Farmers from across the country are out on Delhi’s streets agitating, as the government begins deliberations for the 2018 budget. It is time to seek solutions to the structural issues that plague the system.
The “one-size-fits-all” policy created for the farm sector is self-destructive in design and programmes meant to double farmer incomes are collapsing. The Pradhan Mantri Fasal Bima Yojna (PMFBY) is a classic case of the Prime Minister’s best intentions got muddled in the policy fine-print. The PMFBY is designed to provide crop insurance and the central government shares part of the premium subject to conditions.
To receive the central government’s share, the state has to walk the dotted line, come hell or high water. It does not matter the region is rain-fed or irrigated; whether the cropping density is less than 100 per cent or upwards of 200 per cent. However, simply allowing each state to design its own crop insurance scheme to be supported by part central funding of the premium would have been an excellent idea.
Similarly, an incentive of ₹75 lakh per mandi is given by the centre to the states for linking each market with e-nam, the electronic platform for trading commodities. Much of the recorded turnover is, in fact, a sham. States like Haryana log in all FCI purchases as e-nam transactions. Rather than force e-nam on states, incentivising each state to have the electronic platform that meets the basic criteria of interoperability with other states should be the way forward.
Arguments over the the way the Regional Economic Comprehensive partnership (RCEP) for trade within Asia were shaping up — that the centre government should not negotiate international trade treaties on agriculture commodities without the consent (as opposed to “consultation”) of state governments — are brushed aside. The centre insists that the Constitution of India places trade negotiations are under the purview of the centre, even though agriculture is in the domain of the states. That is precisely why every time food prices rise, the centre intervenes to rein in inflation by facilitating the unhindered import of agricultural commodities. This constantly drives down farm-gate prices. When prices fall, however, the centre remains apathetic.
To offset these annual losses, states should demand that the centre set a floor price for all such farm produce, where only the central government shells out the shortfall between the market price and floor price via a “Price Deficiency Payment”. At present, farmers and states are penalised for the fallout of a policy not sanctioned by them but whose cost they have to share. Additionally, to prepare Indian farmers for global assimilation, funding for programmes such as the Rashtriya Krishi Vikas Yojna and the sub-mission on agriculture mechanisation should be doubled with the funding ratio changing from 60:40 to 80:20, where the central government’s contribution rises to 80 per cent.
When different states announced farm loan waivers, banks were asked to provide farm loan data. Scrutiny of the data revealed the horrifying fact that public and private sector banks have indiscriminately given loans of over ₹100,000 crore to gullible farmers based on their asset value rather than economic viability. In the frantic quest to meet their own priority-sector lending targets, they have given these loans beyond the farmers’ scale of finance or actual value of crops sold each year by individual farmers.
The culpability of banks has been established by the Reserve Bank of India through an in-house study conducted by the Financial Inclusion and Development Department, which established that there was no way that the loans could have been repaid. Now that the malafide intent of the banks in giving loans to desperate farmers has been established, it is time to institute a class action lawsuit for the complete waiver of all such farm loans. The question is whether there will be a jurist with the courage to accept such an audacious case and what the stance of the finance ministry will be. Will it side with the poor farmers or with the banks that are too big to fail?
For farmers to prosper, hundreds of changes are required but, more importantly, a devaluation of the Indian rupee is essential. Also, how funds devolve to the states in a federal structure has to be looked at afresh by the 15th Finance Commission too. States are either innocent of the emergent contradictions or too financially dependent and meek to challenge these notions. Not that fund utilisation is much better in the states, where policy is influenced by the whims of individual short-sighted policy-makers. Each state needs to be nudged and funded to create a data bank and adopt a blockchain process for government decision-making. Big data analytics will usher in improved governance and transparency.
At the recently concluded “World Food Day” extravaganza of the food processing ministry, investments for over ₹100,000 crore were signed for. The only lasting impression, however, was the Guinness World Record for cooking 918 kg of khichdi at the event. Probably no intelligent soul was convinced by the propaganda. Sadly, the “mega food park” policy, like the “farm policy”, has been botched. The PMO cannot be naïve enough to believe in either. It is time to end the policy khichdi by merging the ministry of food processing with the ministry of agriculture and farmer welfare to create synergy.
The age-old perception of farmers that the BJP works only for the urban middle classes is being reinforced. The PM must either listen to the farmers or come 2019, the policy anomalies will drive the farmers into a fury that will engulf the establishment. How long can the leadership continue to hope for support grounded on farmers’ expectations of off-farm jobs and achhe din?