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  1. To put 2017’s bitter harvest behind, Narendra Modi government must implement agri-reforms

To put 2017’s bitter harvest behind, Narendra Modi government must implement agri-reforms

The party now rules 19 states, either on its own or as a dominant NDA-partner. More than two-thirds of Indians live in these states, and this is perhaps the best opportunity for the Modi government to carry out agriculture reforms in a synchronised manner.

By: | Published: January 1, 2018 7:26 AM
Modi, Indian economy, agriculture To put 2017’s bitter harvest behind, Narendra Modi government must implement agri-reforms

The year 2017 has been great for the BJP politically. Under the leadership of Narendra Modi and Amit Shah, the party has scaled new heights, wresting Uttar Pradesh, Uttarakhand, Himachal Pradesh and Manipur, and retaining Goa and Gujarat, and luring Bihar back into the NDA fold. The only setback—a minor one—was Punjab, where the Akali Dal-BJP combine lost to the Congress. The party now rules 19 states, either on its own or as a dominant NDA-partner. More than two-thirds of Indians live in these states, and this is perhaps the best opportunity for the Modi government to carry out agriculture reforms in a synchronised manner.

Remember, agriculture is a state subject under the Constitution, and this sector has remained somewhat neglected in the reform process since 1991. This is prime minister Narendra Modi’s moment. If he reforms agriculture, he will not only distinguish NDA policies from the UPA-type reforms, but also establish himself as a leader of the masses. This will pay him handsomely in 2019.
It is not a secret any more that farmers have suffered during the last three-and-a-half years of the Modi government, first, from two successive droughts and then from tumbling agri-prices. In the first four years of the Modi government, agri-GDP is going to register an average annual growth rate of around 2%, which is almost half of what was achieved during the 10 years of the UPA rule. So, without lifting its performance, and incomes of farmers, it will not be feasible to achieve either ‘sabka sath, sabka vikas’ or ‘doubling farmers’ incomes by 2022’, as is being promised by the prime minister.

As one looks back at 2017 from an agri-perspective, one finds it a puzzling and painful year for farmers. The monsoon was reasonably good, and so was kharif production—still, several states saw farmers’ agitations, triggered primarily by very low prices for their produce, be it onions, potatoes, pulses, oilseeds, or cotton. The profitability of kharif crops, for major producing states, based on market prices and projected costs estimated by CACP, has gone down dramatically, to less than 5% or negative in 2017 (see graph). This has to be seen against the promise of 50% profit over costs that the BJP’s election manifesto of 2014 mentions.

The worst, however, happened in Madhya Pradesh, where the farmers’ agitation became violent, and many farmers died in the ensuing police firing. This led to knee-jerk reaction in policies, from farm-loan waivers in many states to drastic increase in import duties on pulses and edible oils.
Earlier, the Union Budget for 2017-18 had also announced several measures for farmers. For example, augmentation of Long Term Irrigation Fund (LTIF) with Nabard by `20,000 crore, taking its total to `40,000 crore, micro-irrigation fund of `5,000 crore, and dairy development fund of `8,000 crore, all with Nabard. A model Agricultural Produce and Livestock Marketing (Promotion and Facilitation) Act, 2017, was also circulated later. But what has been the progress so far? Very little. Of the 99 major and medium irrigation projects identified for completion by 2019 through the LTIF, not more than 10 have been completed so far and that too with many of the being without field channels. Micro-irrigation fund has not taken off yet, and the dairy fund got approval just a few days back. No wonder, with such lacklustre performance, one cannot expect much improvement in agriculture or farmers’ incomes.

Now, under duress, Madhya Pradesh is undertaking a pilot of a scheme for bridging price deficiency—under this, the difference between MSP and the modal prices of eight notified agri-commodities is to be paid directly to farmers. The jury is still out on its performance, but at this stage it is pretty clear that it suppressed the market prices further, especially of urad, creating a crisis for urad farmers.

In case of trade policy, the government seems to have finally woken up to dovetail it with the MSP policy, and has accordingly raised import duties on pulses and edible oils, ensuring that landed prices of these are not below their respective MSPs. Better late than never!

What can be done now, in 2018? First, expedite the implementation of major flagship programmes by removing glitches, especially in crop insurance (PMFBY), irrigation (LTIF and micro-irrigation), and dairy development fund. Second, ensure an effective monitoring and dovetailing of agri-trade and tariff policies with the MSP policy through a sub-committee of the Cabinet to take quick decisions. Third, give high priority to agri-marketing reforms and create seamless movement of agri-produce all over India. Don’t hesitate to admit that so far, e-NAM has not delivered and will not do so unless basics of agri-marketing from assaying, grading, storage, dispute settlement, etc, are on track. A major impetus needs to be given to link farmer producer organisations (FPOs) to agri-markets through ‘Operation Veggies TOP’ (Tomatoes, Onions and Potatoes) on the lines of ‘Operation Flood’ (for milk), bypassing the mandi system. Nabard has more than 2,000 FPOs and SFAC has created about 700 FPOs. The beginning can be made with them, and with experience, this model can be scaled up to other fruits and vegetables. And finally, government must ensure that the new rule of Prevention of Cruelty to Animals (May 2017) does not affect adversely the economics of livestock farming in the country.
If the Modi government can do this, it can certainly improve farmers’ economic condition, who in turn, will also reward BJP in 2019. It is good economics and good politics, and PM Modi can sense it well!

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