Showing posts with label farm crisis. Show all posts
Showing posts with label farm crisis. Show all posts

Monday, April 26, 2021

What India is doing today to Agriculture was done by the West with disastrous consequences


Around the mid-1980s, my interest grew in the extent of subsidies rich developed countries were giving to the agriculture sector. If farmers in rich countries were allegedly doing so well, why did these governments, all champions of the free market, have to provide subsidies to their farmers? Generally speaking, no political regime wants to subsidise Agriculture; they would rather put all the eggs in the corporate basket.

Then during my travels to the USA and Europe, especially the countryside, I witnessed the devastation market-oriented agriculture had done to rural communities in America, Canada, and in Europe. We are constantly told in India that developed countries are so prosperous and their farmers are in such good shape that we need to copy the same model. In reality I found that whatever remains of the American agriculture today is entirely due to the massive subsidies the government provides.

When WTO came into existence, I was commissioned by British journal The Ecologist to do a column on how the WTO regime would benefit Indian farmers. In that column I compared Indian farmers to a European cow, comparing the subsidies that a European cow received vis a vis an Indian farmer’s income. It became a major talking point among the economists and the UN Human Development Report by the UN and the World Development Report by the World Bank both mentioned dairy subsidiaries in comparison to developing world.

What India is doing today to Agriculture was done by the West with disastrous consequences

Dominant economic thinking is that we have to reduce the size of the population dependent on agriculture to achieve higher growth. when I visit foreign universities, economists endlessly argue that there is no other way than this. One of our former RBI Governors in fact went on record to say that the biggest reform in India would be when we can move people away from agriculture to urban areas, which need cheap labour.

If we take this migration of people to the cities as employment generation – creating an army of dihadi mazdoor - there is something fundamentally wrong with our economic thinking. There are lessons from the lockdown last year, when we saw the plight of migrant workers, as hundred million walked back long distances to their villages. I call these migrant workers ‘agricultural refugees’. They were pushed to the cities because the economic paradigm created by the dominant thinking has made rural areas economically unviable.

In America , 1.5 percent or so of the population depends on agriculture, agriculture by this warped definition should have been a lucrative profession. But it is not. Agriculture in American is facing a severe crisis, with farmers saddled with a bankruptcy of $425 billion as of July 2020. The idea that fewer people engaging in agriculture will ensure prosperity has clearly outlived its utility and it is time for economists to stop flogging this dead horse.

What India is doing today to Agriculture was done by the West with disastrous consequences

There is another flawed argument that larger the land holding size, the better the bargaining power. The average land holding size in the US is 440 acres while 86 percent of Indian farmers have land holdings of less than 5 acres. It is therefore argued that we need aggregators and contract farming, which would enhance bargaining power of farmers and there will be price discovery. My question is why did this then not happen in America? Or Or in France where the average land holding size is 135 acres? Or Canada where it is 3000 acres; or in Australia where it is a staggering 10,800 acres?

When Ronald Reagan was encouraging big corporates to replace the allegedly inefficient small farmers, the world did initially go into surplus food production, prices fell and consumers were happy . But a country where over 50 percent of the population are involved in agriculture, we do not have to follow what America did but go by what Gandhiji said, production by the masses, not production for the masses. In fact, that is what PM Modi also envisages, Sabka Saath Sabka Vikas.

As I have said before, economists have to be held accountable for the crisis the agriculture sector the world over is facing. They have misled us to believe that this model of economic growth works. They need to go beyond Economic theory and look at the ground realities. The reverse migration we saw in India should be a lesson for them to go into reverse economic thinking. Rather than pushing people to the urban areas, the challenge is how to make rural areas economically viable and profitable.

***

Indian farmers are still on the streets. Their agitation is far from over and the whole world is eagerly observing how it shapes up. The movement has moved out from the Delhi border to various parts of the country as farmers have started going to villages, holding maha-panchayats and taking their message to more and more people. This is possibly the greatest mass movement of our times.

Just two years back, the chief economist of the US Department of Agriculture admitted that since the 1960s, American farm income has seen a steep decline if you adjust for inflation. Whereas in India we are told that free market agriculture model would make farm income go up. I fail to understand why that did not happen in first world countries after they opened up?

