Arun Jaitley’s budget has nothing for farmers
Farmers and farm workers, perhaps the worst hit by demonetisation, have been left high and dry
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Moving away from the days of the Green Revolution, finance minister Arun Jaitley has clearly pointed to the road ahead: from subsistence farming to corporate agriculture.
When Jaitley said that a model law on contract farming will be circulated among states, and backed it up with a series of marketing reforms including delisting of perishables like fruits and vegetables from Agriculture Produce Marketing Committee (APMC) to enable farmers to realize a better price, he spelled out a strategy to usher in corporate agriculture. Read in conjunction with the policy framework earlier laid out by the National Skill Development Council (NCDC), which aims to reduce the farming population from the existing 58% to 38% by 2022, the shift to corporate farming becomes obvious.
Add to it the repeated emphasis on strengthening the network of electronic National Agriculture Market (e-NAM), which the finance minister accepted was integral to commodity trading, markets are being proposed as the essential route to double the farming income. A sum of Rs75 lakh is being provided to link the regulated mandis. The Federation of Indian Chambers of Commerce and Industry (Ficci) as well as the Confederation of Indian Industry (CII) had been asking for it.
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Jaitley has presented four budgets. Except for repetition of the promise of doubling farmers’ income in the next five years, I haven’t seen any clear roadmap being laid out. Like the last year, this year too he reiterated his promise without even making a mention of the terrible agrarian crisis that prevails. Only a few weeks back, the National Crime Records Bureau (NCRB) had estimated 12,602 farm suicides for 2015, the latest year under investigation, up by 3% from the previous year.
Agriculture has been hit severely by demonetisation, which saw farm incomes plummeting, after reeling under drought for two consecutive years. To simply acknowledge: “This year farmers have shown resilience and agriculture growth is expected at 4.1%,” the finance minister very conveniently glossed over the prevailing crisis. Agriculture growth rising to 4.1% is primarily because of an abundant monsoon.
In addition, he announced the farm credit outlay being enhanced to Rs10 trillion. “We will ensure flow of credit to underserved areas, like the northeast.” But what is lesser known is the fact that bulk of the farm credit, for which an interest subvention scheme of 3% is provided if paid back in time, is availed of by the agri-business companies. Roughly Rs8 trillion out of the Rs10 trillion will eventually go to the agri-business corporations in the name of farmers. I have been asking the finance ministry to categorise the farm loans under two different categories so to remove this illusion that the entire amount is meant for farmers, but to no effect.
This brings me back to the question: how will the farmers’ income double in the next five years?. Considering that the average income of a farming household in 17 states of the country, as per the Economic Survey 2016, stands at a meagre Rs20,000 a year, I thought budget 2017 provided an apt opportunity to provide debt relief to farmers by reducing the interest rates on farm loans, if not striking out a portion of the farm debt. But instead the finance minister provided tax relief only to the middle class. Farmers and farm workers, perhaps the worst hit by demonetisation, have been left high and dry.
It is generally believed that expanding irrigation and raising crop productivity is the way to enhance farmers’ income. More crop per drop is perfectly fine but to consider it as the way forward to increase farmers’ income may perhaps be stretching it too far. These are public sector investments that are in any case required. But while the outlay for irrigation is being enhanced, and an additional provision is also made for micro-irrigation, the fact remains that agriculture suffers from income insecurity. If irrigation and high productivity alone could raise farmers’ income I see no reason why Punjab, the food bowl of the country, has lately turned into a suicide hotspot. Punjab has 98% cultivable area under assured irrigation and the crop productivity matches with the best in the world. With 45 quintals per hectare productivity of wheat and 60 quintals/hectare for rice, Punjab tops the global chart. And yet, Punjab is witness to a spate of suicides every week.
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Doubling the farmers’ income therefore is the crying need.
Delisting fruits and vegetables and eventually dismantling procurement prices is a pre-requisite for corporate agriculture. After fruits and vegetables, it is generally believed that wheat and rice too will be taken out of the procurement system. Punjab chief minister Prakash Singh Badal has on a number of occasions acknowledged how much pressure he is under to dismantle the APMC-regulated mandi network. But if the markets were so efficient I see no reason why 94% of India’s farmers, who do not get the benefit of any procurement prices, were economically not doing any better.
According to the Shanta Kumar Committee, only 6% farmers get the benefit of minimum support price (MSP). The remaining are dependent on the markets. And if the markets were so efficient, I see no reason why farmers would be demanding a hike in MSP along with 50% profit as recommended by National Commission for Farmers.
Devinder Sharma is a food and trade policy analyst.
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