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LATEST NEWS UPDATES | Farmers look for green shoots-Ajay Vir Jakhar

Farmers look for green shoots-Ajay Vir Jakhar

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published Published on Jun 6, 2014   modified Modified on Jun 6, 2014
-The Business Standard
 

 

They were unimpressed by the UPA's misguided socialism, but they worry about the new regime's free-market orientation too

Consider this paradox. The Congress Party-led United Progressive Alliance (UPA) was decimated in the elections in spite of several years of good monsoon and rising agricultural production.

Consider another paradox. This was the regime that implemented policies that were presumed to be pro-farmer: the Mahatma Gandhi National Rural Employment Guarantee Act, the Land Acquisition Act, rising minimum support prices (MSPs), foreign direct investment in multi-brand retail, regular export bans and so on. It would be no exaggeration to say most of these policies have eroded the profitability of the farmer. Simply put, the cost of inputs (especially labour) increased substantially over the years and these increases have not been fully compensated by increases farmers received in the prices of agriculture commodities. Yet, the UPA continued to tout them as success stories. On the issue of rising agriculture production, that issue is as different from farmer profitability as agriculture economists are from farmers.

The misalignment between perception and reality is the price the UPA paid for not engaging with the farm community for the decade of its tenure. This was clearly brought out in a "Survey on the State of Indian farmers" conducted by CSDS for the Bharat Krishak Samaj. Of the over 11,000 interviewed, only 10 per cent believe that poor and small farmers benefited from farmer-related schemes. Farmers lack organised lobbying power, so they were not taken seriously and their consent for policies was taken for granted. Their voices were lost and both the farmers and the ruling regime suffered as a result.

It would be fair to say the inertia of the previous National Democratic Alliance helped the UPA in its first few years in power. Similarly, Narendra Modi has inherited an agri-economy that is burdened with the legacy of misconstrued socialism and lethargy. But, having suffered from years of misguided left-wing policies thrust on them by non-state players (read: the National Advisory Council), farmers are now worried that the new regime may now shift to a farming policy dictated by business houses and right-wing economists. Coupled with this is the sinking feeling in the villages that the Bharatiya Janata Party (BJP) will prioritise bringing "achche din" [the good days] for the urban population by sacrificing farmer interests.

There is an apprehension that, in the urgency to show results and juggle the competing demands of dues of Rs 1 lakh crore from P Chidambram's tenure in the finance ministry between subsidy bills, welfare schemes and boosting infrastructure, the new government will find it extremely difficult to allocate the funds needed to make agriculture a remunerative activity. This is especially so because returns on investment in agriculture take time to become visible and transform into voting behaviour.

On the immediate horizon are farmers' anxieties about the government's policies to tackle inflation - a key issue on which the UPA floundered. Some economists have suggested reducing import duties on fresh fruit and vegetables, which will squeeze producer margins. Others have talked of offloading excess food stock, a good idea, even though it will not reduce food inflation beyond a point. Still others want to see the dismantling of the MSP policy, which is in place for selected agri-commodities at a few places, rather than expanded across India. In the absence of an income policy and competitive market in which the private sector also plays a role as buyer, abolishing MSP would be an ill-advised move.

Food inflation can be controlled within bearable limits with better governance, but the real price of fruit and vegetable will not fall. Much, for instance, has been made of the fact that the states need to scrap their Agriculture Produce Market Committees (APMC) Act, which requires farmers produce to be sold to designated mandis and buyers (middlemen or artiyas).

But this is only part of the story. A concomitant expansion of marketing infrastructure and the enforcement of existing regulations is critical to break the monopolies of the mandis such as Azadpur (Delhi) and Navi Mumbai (Mumbai), which effectively control the national market for fruit and vegetable. So is investment in cold chains and other facilities that promote the growth of the food processing industry. Bihar is a case in point. It abolished the APMC in the state but this did not transform farmers' incomes nor attract private capital to the state. The new Agriculture Minister, Radha Mohan Singh, is from Bihar, and would have experienced this anomaly.

Another apprehension among farmers is the growing clamour for abolishing the fertiliser subsidy to balance the fiscal deficit. In itself, no farmer would object if there is a corresponding increase in his real income, but as of now the increased price of fertilisers will not translate into a higher price realisation for the farmer, thereby increasing losses.

Many also blame the subsidy for an imbalance in soil nutrients. Because urea, a primary fertiliser, is subsidised more heavily than phosphates or potash, so it is used more heavily. But this is the wrong way to look at things: redistributing the subsidy across the three nutrients could easily correct this imbalance. Every plot of land needs to mapped for soil quality, ownership and tenancy rights even for the direct nutrient subsidy scheme to be successful. To reduce inequality, we have constantly proposed that all farm subsidies be distributed inversely proportional to land rights.

To be sure, the task of making farmers prosperous and happy is never easy. First, because agriculture is a state subject, the implementation of central policy also takes place at the state level. Second, at the central level, the complementary ministries such as fertiliser, food processing, irrigation, environment or rural development do not form a part of mega-agriculture ministry. In the last government, the problem was not that the officials of agriculture ministry let down the minister, but that governance suffered because the agriculture minister was not supported by the UPA. Advice contrary to the National Advisory Council was muffled, even when it came from Cabinet ministers, Congress chief ministers or from leaders of the opposition belonging to the Congress party.

As far as the current regime is concerned, these fears could be unfounded for one very good reason. The current Union Council of Ministers, including the prime minister, has experience of working at the state level unlike the earlier leadership. As a result, they are more connected to the masses, aware of problems and policy implementation constraints, and react better to political compulsions. They will not allow academics to lead them blindfolded like their predecessors. For example, Raman Singh in Chhattisgarh and Shiv Raj Chouhan in Madhya Pradesh understood the political expediency of offering farmers a bonus on the declared MSP. Vasundhara Raje Scindia in Rajasthan did the same.

Reviving farmer prosperity is more essential for inclusive growth than promoting urban development. Sticking to a plan in the face of stiff criticism is the need of the hour and the BJP is adept at handling pressure. The illusion that "good days are coming" will not last long if the current regime opts for a free-fall towards a free market economy rather than structured liberalisation. We believe the BJP won't fall prey to educated articulation and sincerely hope we are not wrong!

 


The writer is chairman of the farmers' forum Bharat Krishak Samaj

 

The Business Standard, 5 June, 2014, http://www.business-standard.com/article/opinion/ajay-vir-jakhar-farmers-look-for-green-shoots-114060501420_1.html


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