Bedabrata mentions in his Times of India that the price American farmers get for wheat today is less than what they used to get during the American civil war. In Canada the wheat price in 1867 when adjusted for inflation was $30 per bushel. 150 years later, in 2017 the price had come down to $5 per bushel. This is what free markets have done to agriculture.

In the US, 40% of average farm income actually comes from subsidies. It clearly demolishes the argument that markets lead to price discovery. A study of cotton in America shows that around 2005 there were 20,000 cotton growers. American farmers were getting a subsidy of 4.7 billion dollars in 2005 to produce a crop which was sold at 3.9 billion dollars. It depressed global cotton prices. Farmers in Africa and India were priced out.

We were led to believe that our farmers were inefficient and unproductive; but in reality, Indian farmers were priced out because of subsidies that American farmers received from their government. On top of it, America provided an additional subsidy of 180 million dollars to the textile industry to buy the subsidized cotton. Still Brazil continues to heavily subsidize cotton growers.

According to the Centre for WTO Studies, New Delhi, America provides a subsidy of 85 lakh rupees to each cotton grower every year while in India the subsidy a cotton grower gets is Rs. 1500.

Situation is not much different in Europe. Despite the massive subsidies for the agriculture sector, every minute one farmer is quitting agriculture. EU provides a subsidy support of 100 billion Euros every year. Imagine if this subsidy is withdrawn, what would happen to the farmers in EU? Even in France, the top most agriculture producer in EU, recently farmers hung dozens of suicide dolls from trees in front of Parliament to highlight their plight.

So why do we want to borrow this failed model? It’s a question I have been repeatedly asking.

Sonny Perdue, Donald Trump’s Agriculture Secretary had said, “In America the big gets bigger, the small go out.” To illustrate in 1970s there were more than 6 lakh dairy farms in America. 93 percent of American dairy farms have closed down. Does that mean milk production has come down? No. On the contrary it has gone up, which drove the prices down and dairy farmers committed suicide. Today there is so much surplus milk with mega dairy farms, each with 7000 to 15000 cows that America is trying to find a market for its surplus milk; and that’s why the US is pushing India for market access in dairy.India is the largest producer of milk in the world and yet we are under pressure to open up our markets to dairy companies for milk..

Even for India, the Director General of International Food Policy Research Institute, Washington DC, comes up with similar advice, “Move up or move out.”

Bedabrata mentioned about the nexus between political power and big corporates in America. In fact there is another player - the economists. The mainline economists all over the world speak the language of capitalist power , a language that has failed to enhance farmers’ income anywhere in the world.

Agrarian crisis is so severe in America that one of the farmers called me up the other day asking what is happening in India. As I explained the situation he said, “We know that living in debt is living in hell. We are very happy that Indian farmers are standing up and fighting our battle.” Another farmer in France said that agriculture is being sacrificed to keep consumers happy. Not only in France or US, the crisis of farm debts is the same everywhere. It is actually caused by the denial of rightful income to farmers which is the biggest issue globally farmers are facing.

Prior to the Indian farm protests in hundreds of tractors had marched into Washington DC in Feb 1979 asking for guaranteed price. . They camped for 4-5 weeks but they could not get what they wanted. Jimmy Carter, then American President could not meet farmers demand. If he had not failed, American agriculture would have been a global model for economic viability of the farmers.

What farmers need everywhere today is a guaranteed price for their produce which alone can pull them out of the prevalent crisis. Markets would automatically adjust to it. Don’t forget when the debate about minimum wages had started, corporates had objected saying this would upset their balance sheet but eventually they had to provide minimum wages and adjust their business plans accordingly. If there can be minimum wages for workers, it is time we provide minimum support price (MSP) to the farmers as a matter of right.

Let us look at the confectionary industry with a turnover of $212 billion. Chocolate is a major component. Guess what the average income of a cocoa farmer is, it is Rs 100 per day, less than the price of a standard chocolate bar. Coffee industry is no better. There are around 50-60 lakh coffee bean farmers across the globe and 80 percent of them earn less than $1.9 per day, which the World Bank defines as acute poverty line imagine if these farmers had received a minimum support price all these years rather than being left to face the brutalities of the market.

