After jibe politics, Congress VP Rahul Gandhi must learn a little economics

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Updated: September 23, 2015 10:17:25 AM

Congress leader Rahul Gandhi would do well to find time and dwell upon what he is trying to do is exactly pro-farmer or not.

rahul gandhi on modiRahul Gandhi has said that the Congress will try to replicate its Rajya Sabha strategy in the BJP-ruled states trying to pass Land Bill in their assemblies with diluted consent and social impact assessment clauses for land acquisition and thwart efforts made in that direction. (PTI)

narendra modi us visitCongress Vice-President Rahul Gandhi is clearly hugely enthused by his party’s success in scuttling the passage of the PM Narendra Modi-led NDA government-promoted Land Bill in Parliament and is trying to make full use of it by projecting it as a farmers’ victory.

While that is fine as the NDA lacks a majority in the Rajya Sabha and it is difficult to pass any reform Bills without the support of the Opposition, stretching the win on Land Bill to project a pro-farmer image too far, which Rahul Gandhi tried to do on Sunday at a Kisan rally, may not yield much — in fact, it can mar the political prospects of his party further besides obstructing necessary reforms and above all hurting farmers’ interest that he is projecting to protect.

Rahul Gandhi has now said that the Congress party will try to replicate this in the Bharatiya Janata Party-ruled (BJP) states trying to pass a similar Bill in their assemblies with diluted consent and social impact assessment clauses for land acquisition.

Rajasthan appears all set to become the first state to pass its legislation on the lines of the NDA Land Bill, and it can happen in the next few days with the BJP planning to take it up in the ongoing assembly session itself, which will have a much higher compensation for farmers.

It will be bad politics based on a complete lack of understanding of economics and development if he tries to stall even those land acquisitions that can benefit farmers in the ultimate run, across the country.

Then, he has also raked up the issue of a 50% return to the farmers through the minimum support price (MSP) which Prime Minister Narendra Modi had promised during the campaign for the Lok Sabha polls last year.

Political parties have made promises before elections, but if they find after winning that some of them are not possible to implement, it is perfectly legitimate that they abstain from fulfilling those.

The high MSP hikes during the UPA regime has distorted the Indian agriculture and it needs to be handled carefully now.

In fact, the process of muted MSP hikes had started in the UPA regime itself and this has to be pursued with the ultimate objective of revamping the whole agriculture pricing, procurement and subsidy structure.

The MSP hikes in the past have infused additional money into the rural economy, which adds to inflation without increasing productivity.

The MSP of wheat was hiked by 97% between FY06 and FY12, and rice by 90% — thanks to just around 4% raises in the last few seasons, inflation levels have come down sharply. Of course, other factors have also contributed to it.

In any case, the MSP economy is largely restricted to wheat and rice and to 4-5 states only, mainly Punjab and Haryana, as the Food Corporation of India procurement machinery is limited to these states.

The higher returns in wheat and rice has meant that farmers in these states have little incentive to switch to other crops, which they need to do urgently as there is neither a need for higher production of wheat and rice in the country nor the water tables in Punjab and Haryana can support water-guzzling crops.

Higher production of wheat and rice means extra transportation and storage cost that can be utilised in creating irrigation facilities to support other crops.

There are studies and reports in abundance on how the MSP-FCI led agriculture system is hurting Indian economy and also farmers.

Rahul Gandhi would do well to find time and dwell upon these issues to get a better insight on what is exactly pro-farmer.

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