With several state governments already waiving off Rs 150,000 crore of farm loans to alleviate agriculture stress—in the case of Uttar Pradesh, it was prime minister Narendra Modi that made the announcement in the run-up to the elections—and the central government planning a Rs 100,000+ crore scheme to raise minimum support prices (MSP) for all crops (except horticulture) to at least 1.5 times the A2+FL costs, it is obvious the sector is deeply stressed. While the Modi government had to face two back-to-back droughts when it came to power, the subsequent hike in production of several crops resulted in a crash in prices after the monsoons normalised. In states like Madhya Pradesh, the government tried to fix this by assuring farmers of a minimum price for certain crops, but had to give this up when the scheme became too expensive, partly also the result of traders gaming the system by colluding to drive down market prices.
The central government’s record in fixing things is mixed. It has managed to rollout a nationwide insurance plan—PM Fasal Bima Yojana (PMFBY)—with the bulk of the premium paid by the central and state governments, it is working on ambitious plans to raise the irrigation potential and it has done a good job in building rural roads. Where the government has failed, however, is in freeing up markets so that farmers get a higher price for their output—it is true the responsibility for freeing mandis is really the responsibility of state governments, but given how many are run by the BJP or its allies, the central government has to take responsibility for this.
So, it comes as a surprise that, when prime minister Modi chose to speak with farmers in nine states via video-conference, few of them drew his attention to the farm crisis and, instead, spoke of how their incomes had risen due to the impact of various government policies. It can be no one’s case that, in a period of four years, Modi’s government can fix the distortions caused over the 66 years before that, but if the PM is not going to be able to get honest feedback, how is the government expected to fix things? Apart from the crash in prices, as this newspaper has reported, the settlement of insurance claims has been very poor—since, by and large, it is not in the interests of the bureaucratic system to make this public, it is live interactions of the type the PM had with the farmers that help bring out such instances. And surely the PM would have been better served by an honest interaction with farmers across the country—in any case, even official GDP data makes it clear that while agriculture GDP rose 5.2% a year in the last four years of the UPA, it rose 2.5% in the first four of this government.