Source: Lessons for Indian Agriculture. National Herald. April 17, 2021. https://www.nationalheraldindia.com/india/why-should-india-follow-an-agricultural-model-that-has-failed-in-the-developed-world?fbclid=IwAR1HyZFqUbmx02dpM3NO56tcVGmi60Z2smQryqLTowhP5uRGDfFEMh6dm94


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Monday, December 16, 2019

Agriculture is in need of an economic stimulus



The writing was on the wall, a clear pointer to the deep agrarian distress that continues to prevail over the decades. Before a ‘leaked’ 2017-18 National Sample Survey Office (NSSO) report on consumption expenditure — which the government decided to shelve — showed that rural households were spending less and less on food, the Economic Survey 2016 had brought out the unpleasant truth. The average farm income in 17 states, which means roughly half the country, stood at a paltry Rs 20,000 a year, which indicated the low farm household expenditure on consumption.
While the leaked consumption expenditure survey pegged the per capita monthly expenditure on food in rural areas at Rs 580 (roughly Rs 19 a day), the Economic Survey had shared data pertaining to average farm income based not only on what the farming families were able to sell, but also adding what they saved for household consumption. One was often left wondering how these families would be surviving with income levels of less than Rs 1,700 a month. With farm prices remaining depressed, several other studies pointed to farm incomes sliding to a 14-year low, and farm wages, too, showing a marked decline over the past few years.
Another leaked document, the Periodic Labour Force Survey 2017-18 report of the NSSO, had shown that 3.4 crore casual labourers in rural areas (3 crore were farm workers) had lost their jobs between 2011-12 and 2017-18. With unemployment worsening over the past 45 years, the crisis had certainly gone beyond farming.
While all these reports pointed to the deteriorating economic wellbeing of a rural family, the implications it had on pulling down rural spending were not difficult to foresee.
Economists, however, remain divided over trying to manoeuvre a reliable way out of the downturn. While mainline economists agree that weaker consumer demand and slowing private investments are the two key factors that have slowed the economy, leading economic growth to a six-year low of 4.5 per cent in the July-September quarter, the prescriptions being suggested are aimed at the top of the ladder.
Industry associations find the slowdown to be an appropriate opportunity to push for more reforms in the form of cheaper and easy land acquisitions, labour laws, reducing corporate tax, removing tax terrorism, fast-tracking of bankruptcy resolutions and, of course, providing yet another sector-based stimulus.
While mainline economists generally agree that it is the bottom of the pyramid that needs more attention, a set of booster doses that have already been announced to reinvigorate the economy relate essentially to corporate tax stimulus, real estate, automobile sector, bank consolidation and recapitalisation, export incentives, and some sops to micro, small and medium enterprises. A few economists have questioned the need to provide tax breaks to an industry which is already sitting comfortably over cash. They have said that it is not the way to bolster the sagging economy.
With already 5 per cent of the GDP going as revenue foregone, an additional cut in corporate tax rate providing a stimulus of Rs 1.45-lakh every year is only going to further weaken the tax revenue position. Finance Minister Nirmala Sitharaman has also hinted at a relief on the personal income tax in the next Budget.
To say that tax concessions will encourage businesses to invest more in greenfield projects, and eventually help in providing more jobs is not backed by international experience. Nobel laureate Paul Krugman has shown that corporate rate tax cuts in the United States, which received a fillip after President Donald Trump took over, have neither brought in investments nor created jobs. The money the corporate saved was, instead, invested in the stock markets.
No wonder, the Indian stock markets too went into a celebration mode the day after the corporate tax rate cuts were announced.
While the celebrations still continue, and the inflow of foreign funds has increased after the tax rate cut, my worry remains about a large section of the poor who are finding it difficult to buy a Rs 5 pack of biscuits; about those who are struggling hard to market their crop harvest at a remunerative price; about those farm and non-farm workers who are finding it hard to secure a sustainable daily wage.
For the population in the poor category, especially in agriculture, no specific incentives are being announced. More so at a time when a study by the Organisation for Economic Cooperation and Development and the Indian Council for Research on International Economic Relations (OECD-ICRIER) had earlier shown that farmers lost an estimated Rs 45 lakh crore in the 16-year period, from 2000-01 to 2016-17, on account of being denied the right price. Niti Aayog’s own estimates showed the growth in real farm incomes, in the past two years, to be ‘near zero’.
In other words, for two decades in a row, farmers have been at the receiving end, with almost stagnant or declining incomes. It only elaborates the primary reason behind what is seen as a deepening survival crisis. The growth rate in farm wages, too, has been slipping. When agriculture, which engages nearly 50 per cent of the population, is in a crisis, the reverberations it carries on the economy are bound to be intense.
The revival of agriculture, therefore, holds the key. If there is one sector of the economy which is in dire need of an economic stimulus, it is agriculture. The time is appropriate to compensate farmers.
To begin with, if an amount equivalent to the Rs 1.45-lakh-crore tax relief per year to the industry was allocated, instead, to agriculture, it would triple the direct income support amount under the PM-Kisan scheme to Rs 18,000 per year (Rs 1,500 per farmer per month) and extend the scheme to landless farmers as well. Already Rs 75,000 crore is allocated for the PM-Kisan scheme, which needs to be raised by adding another Rs 1.45-lakh crore. The more money in the hands of the poor, the more will be the demand generated, which is the crying need.
Follow it up with measures to make public procurement more effective, expand the network of APMC (Agricultural Produce Market Committee)-regulated mandis; and assure MSP (minimum support price) for all crops for which it is announced, meeting the gap in MSP and market prices by deficiency payments. In addition, drawing from the experience of Kerala, set up a debt relief commission in every state. And invest more in rural roads and public services like schools and health centres in rural areas.#
Agriculture in need of economic stimulus. The Tribune. Dec 17, 2019



