If noble intentions had the power to make a difference, the Indian farmer would perhaps, be richer than his counterparts in Sweden. The number of proposals, policies, schemes, projects and incentives provided to agriculture since the 1950s are so staggering that it would take a researcher months to merely count and list them. And yet, Sweden is as good as a different planet for the Indian farmer. Forget Sweden, even the “manufacturing” powerhouse is far ahead in India when it comes to agriculture. For most crops, productivity per hectare in China is more than double that of India. At about 500 million tonnes, foodgrain output too is almost double that of India.
It is against this backdrop that one needs to look at the proposals offered by Finance Minister Arun Jaitley in the current Budget, as well as the previous one, in which there was a public commitment to double farm income by 2022. Going by the numbers, the Budget looks very ambitious. It has set aside a record Rs 10 lakh crore for farm credit. The corpus for irrigation development has been doubled to Rs 40,000 crore. The MGNREGA scheme has created 10 lakh ponds in rural India which should offer additional livelihood opportunities. The total sum assured under the crop insurance scheme has more than doubled to Rs 1.41 lakh crore.
Numbers apart, there are tantalising hints of meaningful reforms. The number of e-connected markets for farm produce has been increased to 550. There is a promise to amend laws which will enable farmers to bypass middlemen and sell fruits and vegetables directly to consumers in urban markets. There is also a promise to make a new law that will encourage contract farming. And there is the standard promise to encourage growth of food processing centres in rural areas so that farmers may earn higher incomes. All this has undoubtedly generated a “feel good” factor, even among corporate leaders. Says Deoki Muchhal, Managing Director, Cargill Foods India, “The Budget for this year is focused in the direction of rural development and the available disposable income with lower income class will boost consumption economy. Any boost to the rural sector plays a crucial role for the FMCG sector in 2017, therefore the decision to boost rural demand by increased allocation in MGNREGA and an increased farm credit is a welcome decision.”
However, seasoned commentators like Devender Sharma, who have tracked agriculture for a long time, are not very sure if the Jaitley proposals will make any fundamental difference to farmers who are caught in a vicious cycle of low productivity and high debt. In any case, virtually all finance ministers and prime ministers have announced ambitious and seemingly “game changing” plans to transform the sector since the 1950s. On the ground, nothing much has changed, particularly for small and marginal farmers and farm labour.
The very first Five-Year Plan launched in 1952 was devoted and dedicated to agriculture. This is what Indira Gandhi had to say as finance minister in 1970: “Greater attention to dry farming areas is not merely to avoid inequalities in the rural areas. It is also an essential part of any programme to achieve sustained increases in agricultural production.”
When Charan Singh was finance minister in 1979, his Budget speech stated: “So long as there is great poverty and unemployment in the country, particularly in the rural areas, and agriculture has the largest potential for generating employment, and providing purchasing power to the people, there can be no let up in the task of agriculture improvement”. Three decades and a series of pro-farm Budgets later, the then finance minister, P. Chidambaram was so moved by the plight of farmers that he announced a farm loan waiver of a staggering Rs 60,000 crore in his 2008 Budget speech. One more decade has passed since then and we now have Jaitley unfolding a Budget tailor-made for farmers and rural India.
There are reasons why Indian agriculture has been crisis ridden despite successive Budgets and a host of measures and policies. The first is misplaced priorities which have given too much importance to rice and wheat. The second is the heavy hand of the government, which often discourages and stifles the farmer instead of encouraging him. And the third is the inability of the economy to absorb surplus people whom the agriculture sector cannot support. On all three counts, the Jaitley Budget does appear to move ahead in the right direction. But many analysts think much more needs to be done for any substantive change to come about.
There was a time when India genuinely faced a food security crisis. A failed monsoon meant a steep decline in foodgrain production. The mid-1960s were a humiliating phase for India when it was dependent on foodgrain supplied by the United States under the PL 480 scheme to prevent people from actually starving to death. But the Green Revolution completely changed the dynamics. Today, even failed monsoons do not result in any significant drop in output. The supply of food is simply not a problem anymore. And yet, the practice of hiking support prices for wheat and rice has led to record levels of output.
As Jayprakash Narayan of Lok Satta says, “India now sits on a stock of foodgrain in excess of 80 million tonne. A lot of it rots because of poor storage facilities. Perhaps, the time has come to focus on other crops. One healthy trend seen in recent times is the growth in horticulture. In 2015-16, the production of fruits and vegetables exceeded that of foodgrain. This means that the Indian farmer is expanding livelihood opportunities. But even here, apart from losses due to poor storage facilities, the farmer suffers from obsolete and oppressive government laws and policies.”
What many Indians still don’t know is that it is a criminal offense for a farmer to sell his produce in a different State. He is compelled to sell his output in the local Mandi where he is at the mercy of greedy wholesale merchants and crooked government officials. If Jaitley does keep his Budget promise of bringing in new laws that will enable farmers to bypass wholesalers and directly sell fruits and vegetables in urban markets that would be a big reform step.
Maharashtra has already launched this initiative and analysts are keenly watching the outcome. Another way in which the State punishes the farmer is by denying him access to global markets. The government promptly bans exports or imposes heavy tariffs if urban consumers complain of rising prices. Mysteriously, this step-motherly treatment of farmers continues till date.
The third and most significant reason behind the plight of agriculture is the failure of the economy to absorb surplus people from the farm sector. Raju Shetti, the firebrand farmers’ leader and Lok Sabha member from Maharashtra, who took on the might of Sharad Pawar says, “About two- thirds of India depends on less than 15 per cent of GDP. How is that sustainable? I haven’t seen any concrete proposals in this Budget or the previous ones to solve this fundamental problem”.
This indeed is the biggest failure of contemporary India, Budget or no Budget. In developed economies, just about five per cent of the population is dependent on agriculture for a livelihood. Even in emerging economies like Indonesia and China, the share has dropped significantly to below 30 per cent. But it remains stubbornly high in India. Even poor countries like Bangladesh and Vietnam, are creating manufacturing jobs at a much faster rate than India. For instance, garments exports from Bangladesh now exceed those from India. Unless this basic problem is fixed, the crisis confronting Indian agriculture will never go away.
Jaitley will have one last chance in 2018 when he presents his fifth Budget. Will he go the Chidambaram way and become overtly populist to woo voters for the 2019 elections? Or will he offer something truly transformational, something he has been hinting at since 2014? Analysts are keeping their fingers crossed.
