Farmers may rejoice. The government has finally acknowledged that farmers are part of India, that the farm sector faces acute distress, and that farmers need a helping hand.
Farmers may rejoice. The government has finally acknowledged that farmers are part of India, that the farm sector faces acute distress, and that farmers need a helping hand. That is something which many commentators—especially Mr Ashok Gulati—have been saying for many months.
Farmers had taken note of the BJP’s failure to keep its election promise of offering a Minimum Support Price (MSP) of cost + 50%. I had pointed out that the increases in MSP in 2015-16 were paltry. Members of Parliament were aghast when Prime Minister Modi declared his contempt for MGNREGA that, according to him, was “a monument to the failure of the Congress governments”. Critics warned the government that the allocation to MGNREGA was inadequate. Surveys show that farm wages have risen only marginally in 2015-16 adding to the distress.
While the Prime Minister spoke often, and eloquently, on FDI, Make in India, and ease of doing business, he paid scant attention to the agriculture sector, leaving it, presumably, to the minister of agriculture. The latter, however, was neither seen nor heard and, after nearly 21 months in office, remains largely unknown. (He could take a few lessons from the minister of human resource development who has acquired a cult status among the ‘nationalists and patriots’, if not among the students and teachers.)
As a result, the label of ‘suit-boot ki sarkar’ stuck, and something had to be done. I suspect that is how the idea of a ‘pro-farmer, pro-rural India budget’ was born. Whatever be the motivation, I welcome the government’s move to address the problems of the agricultural sector.
Let’s do the math
It was brave on the part of the finance minister to reiterate the Prime Minister’s declared goal of ‘doubling the income of farmers by 2022’. The budget, we were told, was the first step in this regard. So, what did the budget do?
Let’s do the math. Doubling income in six years will mean that the average annual growth rate of farmers’ income should be around 12%. Is that possible in a country where 66% of all agricultural land is monsoon-dependent and does not have assured irrigation? Besides, in 2014-15 and 2015-16, the agriculture sector grew at the rate of minus 0.2% and 1.1%, respectively. It is difficult to imagine that the sectoral growth rate will jump to anything close to 12% or farmers’ income will grow at 12% per year.
Agricultural income is based on two factors—productivity and price. No one has claimed that there are measures underway to dramatically increase productivity in growing paddy, wheat, sugarcane or pulses in the next six years. Productivity gains in select areas or crops may add about 3% to the farmer’s income. That leaves price. Will the government increase the MSP for these crops by 12% a year? There is no clear answer in the budget speech or in the allocations.
Rabbit out of the hat
In the speech there is one possible answer: the total allocation for agriculture and farmers’ welfare. It is an impressive jump from Rs 15,809 crore in 2015-16 (RE) to Rs 35,984 crore (BE). How did the government manage to pull this rabbit out of the hat? By the simple expedient of shifting the allocation for ‘interest subsidy for short-term credit to farmers’ from the Department of Financial Services to the Department of Agriculture, Cooperation and Farmers’ Welfare! Minus this shift, the allocations read as follows under the NDA government:
2014-15: Rs 19,255 crore
2015-16 (RE): Rs 15,809 crore
2016-17 (BE): Rs 20,984 crore
Nothing dramatic; the allocation that was cut in 2015-16 has been restored to the level of 2014-15. Allowing for inflation over two years, in real terms, the allocation may be actually less.
The singular idea trotted out as ‘path breaking’ was the Prime Minister’s Fasal Bima Yojana for which an allocation of R5,500 crore has been made. The budget documents themselves say that the scheme is basically “the National Crop Insurance Scheme which includes existing” schemes. Each of the old schemes was an attempt to make crop insurance better targeted and more effective. It is possible that the Fasal Bima Yojana that rolls all the old schemes into one will be more beneficial to the farmers. I sincerely hope so, but I must say that no new paths have been broken yet.
The way to improve the farmer’s income is to improve his non-farm income. Most farmers have no reliable non-farm income except casual manual labour. Non-farm income for a family will be available only if there are jobs outside the farm. Such jobs can be created through public works like road-building, irrigation works and watershed programmes, but they will not be enough. More can be done only through private investments in small, medium and large industries and in the services sector. Such investments have been lacking in the last two years adding to the distress caused by drought or drought-like conditions in the last three years.
The goal of doubling the income of farmers by 2022 is indeed laudable. Farmers must, however, demand that the government should present a concrete plan to achieve that goal. Otherwise, it will be another chunavi jumla.