Libertatem Magazine

Agrarian Crisis in India and 2018 Budgetary Antidote – An Expired Placebo

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The Budget 2018

The process of the Budget Presentation in the Parliament is one of the ways to keep a check on the executive by the Legislature. It is an effective way to question the ruling dispensation for its lacunas. It also serves as a watchdog for the Government to highlight its perspective policies concerning various sectors of the economy. Hon’ble Finance Minister, Mr. Arun Jaitley has presented Budget 2018 in the Parliament. The budget is particularly significant this year since it is the last complete budget before the impending general elections in 2019. It is invariably a crucial chance for the Government to course correct the economic hurdles while trying to woo the public for support over another five-year term. Of all the budgets presented by the NDA Government in the span of last four years, this year’s annual financial statement stands most cardinal, as it comes at a time when India’s Agricultural sector passes through a downtrodden phase. The market sentiment is also not encouraging due to high unemployment, soaring NPAs of the public sector banks and a major surge in fuel prices in the international market. The article dwells upon the root cause of the prevailing distress in the agriculture sector. It will try to analyze the various remedies suggested by the Government in the budget while focusing on their efficiency as well as implementation.

Prevailing Agrarian Distress in India

The agricultural sector in India is going through a tough phase presently. The real income of a farmer in India according to the recently released Economic Survey of 2018 has remained stagnant in the past four years. It has failed to improve in spite of a slew of reforms being initiated by the present Government such as electronic National Agricultural Market (e-NAM), Soil Health Card, Kisan App, solar pump sets, etc. It is interesting to note that, though the Economic Survey candidly admits the failure of the Government in raising the incomes of the farmers, the executive still believes that it would be able to achieve the seemingly impossible target of doubling the farmer’s income by 2022. Another cause of gloom for the farmers has been the debt trap in addition to the poor prices for their crops. While many Governments across the nation have launched the loan waiver schemes, however, their effect on ground zero has been minimal. The example of Maharashtra is apt to quote, as the state Government in 2017 introduced a massive ₹ 34,000 crore loan waiver for the poor farmers. But still, around 2,414 farmer suicides were reported in the state during a period ranging from 1 January 2017 to 31 October 2017. The sad statistics has been a reality in many states as more than 10,000 farmers commit suicide throughout the nation every year. It is disgraceful fact for the entire nation that even after 70 years of Independence, we have utterly failed in taking care of our annadatas. The farmers have remained a neglected by the governments, to be only used as a vote bank in the elections.

Causes of Distress in Agriculture – MSP Fallacy

The root cause for the trouble to the farmers is the non-implementation of the Minimum Support Price (MSP). In India, the Government announces the MSP for the various crops before the sowing season itself. It is that minimum price which the Government promises to give to all the farmers in exchange for their produce in order to sustain their livelihood in farming. Of course, the farmers could always sell their crops at higher rates which are in turn governed by the market forces led by demand and supply. But the sad reality is that, on most occasions, farmers do not get even MSP for their crops. It is because the Government’s MSP is usually delayed and generally, farmers need urgent income after a crop cycle so as to start another cycle of sowing. There has been a great controversy as regards to the calculation of the MSP. Ideally, It is to be based on the cost of production and governments usually advocates that MSP provided by them is greater than the cost of production to serve as real income for the farmers. But the farmer activists claim that in most of the cases the MSP is grossly under-calculated and is sometimes based on flawed figures as regards to the cost of production. For most of the crops, the average Agriculture produce Market Corporations (APMCs) prices are much lesser than MSP.

There is also the issue related to the implementation of the MS Swaminathan Committee recommendations, fixing MSP at least 50 percent higher than the weighted average cost of crop production. The other recommendations by the committee which includes land reforms, irrigational facility, and food security could serve as a potential roadmap for the Government to mitigate the current distress. Madhya Pradesh has observed a series of prolonged protests by the farmers’ groups, demanding the implementation of the Swaminathan Committee’s recommendations. The root cause for behind the prevailing distress has been the neglect of the agriculture sector and absence of the required political will to improve the lives of millions of small and marginalized farmers. The questions regard to priority arises as well because the Government has already injected around ₹ 2 lakh crores in the ailing public sector banks for the NPAs mitigation. There is real possibility that the Government will have to spend lakhs of crores in the coming future under the PSU banks, along with an amount around ₹ 1 lakh crore for the implementation of the Seventh Pay Commission guidelines for the Central employees; but the same duty to prevent the farmers from committing suicides seems to be absent. It is estimated that around ₹ 2 lakh crore would be required per year to ensure that farmers get more than their cost of production as the MSP for their crops. The allocation of the additional resources must remain a priority for the Government because approximately 54% of the nation’s population derives its livelihood from the primary sector. We must acknowledge that no cost is dearer to the lives of thousands of farmers who commit suicide every year due to failure to pay off their debts. It is indeed ironic that on one hand, farmers who default on petty amounts of a loan are forced to commit suicides, while industrialist defaulting in thousands and even lacs of crores rupees conveniently escape in foreign nations, evading the legal process for years on the trough.

