There is zero merit in the idea that jobs can only be created if industrialists are allowed to acquire farmers’ lands without their consent.
The Bharat Krishak Samaj (BSK) has long sought a merger of the agriculture ministry with the water resources and rural development ministries, in the interests of better coordination. With co-operative federalism gaining currency as an idea, it might just become possible. If the panchayati raj and food processing ministries could join the club, agriculture may well be left to the states, for all practical purposes, as envisaged by the Constitution. Yet, one must be careful in what one wishes.
This year, India had a landmark budget in terms of the devolution of resources that could have mixed consequences. Allocation for the Rashtriya Krishi Vikas Yojana (RKVY), a flagship programme sponsored by the central government, has been halved. The RKVY was cleverly designed. If a state government spent more on agriculture than it had the previous year, the RKVY funds it got would increase proportionately. If the state government spent less, it would get no new funds. This guaranteed and incentivised state investment in agriculture.
States are famous for diverting funds from centrally-sponsored schemes to pet populist measures for electoral gains. Many states also face constraints in ensuring the timely release of salaries and employee allowances. The fear is that the supposed windfall to states will be used elsewhere and “farm extension services” will suffer further. Even after state governments used a large chunk of RKVY funds on animal husbandry, the milk yield of indigenous cattle remains at a low of around 2.5 litres a day. A national programme to deworm cattle would increase milk yields by 20 per cent. However, this would require central coordination. Whether the NITI Aayog can generate simple, practical advisories for implementation, or has the clout and resources to influence state policy, will be tested over time.
The budget has been perceived as targeting long-term growth rather than short-term gains. The finance minister recognised that agriculture incomes are under stress and announced the Soil Health Card Scheme and the Pradhan Mantri Gram Sinchai Yojana. It would have been even better if micro-irrigation had been given infrastructure status. That would have enabled cheaper funding and substantially lowered costs to farmers. The proclaimed objective of organic farming was not matched by financial allocations.
On the marketing side, the creation of a national agriculture market will benefit farmers and consumers alike. The finance minister must now convince the states of the benefits of a unified market. They may agree if the revenue loss is compensated with central grants for at least five years. The proposal to merge the Forward Markets Commission with Sebi will definitely strengthen the regulation of commodity futures markets, increase transparency and reduce speculation.
The budget proposes tax deducted at source (TDS) on term deposits held by farmers in a co-operative society or by co-operative societies in a co-operative bank. It is puzzling that there should be a TDS on the income of primary agricultural credit societies or co-operative societies (other than co-operative banks) when they are exempt under Section 80(P) of the Income Tax Act, 1961. Such inconsistencies must be removed.
Meanwhile, the praise for the public banking sector was rather too generous. Considering how agricultural credit is disbursed, they should have been castigated. Agricultural credit has been increased to ₹8.5 lakh crore but there is no transparency in terms of who receives this largesse. The recent untimely rains, which destroyed yields of grape, pomegranate and vegetables as well as of cereal, should be a wake-up call for the government. It needs to start incentivising crop insurance by sharing premiums.
Over the pre budget discussions it was said that this budget would be the last opportunity to fix various problems. Later, some economists hailed it as the best budget since 1991. The BSK’s disagreement with this position stems from the fact that this was a budget of missed opportunities and, with every missed opportunity, the problems get more difficult and expensive to fix. To make farms prosper, jobs need to be created for the rural young. Only if this budget delivers on that promise of spurring job creation can it become the much-awaited “defining moment”. There is zero merit in the idea that jobs can only be created if industrialists are allowed to acquire farmers’ lands without their consent.
In a changed federal structure, it is difficult for us to advocate for a particular farm policy because agricultural policy must work for different states. Hopefully, states will soon realise they cannot get away with just blaming the central government for farmer woes and utilise funds with integrity. It is important to make the best of the half measures instead of getting a motley crew of farmers’ organisations, from the Bharatiya Kisan Sangh (affiliated to the RSS) to the All India Kisan Sabha (with ties to the CPM) criticising the budget.
The progress made, even if by half measures, need not be undermined even as one rues that fact that much faster progress could have been achieved had the farmer’s prescription been heeded.