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Friday, November 29, 2019

Low farm incomes is killing agriculture



French farmers drove to Paris to protest low farm incomes -- Al Jazeera photo

A New York farmer, who also works as a lawyer, tweeted this the other day: “Headed home, I tried to work in the law office today, but my head is full of the disasters I am seeing on the dairy farms and in rural areas. Even long time farmers in my area are trying to sell land to save the rest of the farm. Where is this headed? I don't know.” Well, if such a deepening farm crisis should dominate one of the most productive agricultural systems in the world, it’s time to pause and rethink.

The question that needs to be asked is whether the US agricultural policy is deliberately aimed at decimating the farm sector? And in that sense whether Indian agriculture too is intentionally (or unintentionally) moving in that direction? To say that the landholdings in India are too small to be economically viable is understandable but why is that even in the United States, where the average farm size is 444 acres, small family farms should be on way out? Why is that in Australia, where the average farm size is 4,331 hectares, should agriculture become unviable? Going by the economy of scale there seems to be no plausible reason why farmers in America and for that matter in Australia should be quitting farming. If small holdings are unviable how come even large holdings are becoming uneconomical, unless of course policy makers refuse to admit that farmers everywhere in the world, not only in India, are being denied real time prices, depriving them of their rightful income.   

First of all, let’s be clear. The US has always been for pushing small farmers out of agriculture. Look at it, even at a time when US agriculture is passing through turbulent times, the American Agriculture Secretary Sonny Perdue unabashedly acknowledges: “In America, the big get bigger and the small go out.” This echoes what a former US Agriculture Secretary Earl Butz, who served under President Richard Nixon and Gerald Ford, had famously said: “Get big or get out.” This was followed by a cleverly drafted narrative of “feeding the world”, pushing farmers to produce large surpluses that actually dipped prices. Such a deliberate policy has left US small farmers struggling. Many of them are going out of business and quitting agriculture in desperation.

The policy to get big serves as an invitation for an increasing corporate control over agriculture, which is also becoming an unwritten policy for the developing world to follow. In addition, whether it is the World Trade Organisation (WTO) or the Regional Comprehensive Economic Partnership (RCEP) treaty, trade policies have been very conveniently tweaked to provide an enabling environment for big agribusiness giants to step in. As competitiveness became the market mantra, developing as well as least developing countries are being increasingly forced to open up for cheaper agricultural products, thereby displacing millions of small farmers in the bargain.

