How farmers continue to subsidise consumers and the industry.

A poor woman in a village wants to buy a bakri. She desires to be economically independent, and that knowing that she can eke out living, approaches a micro-finance institution (MFI) for a small loan. She needs roughly Rs 7,000 or so which no bank would be willing to provide her.

The MFI operating through a self-help group lends her the money at an interest of 24 per cent to be paid back at weekly intervals. Effectively the interest rate comes to 36 per cent.

On the other hand, industrialist Laxmi Mittal decides to invest in Bathinda petro refinery that the Punjab government is setting up in a joint venture. The cash-starved State government gave him a loan of Rs 1,250-crore at 0.1 per cent rate of interest spread over five years and on top of it gave him a tax holiday of 15 years. Similarly, for Tata’s Nano factor in Gujarat, the State government had given him a loan of several hundred crores to be paid back in 20 years at an interest of 0.1 per cent. Of course there is nothing wrong in extending a helping hand to the industry.

I bet if the poor women in the village had also got a loan for buying a bakri at 0.1 per cent interest, she would have been driving a Nano car at the end of the year !

Some years back, in the early 1990s I read a report of the Commission for Agricultural Costs and Prices (CACP), the body that determines the minimum support price for agricultural commodities. This report for the kharif season clearly stated that cotton farmers were deliberately paid 20 per cent less price for over 20 years so as to keep the textile industry economically viable. In other words, what we are never told is that actually it is the cotton farmers who had all been subsidizing the textile industry all these years.

A few months back, the cotton prices crashed from Rs 4,500 to Rs 5,200 per quintal to about Rs 3, 200 per quintal. Since the cotton farmers had subsidized the textile industry all these years, I had expected the rich and powerful textile industry to come to the rescues of cotton growers in this hour of need. But it didn’t happen. Farmers were left to count their losses.

These two examples clearly illustrate why and how the rural population, mainly comprising farmers, has been kept impoverished all these years. Not only in case of cotton, farmers across the board have been deliberately paid a low price for their produce either to ensure that the industry gets the raw material at a cheaper price or have been penalized to keep the food prices low for the consumers.

The 2014 report of the National Sample Survey Organisation (NSSO) tells us that the average monthly income that a farm family derives from farming activities is a paltry Rs 3,078. To make the ends meet, a farm family has to work in some other non-agricultural activities, including MNREGA. That makes for an average of Rs 6,000 per family per month. No wonder, 58 per cent farmers go to bed hungry, and 76 per cent want to quit agriculture if given a choice.

This year, soon after the NDA government took over in May 2014, the minimum support price for wheat and rice has been increased by just Rs 50 per quintal. Last year, the wheat farmers received a price of Rs 1400 per quintal, this year they are being paid Rs 1450 per quintal, an increase of 3.2 per cent. On the other hand, government employees have been paid two DA installments in the same period which add up to 13 per cent of their salaries.  This low price for farmers is simply to ensure that food inflation is kept in control. But the same principal is not followed when it comes to government employees. They continue to get DA regardless. In other words, it is the farmer who is subsidising the consumers.

It is primarily for this reason that agriculture appears to be a losing proposition. Planners and policy makers therefore advocate farmers to be moved out of agriculture. Forcible land acquisition is being justified in the name of a better economic future for the farmers. I have heard Finance Minister say time and again that he is supporting industry simply because the revenue he gets from the industry is what can be invested in rural areas. Industry has been given tax concessions to the tune of Rs 42-lakh crore in the past ten years, beginning 204-05, so as to prop up industrial growth, manufacturing output and boost job creation. Nothing of the sort has happened.

This skewed economic thinking is leading to policies that push farmers out of agriculture to swarm in to the cities. It is expected that in another 15 years, by 2030, nearly 50 per cent of India’s population would be living in the urban centres. These cities and towns would occupy approximately 2 per cent of the country’s geographical area. To me this is not only economic madness but also speaks volumes about the lack of political and scientific vision. With such a massive translocation of population, living in the cities will be like living in ghettos. Already, 60 per cent of Mumbai’s population comprises slums, and these slums are in 8 per cent of Mumbai. 

Economic approach therefore has to change. It should aim at making the rural areas economically viable. Instead of pushing rural population out of agriculture the thrust should be to provide gainful employment in the countryside. It has to begin with providing the right kind of economic incentives to farmers and other living in the villages. Farmers too are entrepreneurs, and the younger generation in villages too can become start-ups. All they need is policy support. This has to be accompanied by public sector investments in the villages. So far, the effort has been to keep the countryside starved of resources. In the 12^th Five-Year plan, only Rs 1.5 lakh crore has been invested in agriculture. This is a pittance considering 60 crore people directly or indirectly survive on farming. How long can India afford to keep farmers impoverished? 

सोच बदलने का समय  Dainik Jagran, May 16, 2015
http://www.jagran.com/editorial/apnibaat-time-to-rethink-12371140.html

गांवों की ओर भी देखें हमारे हुक्मरान Nai Dunia, May 16, 2015
http://naidunia.jagran.com/editorial/expert-comment-our-rulars-should-also-look-towards-villages-368697

It's time Prime Minister listens to farmers' Mann Ki Baat

While we wait with abated breath to listen to you on Mar 22, I thought it appropriate to share my Mann ki Baat with you. I am not sure whether my thoughts will in any way influence your decision making, but at least I can share the plight and suffering of farmers – an outcome of deliberate economic policies over the years to keep me impoverished – with you. Knowing that you believe in sabka saath, sabka vikas I am hoping that you will not abandon the saath of 60-crore farmers in a quest to ensure vikas for a few.   

