlier, the Commission for Agricultural Costs and Prices (CACP) had also called for making MSP a legal entitlement. It had specifically highlighted how farmers in remote parts do not have access to regulated APMC markets and therefore have to sell their produce in the local haats much below the MSP. In the past two years, farmers had reportedly sold pulses, oilseeds and coarse cereals at prices ruling 20 to 30 per cent lower. Even in the case of wheat and rice, the two crops that are procured, farmers are unable to realise the minimum price except at places where a robust procurement system prevails. Low prices of wheat and paddy in Bihar for instance forces many unscrupulous traders to transport the produce to Punjab and Haryana to get a higher MSP.
Making MSP a legal instrument instils not only confidence among farmers, but will also assured minimum price to farmers thereby enhancing farm incomes, reducing debt, and minimising farm distress. In addition, raising MSP to three times the average weighted cost of production, including imputed rent and interest on owned land and capital, is certainly a very valid recommendation. This alone has the potential to bring about a remarkable turnaround in the performance of agriculture. It is doable, and my suggestion is to have two price bands – one at which the procurements are made at MSP, and the second be the actual price that the farmer has to be paid. Considering that all farmers are now linked with Jan Dhan bank accounts, the gap between the two bands can be directly transferred to the farmer’s bank account.
Such a delivery system will ensure that food inflation remains in control, and at the same time farmers get the legitimate price they are entitled to but have been deprived of all these years. Of the Rs 25-lakh crore investment promised in the BJP manifesto, even if Rs 5-lakh crore are disbursed as enhanced price to farmers routed through the flagship PM-Kisan scheme, the face of Indian agriculture will change forever, for the better.
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