Allay farmers' concerns
With an evident dip in agricultural growth, can the 2018-’19 budget alleviate farmers’ distress?
While presenting the Union Budget 2017-18, Finance Minister Arun Jaitley had laid a significant amount of emphasis on the plight of farmers. He even announced an increased budget outlay for agriculture, which compelled media houses to declare that this was a budget for rural India. Soon, the dust settled down and reality came to the surface. The budget was increased by a mere Rs 3,053 crore to stand at Rs 51,026 crore. Only 0.30 per cent of the total GDP has been spent on agriculture. Consequently, its effect is now becoming visible on the ground. The average agricultural growth has reached its lowest in the last four years to 1.9 per cent.
The growth of the agriculture sector is at its lowest since India took the path of economic reform in 1991. Since then, both the Congress and the BJP have ruled the country, but agriculture has continued to suffer. The rampancy of farmers' suicides continues to increase. According to a DownToEarth report, based on the National Crime Records Bureau (NCRB) data—every hour, a farmer committed suicide in 2015.
With the next general elections scheduled to take place in 2019, this is the only budget that the current government is left with to boost the growth of rural India. While the average growth of agriculture in the last four years has been 1.9 per cent; during the same time, GDP growth has been above 7.2 per cent. This is clearly indicative of a skewed growth pattern. During the UPA regime, the growth of agriculture was 3.8 per cent and 3.7 per cent between 2004-2009 and 2009-2014. In the Atal Bihari Vajpayee era, the agricultural growth was 2.9 per cent between 1998 and 2004. During PV Narasimha Rao's administration, the growth was around half of the total GDP growth—2.4 per cent when the country's GDP growth was 5.2 per cent.
The impact of the slowdown in the agriculture sector was visible in the recently concluded Gujarat Assembly election, with rural Gujarat vehemently protesting over the prevailing conditions of agrarian distress. The much-hyped 'Gujarat model' was ultimately proven to be flawed during the election. In its pre-budget consultation with farmer organisations, the government was reportedly planning to give an impetus to rural India, which largely pivots upon agriculture. The reason behind the focus on agrarian distress could be because of the upcoming elections in four states—Karnataka, Rajasthan, Chhattisgarh, and Madhya Pradesh. Except for Karnataka, all three are BJP-ruled states, with a high concentration of rural areas.
Despite a record production of cereals and horticulture crops, farmers have been at the receiving end of woes. The flagship irrigation scheme, Pradhan Mantri Krishi Sinchayi Yojana (PMKSY), remained halted as a non-starter. Its budget was increased but the scheme was shifted to revive 99 small and medium old irrigation projects in 2016-17. There was no development reported on the revival of old projects. Moreover, the budget outlay for the crop insurance scheme—the only scheme to help farmers in the case of natural calamities like drought and flood—was also reduced. Further, the farmers' income has either remained stagnant or dipped towards the negative. The non-realisation of the price of their produce is a regular feature every year. When they produce abundantly, the price crashes and they are pushed into distress selling. In December, the price of potato came down to 20 paise per kg in the Agra mandi. At the same time in Delhi, consumers were buying it for Rs 20 per kg! Farmers were seen throwing their potatoes on the roads in frustration, across many parts of the country. In January, the price increased up to Rs 4 in the Agra mandi. At the same time, it is around Rs 10 in Mumbai and Bengaluru.
When the government launched the electronic market portal in 2015 with much fanfare, it had promised to help farmers in realising the correct price for their produce. But that promise has not been achieved. The states are favouring traders who are engaged in spot trading, not allowing the farmers to sell their produce online.
All the 2,477 APMC-regulated markets are prone to corruption. In Haryana, APMCs and officials, feed data of spot trading to the eNAM portal to prove the success of online trading. It is also interesting to know that the revenue earned by the APMCs does not go to the state exchequer. Hence, the state legislature's approval is not needed to utilise the funds. "eNAM has not brought any convenience to farmers; it rather adds to their woes. The cumbersome process ensures that traders continue to rule the roost," says Yogesh Thorat, chairperson of MAHAFPC. "eNAM, in its current form, will not benefit farmers but only assist the traders of big mandis who have access to the Internet," says Gokul Pattnaik, Chairman of Global Agrisystem, a consultant in Delhi.
While launching eNAM, the government had planned to connect 400 mandis by March 2017 and another 185 mandis by March 2018. But according to eNAM's website, only 470 mandis have been connected so far. "Traders are not interested in eNAM as they don't want to give farmers a chance to involve themselves in the price discovery mechanism," says JP Mishra, agriculture advisor at NITI Aayog.
In the upcoming Union Budget for 2018-19, the government has planned to launch a scheme to compensate for the losses incurred by farmers during distress selling. According to a NITI Aayog official, the government is going to launch a scheme to intervene in the farm markets during the time of price crash. But there have already been similar schemes like the Price Stabilisation Fund (PSF), Market Intervention Scheme (MIS), or Price Support Scheme for crops which proved to be of no use to the farmers.
"The new scheme is in the planning stage and it aims to provide states with more say to use the funds without complete dependence on the Centre," says an official. The existing scheme has little scope for the state's say. States have to depend on the Centre's approval for these schemes because a part of the fund is borne by the Union Government. If the states use a certain amount of fund from the PSF, they have to add the same amount of fund from its own kitty. So, states avoid using such funds.
A major expectation from this 2018 budget is another conducive propeller for the farmer-producer organisations (FPOs). Madhya Pradesh, Maharashtra and the southern states are doing well regarding their FPOs where farmers' companies are engaged in the aggregation and marketing of farm produce. DOWN TO EARTH.