You know it very well that the path to economic growth in India passes through its 6.4 lakh villages. Mahatma Gandhi had always talked of gram swaraj. In your election campaigns, you had quoted extensively from Mahatma Gandhi and promised to make agriculture economically viable. You had promised to provide 50 per cent profit to farmers over and above the cost of production. Whichever part of the country you campaigned, you talked about the terrible agrarian crisis. You talked of sugarcane farmers. You talked about cotton farmers. You reiterated again and again on the need to bring in more prosperity to the farm.

Farmers are now asking whether what you promised to them was also a chunavi jumla.   

Soon after you became Pradhan Mantri in May 2014, a shortfall in monsoon had hit farming operations. Instead of rescuing farmers with an economic package, the government merely increased the minimum support price (MSP) for rice by Rs 50 per quintal, a rise of 3.8 per cent against an inflation rate of 7-8 per cent. For wheat in rabi season, the procurement price was also raised by a paltry Rs 50 per quintal. At a time when government employees get 107 per cent DA, does it not mean that farmers are being penalized for food inflation?    

On top of it, the Food Ministry has directed the State governments not to provide any additional bonus to farmers. Procurement of rice and wheat is now being aggressively restricted, in Chhatisgarh and Madhya Pradesh only 15 quintals per farmer are being procured while the rest is to be left to the exploitation by markets. Instead of expanding the network of APMC mandis the government is dismantling the existing ones. Punjab Chief Minister Prakash Singh Badal has warned of a civil war within the country if MSP is withdrawn.

An international crash in commodity prices in 2014 has hit farmers. Cotton, sugarcane and basmatifarmers have suffered a huge blow as a result. Prices have slumped by 40 to 60 per cent. As if this is not enough, unseasonal rains have devastated the standing crop in various parts of the country. More than 500 farmers have committed suicide in Telengana, Vidharbha and Marathwada regions since the beginning of this year, and there is an unprecedented gloom prevailing in the countryside.

According to the 2014 National Sample Survey Organization (NSSO) the monthly average income of a farming family is only Rs 3078 from farming operations. Some studies estimate that nearly 62 per cent farmers depend on MNREGA to augment income, and almost 58 per cent farmers go to bed hungry. While the employees unions are demanding a minimum monthly basic salary of Rs 26,000 for a chaprasi in the 7^thPay Commission, a farmer is left to survive on a pittance. Why can’t we have a Farmers Income Commission that provides for an assured monthly take home package? Why should farmers alone be made to bear the burden of keeping food inflation low?

Agriculture crisis is not because of lack of technology but because of the deliberate effort to keep farm incomes low. BJP manifesto had opposed the introduction of genetically modified (GM) crops, but the government now appears to be aggressively pushing GM crops in the name of ‘more crop per drop’. There is no GM crop which increases crop productivity, and what is little known is that even in America, GM crops have failed to withstand the raging epic drought that continues for the 4^th year in California and Texas. ‘More crop per drop’ is possible only with non-chemical agriculture, not with GM crops.   

It is also being said that industry has to be provided with finances and tax holidays so as to generate revenue that can be used for agriculture and rural development. This thinking must change. A farmer is not a burden on the society. Neither do the poor lack entrepreneurship. It’s only that they are being denied an enabling environment. A poorest of the poor women in a village wants to buy a bakri. She gets a loan of Rs 8,000 from a micro-finance institution at 24 per cent interest, which effectively becomes 36 per cent on weekly repayments. On the other hand, Tata’s get a massive soft loan for their Nano car factory at an interest of 0.1 per cent. If only the poor women had got the loan at 0.1 per cent I bet she would be driving a Nano car at the end of the year. Similarly, there are some 25-crore landless farmers in our country. They are also hard working, and toil endlessly. If only the government could provide them 1 or 2 acres each, you will see the economic turnaround they bring.

Evicting farmers from their meager land holdings and teaching them skills to become industrial workers is what the World Bank had told India to do way back in 1996. It had wanted 40-crore people to be moved from rural to urban areas in next 20 years, by 2015. World Development Report 2008 had asked India to hasten the process by going in for land rentals. Further, Niti Ayog deputy chairman Arvind Panagariya has acknowledged in an article that if farm land is not acquired forcibly how the industry and infrastructure will get cheap labour. Pradhan mantra ji, please don’t relegate farmers to the level of dehari mazdoor. Neither do they want to pull rickshaw in cities.

Farmer’s land is his only economic security. They can turn it into an economic dream if you provide them even a fraction of the support that is doled out to the industry. In past 10 years, Rs 42-lakh crore has been given as tax concessions to the industry. In 2015 budget, Rs 5.90 lakh-crore was given as tax exemptions. Such a massive dole has failed to generate employment, and failed to increase industrial output. If only Rs 2-lakh crore a year was given to agriculture, and spent meaningfully, it would have not only created gainful employment for millions but taken vikas to every part of the country. That will truly be sabka saath, sabka vikas. #