As NDA seeks re-election, agriculture will form an important part of the poll narrative with BJP banking on PM-Kisan scheme and its MSP promise
Over the past few years, the issues plaguing rural India have remained constant
How rural India votes will largely determine the fate of political parties in the general elections, polling for which begins on 11 April.
The focus on rural India in the elections boils down to simple arithmetics—only 57 of the 542 parliamentary constituencies in India are urban, while as many as 342 seats are rural (another 144 are semi-urban), according to numbers based on Census 2011 classification. A constituency is marked ‘urban’ if more than 75% of the constituents live in urban areas.
The importance of this fact isn’t lost on the Bharatiya Janata Party (BJP) that won in 178 of the 342 rural seats in 2014, up from 66 in the 2009 elections. The BJP’s caution also stems from the fiasco of 2004, when its ‘India Shining’ campaign backfired, spelling losses.
The BJP-led National Democratic Alliance (NDA), which came to power in May 2014 with a historic mandate, is seeking re-election while the Congress-led opposition parties are bidding to form alliances in key states. Given the stakes, agriculture will form an important part of the narrative of the general elections, to be held in seven phases with polling ending on 19 May.
Over the past few years, the issues plaguing rural India have remained constant. Soon after Prime Minister Narendra Modi assumed power in May 2014, large swathes of India came under the grip of a drought which lasted for two years until the June of 2016. The crippling drought gave way to three successive years of normal monsoon (2016-2018), leading to record harvests of grains and horticulture crops but this resulted in a sharp plunge in crop prices.
The Modi government may have set an ambitious target to double farmers’ incomes by 2022 (with 2015-16 as the base year) but in reality farm revenues have collapsed due to a consistent fall in crop prices. In January, the wholesale food prices rose by just 2.3% (year-on-year) after being in negative territory for each month between August and December 2018.
The stagnation in average rural wages which grew at just 3.8% in nominal terms in December 2018 shows that non-farm rural incomes have slumped too, due to a surfeit in rural labour supply.
“In the past few years falling incomes have remained the key issue for farmers across India alongside rising input prices and debt levels. In the northern states the issue of stray cattle menace is a major problem for farmers," said Yogendra Yadav, a farmer leader and former political scientist.
PM-Kisan: Silver bullet?
The government launched the Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) in September last year to ensure remunerative crop prices for farmers. But as the scheme failed to improve farm revenues, it launched an income transfer scheme for small and marginal farmers called the Pradhan Mantri Kisan Samman Nidhi, or PM-Kisan, in the February budget to win back the support of disgruntled farmers ahead of general elections.
Under this scheme, small and marginal farmers who own less than five acres of land will receive three instalments of ₹2,000 each every year. It is expected to form a major part of the BJP’s electoral campaign along with the issue of minimum support price (MSP), with the government agreeing to farmers’ demands by fixing the MSP of 22 crops at one-and-a-half times their input costs.
“Rural distress has worsened under this government despite the schemes it has launched with much fanfare. But the BJP government has successfully arrested its free fall after losing in state elections by making national security a poll issue. But we are not sure if this will override other major issues like employment in the general elections," Yadav added.
Elections 2019 has seen a shift in the narrative with the Pulwama terror attack and the subsequent Indian Air Force strikes in Balakot, Pakistan, overshadowing issues related to development, jobs and the farm crisis.
“There may be a lot of excitement (among voters) following the air strikes on Pakistan but those are for city dwellers... for the average farmer low prices of crops is a daily reminder of the crisis in agriculture," said Amrit Ram Patidar, a farmer from Mandsaur in Madhya Pradesh where five farmers died in police firing in 2017 after a farmers’ strike turned violent.
A host of earlier schemes launched by the federal government, such as an electronic national agriculture market, soil health cards, and crop insurance, had failed to address the two major concerns of the Indian farmer—falling profitability amid rising prices and weather risks.
“Farmers and rural distress are going to be a major talking point in the elections. The Union government has tried to reform agriculture in the country through soil health cards, insurance scheme and now PM Kisan programme. It was under this government that MSP was increased to 1.5 times and the government is working on the idea of doubling farm income by 2022," said a senior BJP leader from Lucknow.
Consequently, the new scheme was Modi’s counter to the pan-India loan waiver promised by Congress president Rahul Gandhi. In particular, the loan waiver promise helped Congress to defeat BJP in key state elections in Chhattisgarh, Rajasthan and Madhya Pradesh in December.
According to the government, the PM-Kisan scheme will help 120 million farmer families live with respect, besides helping pay for cultivation and reducing debts. The PM-Kisan scheme is expected to cost ₹20,000 crore in 2018-19, and ₹75,000 crore in 2019-20 and will cover 86% of all farm households.
PM-Kisan signals an alternative approach to supporting farmers, moving away from price support interventions. In the recent past, several states have launched their own farm income support schemes—for instance, ₹8,000 per acre per year in Telangana and ₹10,000 per farmer family per year in Odisha.
PM-Kisan also holds a special relevance for Uttar Pradesh given the number of small and marginal farmers in India’s most populous state, where the BJP will be fighting a Samajwadi Party-Bahujan Samaj Party combine. The state sends the largest number of MPs to Parliament.
Given the problem at hand, Modi last month hinted that the scope and expanse of PM-Kisan may be increased. The government believes that the scheme will provide ₹7.5 trillion over the next 10 years and benefit 90% of farmers.
Interestingly, the scheme has become the subject of a political slugfest with the BJP alleging that opposition-ruled states have gone slow on implementing it, while the states governed by the BJP and its allies such as UP, Bihar, Gujarat, Maharashtra and Uttarakhand have made it a priority.
The government sees a lot of potential in the scheme as was articulated by Vivek Agrawal, chief executive officer of PM-Kisan in an interview. Agrawal said that a ₹6,000 per annum extra income will help towards building large assets for cold-chain, storage and grading house and creating infrastructure that would add value to the marketing efforts of the produce.
“I see it moving forward, not maybe as a budget outlay but as a scheme that would add a lot of value to the farmer’s activity and farming activity in the country," Agrawal said, adding, “I am very hopeful that an assured income that may seem to be small primarily can really turn around farmers’ thinking towards long-term planning, long-term asset creation or collective pooling of resources."
While the numbers from the Union budget show that allocation for the agriculture ministry rose from ₹57,600 crore in 2018-19 (budget estimate) to ₹1.41 trillion in 2019-20, the increase is largely accounted by the ₹75,000 crore income transfer scheme, while funding for flagship farm schemes, except that on interest subsidy on crop loans, took a hit.
The road to Delhi doesn’t look smooth as it comes through the two heartland states of Uttar Pradesh and Bihar that not only account for a huge chunk of Lok Sabha seats (120) but have also been bearing a major brunt of the agrarian distress.