Budgetary Remedies for the Distress

The Budget 2018 was expected to be pro-farmer one, as the sector was reeling from a crisis. The said budget tries to improve the situation without any splurging of the public money. It has been cautious by not becoming populist and venturing into financial imprudence. The biggest promise made in the budget is the decision to provide MSP of one and the half times the cost of production for the upcoming Kharif crops. It also proclaimed to increase the institutional farm credit to ₹ 11 lakh crore for FY 2018-19. 22,000 rural haats will be developed by the Government and would be upgraded into Gramin Agricultural Markets. “Operation Greens” will be launched with an objective to stabilize the prices of onion, tomato, and potato for the benefit of both the farmers as well as consumers. As a fund ₹ 10,000  has been allotted each for the development of Fisheries and Animal Husbandry sectors. Allocation of ₹ 1290 crore has been made for the restricted National Bamboo Mission. The Budget is a symbolic one, also announced the world’s biggest healthcare programme which will provide benefit to 10 crore families (approximately 50 crore beneficiaries) for the insurance cover of ₹ 5 lakh per year per family for both secondary and tertiary hospitalization.

Implementation: Hurdle like the old times

The issue regarding the implementation of the promises made in the budgets will continue to haunt the ruling regime. As we analyze the lofty announcements of the Budget 2018, we would realize that an enlightened vision is a ‘sine qua non’ for the welfare of the people, but it is not the only requirement. The earlier promised Pradhan Mantri Fasal Bima Yojana, e-NAM, and Soil Health Card scheme have failed to produce the desired results mainly due to lack of proper implementation of the schemes on the ground. The Fasal Bima Yojana which promised insurance coverage against crop failure or prices drops, fared badly due to delay in the release of the insurance amounts, in some cases many a times at the cost of the farmers’ lives. The great promise made in the form of MSP as one and the half times the cost of production would require a herculean effort to succeed; particularly when at present, even the promised MSP is not being disbursed properly. The target of ₹ 11 lakh core farm credit is certainly laudable. But the same as per intended purpose must reach the poor and marginalized farmers and not be mopped up by the richer segment of the community. It would require stringent monitoring along with punctuality in work ethics for the successful implementation of the Animal Husbandry, Fisheries and National Bamboo Mission

The promise of providing health insurance to 10 crore families seems highly improbable because of the simple fact that the nation is suffering from an acute shortage of doctors, medical personnel, and health-related infrastructure. The deplorable sight of the poor patients and their relatives forced to spend nights in open under the chilly nights of Delhi sounds like an ample proof of the shoddy public infrastructure and its inadequacy. In view of the present situation, even if the Government is able to provide health care to the 10 crore families suffering from poverty, the majority of the market shares would be mopped up by the private hospitals and medical practitioners.

The biggest question posed by this very Budget is that, though it makes great promises for the welfare of the people, there is no mention as regards to the source of the funds so as to fulfill those promises. The only significant source of revenue seems through disinvestment by the Government, but the same has its acknowledged limitations as well. The territory of job creation has also been largely remained untouched by the budget. Although, it says that 70 lakh formal jobs will be created in the next year, the same has not been corroborated by the industry experts as well as the rising unemployment rate throughout the nation.

The Road Ahead…..

The problems of the agricultural sector are very grave and require immediate efforts for their amelioration. The Budget 2018 is replete with lofty promises implementation of which on the ground zero would not be very smooth. The real issues regarding calculation of MSP for crops and health insurance remain to be unanswered. The looming debate about rising unemployment, NPAs in public sector banks and farmer suicides is largely left in the larch by the Budget. But a human being lives on “Hope”. The only direction in which the present condition of the agrarian sector could move is upwards. If the Budget is able to achieve a major portion of the pronouncements made, it could improve the situation greatly. The need of the hour is to have a sincere political will to better the lives of crores of poor and marginalized farmers, on whose sacrifice and hard-work the nation bestows of being a self-sufficient economic powerhouse. Farmers who constitute a large portion of the electorate have been mostly forgotten by the governments post-election. The political slogans of “Jai Jawan, Jai Kisan”, “Garibi Hatao”, “India Shining” and “Bharat Nirmal” have only been electoral stunts to placate the ailing community. It is high time that the Government feels the pain, agony, and helplessness of the Indian Farmers; and rise to the occasion by improving the living conditions of the country’s annadatas.

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