1. Uttar Pradesh elections: Why the winning party must offer a better deal to farmers

Uttar Pradesh elections: Why the winning party must offer a better deal to farmers

Almost 80% of its cropped area is under foodgrains with yields that are lower than all-India averages. During FY06 to FY15, UP’s agri-GDP growth has been 3.2% per annum, somewhat below the all-India average of 3.6%, but almost a third of the growth rate experienced by neighbouring Madhya Pradesh (9.7%), and less than half of Chhattisgarh (6.6%).

By: and | Published: February 13, 2017 4:10 AM
While, farmers get the short term crop loan up to Rs 3 lakh for a year at the interest rate of 7 per cent, the farmers paying their debt on time get the loan at an interest rate of just 4 per cent. (PTI) Both the BJP and SP manifestos promise goodies for farmers. For example, the BJP promises waiver of crop loans for small and marginal farmers, to give interest-free crop loans and create a chief minister’s irrigation fund. (PTI)

Next month, Uttar Pradesh will have a new popular government—hopefully, with a clear mandate. If UP was a country, with a population of more than 216 million in 2015 (as per UN population projections), it would have been the fifth-most populous country in the world after China, India, USA and Indonesia. Holding free and fair elections in such a large state is a proud moment for democracy, supposed to be of the people, by the people, for the people. One of the key objectives of such a democratically-elected government is to adopt policies that can quickly alleviate hunger and poverty and create an environment where people can enjoy peace and prosperity.

UP is primarily a rural and agri-dominated state. More than 77% of its population resides in rural areas, and about 60% of its workforce is engaged in agriculture (Census, 2011). It is blessed with one of the most fertile plains (Gangetic plain) in the world, with almost 80% of its copped area having irrigation, although Bundelkhand has just 40% irrigation cover. UP supports almost 17% of the country’s population, with roughly 13% of India’s gross cropped area (GCA) and 7.4% of geographical area.

Almost 80% of its cropped area is under foodgrains with yields that are lower than all-India averages. During FY06 to FY15, UP’s agri-GDP growth has been 3.2% per annum, somewhat below the all-India average of 3.6%, but almost a third of the growth rate experienced by neighbouring Madhya Pradesh (9.7%), and less than half of Chhattisgarh (6.6%). Even Bihar had a better agri-GDP growth, of 4.6%, during the same period. No wonder, its per capita income remains less than half of that for the county, and almost 30% of its population is poor, against 22% at the all-India level (based on the Tendulkar poverty line).

Both the BJP and SP manifestos promise goodies for farmers. For example, the BJP promises waiver of crop loans for small and marginal farmers, to give interest-free crop loans and create a chief minister’s irrigation fund. The SP has promised that 75% of the State budget is to be committed for farmers and agriculture, to boost investment in cold-chains and extend interest subsidy to Kisan Credit Card (KCC) holders. The Congress’s manifesto pitches for safety nets through their MGNREGA and National Food Security Act, essentially a dole model. Conspicuously, the BSP is silent so far on farmers’ issues.

What all parties seem to have missed is the basic problems of UP’s peasantry. If there is one thing over which UP farmers are dismayed, it is low prices for their major crops. Even though UP is the largest producer of wheat in the country—30 million tonnes (mt) in 2016-17—it saw procurement of just 0.8 mt in FY17, compared to 10.6 mt in Punjab, 6.7 mt in Haryana, and 4 mt in MP. In the case of rice, the situation is only marginally better, but way worse that it is in Punjab or Andhra Pradesh or even Chhattisgarh. As a result, paddy and wheat farmers often sell their crops even at 10-25% below minimum support prices (MSP). And this happens, ironically, even in Varanasi, which happens to be the constituency of prime minister Narendra Modi. In case of sugarcane, another important crop, the State Advised Prices (SAP) are generally higher than Fair and Remunerative Prices (FRP) announced by the Centre. But in the last three years, when sugar prices were low, factories could not pay SAP for cane and, as a result, massive arrears, crossing R9,700 crore by March 2015, accumulated causing farmers great distress. This issue is not resolved yet, and keeps popping up in election campaign. Many farmers farmers are still selling cane to khandsari units at R250/quintal despite the SAP being R305/quintal.

Any political party that can ensure payment of MSP for wheat and paddy, and SAP for sugarcane, can boost UP’s agri-growth and reduce poverty, hunger and malnutrition. Interestingly, such a move can pay political dividends, too. An idea of this can be gauged by looking at the neighbouring states of MP and Chhattisgarh. Both states erected effective procurement systems for wheat and paddy, and also gave some bonus to farmers. This, among other things, surely contributed to their chief ministers coming back to office thrice in a row! A similar opportunity arises in case of pulses in UP, especially in Bundelkhand and eastern UP, when tur and moong prices went below MSP during kharif 2016. UP could have procured pulses, contributing to building 2 mt buffer stocks for the Centre. But the lack of such action hit farmers adversely. If UP is not procuring foodgrains effectively, it can still help its farmers realise better prices by linking them to electronic portals such as the eNAM, an initiative of the Centre, after doing the due spadework of grading and assaying agri-produce. According to the latest information, while Haryana achieved a turnover of R6,110 crore on this platform, UP, which is a much bigger state, has achieved a turnover of only about R480 crore through e-NAM.

The cane price muddle can be easily sorted out by linking the cane price to sugar price (about 75%, as was recommended by the Rangarajan Committee). And if SAP is higher than this formula price, the government can give a bonus from its budget (as Chhattisgarh and MP did for paddy and wheat) or from the sugarcane price stabilisation fund. All these are low-hanging fruits, but all major political parties have missed this in their manifestos. May be this would be taken up by the incoming party, if that party wants to serve the largest constituency of the state, namely farmers. It can be good economics as well as good politics!

 

 

 

-Ashok Gulati is Infosys chair professor for agriculture, and Siraj Hussain, former
secretary of agriculture and farmers’ welfare (GoI), is visiting senior fellow, ICRIER. Views are personal

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