By Priya Saraff
The politicians are at it again, announcing mega schemes in order to widen their vote bank. With the state elections around the corner in Madhya Pradesh, Chhattisgarh, Rajasthan and Karnataka, they have started announcing a series of farmer-friendly measures and schemes. Rajasthan’s Chief Minister Vasundhara Raje has announced loan waivers of R. 50,000 for small farmers while Madhya Pradesh’s Shivraj Singh Chouhan is providing a Rs 200 bonus on the Minimum Support Price (MSP) per quintal of wheat. Raman Singh’s Bharatiya Janata Party (BJP) government is handing out bonuses of Rs 300 per quintal of paddy and Chief Minister Siddaramaiah of the Congress-led Karnataka wants to give Rs 5000 per hectare to 7 million farmers in the state.
The falsity of such incentives
These incentives seem to be like balloons: Big, colourful and floating around but also hollow and slightly out of reach. Rajasthan’s loan waiver, for example, has been allotted Rs 80 billion and is supposed to benefit two million farmers. However, it is only applicable for loans that have been taken from state cooperative institutions, a source responsible for less than 20 percent of the entire farmer credit in Rajasthan.
In Madhya Pradesh and Chhattisgarh, the bonuses announced oppose a central government directive issued in 2014. Both these states are the Decentralised Procurement States (DCP), which means that the state governments themselves procure, store and give out food grains through their Targeted Public Distribution System (TPDS). The central government provides for the expenditure and the Food Corporation of India (FCI) buys surplus produce or provides for any deficit. However, since 2014, the central government has refused to pay for any surplus that a DCP state may have procured and the FCI is under no obligation to procure it from them. Since then, wheat procurement in Madhya Pradesh has fallen by 45 percent. Despite this, the officials remain confident that the bonuses will be given out without a hassle.
Is the Union Budget 2018 really farmer-oriented?
Bigger than these immediate state elections are the general elections in 2019. The Union Budget, therefore, seems to be “focused on the farmers.” However, the numbers certainly do not live up to the claims. Total funds allotted to agriculture are only 2.36 percent of the entire budget. The year on year increase is 12.8 percent, which is the same as last year.
Funds for the rural sector grew by only 1.8 percent this year, while the growth reached 19 percent last year. The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has been allotted Rs 55, 000 crores, the same as last year. The funding for the rural electrification scheme, Deen Dayal Upadhyay Gram Jyoti Yojana, was cut by 30 percent. On analysis, one may see that this year’s budget does not favour farmers any more than the previous one.
The Wire spoke to some experts to understand how far this was a farmer’s budget. Mr Abhijeet Sen, former Professor of Economics at the Jawahar Lal Nehru University (JNU), gave a very interesting point. He mentioned that the quoted figure of Rs 11 lakh crore going into the agriculture sector did not just come from the budget. The funds mostly came from the National Bank for Agriculture and Rural Development (NABARD) and other banks, thus creating costs for non-government institutions.
The MSP issue
Sen went on to say that the budget provided a very low monetary base for the numerous agricultural promises made in it, but the biggest debate by far concerns the budget’s biggest announcement: To make the MSP 1.5 times the cost of production. The question then became that how was the cost of production calculated? There were three possibilities as given by the Commission for Agricultural Costs and Prices (CACP): A2 (paid out expenses in cash and kind on various inputs and labour), A2+FL (which is A2 plus the imputed value of family labour) and C2 (this includes the imputed rent on land, along with interest on fixed assets and the A2+FL).
Arun Jaitley had clarified that the 50 percent return will be on the A2+FL cost. However, this may not be enough. The National Commission of Farmers lead by Professor M.S. Swaminathan, recommended providing returns of 50 percent above the C2 cost. This was what the BJP had mentioned in their 2014 campaign but that is not what they are living up to now.
The 50 percent cost on A2+FL was already accomplished under the UPA government and by a larger margin. As a result, farmers growing wheat, chana, mustard, and so on, will not see a difference in their earnings now, but the more crucial fact is that farmers get paid the MSP in the first place. There are estimates that in the most recent Kharif season, farmers lost Rs 32, 700 crores, as they were paid below the MSP.
The way ahead
The way to boost agriculture in India is through gradual, strategic and honest means. Farmers, struggling as they already are, need not be reduced to convenient poster boys for fake commitments made by the ruling political parties. Flashy numbers make for great headlines but hold little truth. As citizens, we must understand the subtext of all political commitments and provided that we genuinely care for a cause, must go after it on our own without waiting for the government to catch up.
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