To illustrate, the biggest dairy farm in China is spread over 22,500,000 acres, an area equal to that of Portugal. According to worldatlas.com, this farm houses around 100,000 cows. The second biggest dairy farm, spread over 11,000,000 acres, is also in China. The remaining eight of the top ten big dairy farms are situated in Australia, which despite the size are under stress. No wonder, the push for seeking an unfettered access into India through the regional mega RCEP treaty, which India has for the time rightly decided to stay out. Considering that 10 million people are involved in dairying in India, imagine the destruction of livelihoods from cheaper dairy imports from Australia, New Zealand and China.     

Returning back to agriculture, rural America, like rural India, is faced with a severe agrarian crisis. Like in India, where the average income of farming families in 17 states, which is roughly half the country, stands at a paltry Rs 20,000 a year, the US agriculture is not doing good either. More than half of US farmers have a negative income. According to the American Farm Bureau Federation, 91 percent farmers and farm workers face distress. Besides affecting their mental health, the severity of the crisis is such that 87 percent farmers fear they will have to abandon farming. Accordingly, farm debt in 2019 is expected to soar to $ 416 billion, the highest since 1980. For several decades, farm gate prices have remained frozen when adjusted for inflation. Prevailing onion prices for instance are no different from the prices farmers received 30 years back. Corn prices have remained static for almost five decades.

If such a worsening farm crisis is happening in a country which applies state-of-the-art technology in agriculture, and is often projected as an example to be followed by the rest of the world, isn’t it time to re-evaluate how inappropriate is the argument for pushing in more sophisticated technology (often unwanted) in Indian agriculture? No one is against technology but it has to be relevant depending on the needs, and not pushed to simply benefit commercial interests. If in a country which is completely high-tech in agriculture, the suicides rate in rural areas is 45 per cent higher than in urban areas isn’t it time to redesign Indian agriculture, focusing more on sustaining small farms thereby reducing the rural urban migration? Shouldn’t the Ministry of Agriculture and Farmers Welfare therefore embark on a fresh strategy to bring in policies tuned in more to domestic needs that make farming environmentally sustainable and economically viable?

An OECD-ICRIER study has shown that Indian farmers have been suffering a loss of 14 per cent every year in farm incomes for almost two decades, between 2000-01 and 2016-17.  This has largely benefitted the consumers who paid 25 per cent less for all agricultural commodities every year. In other words, it is the farmers who have been subsidising the country all these years. An outcome of the global economic design which aims to deliberately keep farm prices low, farmers’ anger is brewing across the world. As farm protests spill on the streets in Germany, Holland, Canada, America and India, the reason for growing farm anger was best summed up by Ian McLachlan, President of the National Farmers Federation of Australia, who had sometimes back while addressing a farmers rally said: “We’re sick and tired of subsidising the rest of Australia.” #

Farm tech bring pushed to benefit Corporates. The Tribune. Nov 30, 2019.

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Sunday, March 10, 2019

Rural investments can change the face of India.




When Rooop Singh and his younger brother Basant Singh returned after performing the last rites of their father, they didn’t know that destiny too had the same pathway reserved for them. A decade after they cremated their father, Avtar Singh, who had committed suicide unable to bear the burden of mounting indebtedness; the two sons took the same fatal route. They jumped into the Bhakra canal in Punjab. They were residents of Patiala district.

Mounting farm indebtedness had taken two generations of the family. While the two sons ended their lives in November 2017, their father had died some 10 years earlier, in 2008. Both the brothers together owned 2.5 acres of land and were cultivating another 30 acres on contract. Not an isolated case, but it tells you how a perpetually loss making farming enterprise has taken a huge human toll over the decades. As the serial death dance on the farm continues unabated in Punjab, farmer unions estimate that even after the Congress government announced farm loan waivers, more than 430 farmers had committed suicide in a year

Therefore the recent report that farm incomes have touched the lowest in 15 years didn’t come as a surprise. It only endorses what has been known for long. The Centre for Monitoring of Indian Economy (CMIE) too had predicted that the nominal farm incomes in 2018-19 would be in the negative. This is in a way an extension of the findings of the Niti Aayog which had worked out the real farm incomes in the five year period, between 2011-12 and 2015-16, to be less than half a per cent every year, 0.44 per cent to be exact.

In such a dismal scenario, I sometimes wonder how the farming communities survive year after year. Those who end their lives add up to the collateral damage but what about those who do not give up, and continue to struggle against all odds? More so when it is generally believed that the real farm incomes have been on the decline for almost four decades now. A recent study by the Organisation for Economic Cooperation (OECD) has estimated a loss of Rs 45-lakh crore that the farmers had suffered on account of being paid a lesser price for their produce between the year 2000 and 2017. Another study by UNCTAD had earlier estimated that the farm prices all over the world when adjusted for inflation had remained almost static in the 20 year period between 1985 and 2005.

It is therefore obvious that in order to keep food inflation under control, successive governments have denied farmers their rightful income. The entire burden of keeping food prices low has been very conveniently passed on to farmers. In other words, it is the farmers who are bearing the entire cost of subsidising the consumers. At the same time, farmers are being deliberately paid less so as to provide cheaper raw material for industry. A farmer therefore has only two roles – to provide cheaper food for the consumers and provide cheaper raw material for the industry.

To be born in debt and live in debt all through his life is virtually like living in a hell. Imagine being told every year that the government has enhanced the credit limit for farmers. It is generally believed that credit pe credit is the only way for farmers to survive. As the debt keeps mounting the distress grows, but I have never seen economists and policy makers ever talking of providing farmers with their rightful income. It is for the first time, confronted with farmers’ anger visible through the electoral results in the Hindi heartland, that the government has launched a direct income support programme to provide small farmers with an annual support of Rs 6,000. This meagre amount signifies a significant shift in economic thinking – moving from credit to income support.  

But what is little understood is that the decline in farm incomes is an outcome of an economic design that we follow. As I said earlier, agriculture is being deliberately kept impoverished to keep economic reforms alive. Continuing with the same flawed economic thinking, the chief economic advisor has also called for more investments in industry so as to pull the youth from the rural to the urban areas. This is exactly what the World Bank had directed India way back in 1996. It is primarily for this reason that public sector investments in agriculture have remained between 0.3 to 0.5 per cent of the GDP between 2011 and 2017. The total investments, both public and private, have also been declining steadily – from 3.1 per cent of GDP in 2011-12 to 2.2 per cent in 2016-17. Compare this with the tax concessions being given to industry, which measures 5 per cent of GDP. The best way to kill agriculture therefore is to drastically curtail public sector investments in this sector which employs 52 per cent of the country’s population.

No wonder, as per the latest CMIE calculations, of the 56.6-lakh job losses encountered in past 12 months, almost 82 per cent or 46-lakh are from rural areas. This is the outcome of an economic policy that aims at pushing the rural unemployed youth to urban areas, which are in need of dehari mazdoor. If displacing farmers so as to create a workforce of dehari mazdoor is economic growth, there is a serious need to take a relook. Shrinking land holdings are not a problem, the bigger difficulty arises by denying the farmers with a rightful price for his produce.

The deliberate neglect of agriculture has rendered farming uneconomical and environmentally unsustainable. What is not being appreciated is that investing in rural areas is the only viable long term solution to many of the problems India faces – hunger, poverty, youth unemployment, forced migration and climate change. All these have deep roots in the rural areas. Since agriculture is the predominant rural occupation, the thrust of any sensible economic policy has to begin with treating agriculture as an economic activity. It alone has the ability sustain millions of livelihoods and thereby reboot the economy. #

कर्ज माफी से आर्थिक मदद की ओर. Amar Ujala. Mar 11, 2019
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Saturday, December 22, 2018

After Dec 11, agriculture has been pushed to the center stage of Indian politics. But will it usher in a new renaissance?




The writing was on the wall. The anger that rural Gujarat voters had exhibited in last year’s Gujarat Assembly elections, edging the ruling BJP overwhelmingly in the Saurashtra region, was a clear pointer to the serious agrarian distress that prevails in the hinterland. Failing to keep a tab on the rural pulse, and unable to assuage the growing farmers anger that was spilling on to the streets, the electoral debacle in the predominantly agricultural belt of central Hindi heartland – Madhya Pradesh, Chhattisgarh and Rajasthan – was already scripted.

Interestingly, while Congress romped home riding on the promise of farm loan waiver and a higher procurement price for paddy, K Chandrashekhar Rao in neighbouring Telangana swept the Assembly polls riding the popularity of a direct income support scheme Rythu Bandhu for farmers. Under the novel investment scheme, the first of its kind in the country, land-owning farmers will get a support of Rs 8,000 per year, to be split in two -- 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. The direct payment amount has since been raised to Rs 10,000 per farmer, and soon thereafter Jharkhand has been quick to follow up by launching a similar scheme providing Rs 5,000 per acre.

The speed at which the newly elected Congress governments in Madhya Pradesh, Chhattisgarh and Rajasthan implemented the farm loan waiver promise clearly shows the political urgency the party felt it needs to accord to agriculture. While Madhya Pradesh has waived outstanding farm loans to a maximum of Rs 2 lakh per farmer, which is expected to cost Rs 35,000-crores, Rajasthan and Chhattisgarh have announced a full loan waiver costing the state exchequer Rs 18,000-crores and Rs 6,100-crores, respectively. More than 8.3 million small and marginal farmers stand to benefit from the loan waiver when fully implemented.

Undeterred by the warnings being issued by economists, bankers and planners saying that farm loan waiver will upset the balance sheets and set in a bad precedence, Congress President Rahul Gandhi has warned “My message to farmers is that this country belongs to you and the Congress and other opposition parties will work together to ask Prime Minister Narendra Modi to write off your loans. We’ll not let him sleep until he waives your loans. If Modi doesn’t act, the Congress will do it 100%.” 

His argument is backed by sound reasoning. After all, when corporate bad loans to the tune of Rs 3.16 lakh crore between April 2014 and April 2018, were written-off, there was no hue and cry from the economists or bankers. Travelling through the rural belt before the elections, angry farmers did confront me at a number of places asking if huge loans of corporate can be written-off why not for farmers. In fact, their anger was specifically directed at former Chief Economic Advisor, Arvind Subramanian, who had gone on record saying that corporate loan write-off leads to economic growth. On the other hand, when farm loan waivers were first announced in Uttar Pradesh after the Yogi Adityanath government was sworn in, former RBI governor Urjit Patel had said that it will upset the national balance sheets and lead or moral hazard.

Nevertheless, the clear electoral verdict in the Hindi heartland has finally brought agriculture to the centre stage of Indian politics. Agriculture has emerged on the top of the political agenda, and the message has gone loud and clear. It is probably for the first time that the electoral verdict has brought in a visibly renewed confidence among the farming community. Rising above the divisive electoral policies that kept them split on the basis on religion, caste and ideologies, they now feel their collective electoral strength. The recent election results have shown them the power to topple governments. This is a major factor that will certainly influence the 2019 general elections.

After all, in a country which roughly has 50 per cent population engaged directly or indirectly in farming, farmers are finally in a position to be a lot more assertive. For over four decades now, real agricultural incomes have remained frozen. A recent OECD study has shown farm incomes have remained static in India for the past two decades. Earlier, an UNCTAD study had shown farm gate prices across the globe, factored against inflation, had remained static between 1985 and 2005. A recent Niti Aayog study has concluded that real farm income had only grown at less than half a percent, 0.44 per cent to be exact, in the five year period between 2011-12 and 2015-16 despite the fact that production had gone up steadily.  

Farmers in reality are being penalised to grow food. Barring a few exceptions, they have been consistently paid less than the cost of production over the years. To maintain food inflation under control, the entire economic burden has been conveniently passed on to farmers. To be born in debt and live in debt all through his life is virtually like living in a hell. Credit pe credit, was the only way to survive, and the debt kept mounting. Such is the economic deprivation that prevails, that even the Economic Survey 2016 stating that the average income of a farming family in 17 states of India or roughly half the country stands at a mere Rs 20,000 per year failed to shock the nation. With policies and economics failing farmers, the emergence of farmers on the political horizon is the only way forward. Only time will tell whether this political turnaround will usher in the new renaissance. #

After Dec 11, farm crisis on top of political agenda. Deccan Herald. Dec 23, 2018


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