Farmers have delivered bumper crops to the market but received paltry prices
Bumper crops year after year and a record stock of foodgrains have been delivered without major ‘Modi reforms’ in agriculture. But farmers’ income have steadily declined
As India celebrates 30 years of economic reforms, agriculture continues to cry for attention. This is something that the chest-thumping original proponents of economic reforms had failed to visualise. And in the process, the country lost a historic opportunity to build agriculture as the second engine of growth.
The Economic Survey of 2016 brings out the harsh reality. The average income of a farming family in 17 states of India, which means roughly half the country, is a paltry Rs 20,000 a year. In other words, farmers in half the country are somehow struggling to survive with a monthly income of less than Rs 1,700 a month.
Subsequently, the Niti Aayog itself had admitted that between 2011-12 and 2015-16 the growth in real farm incomes had prevailed at less than half a percent every year, 0.44 per cent to be exact. For the next two years, the growth in real farm income had been ‘near zero’.
Farm incomes had declined or remained static in the past three decades. Decline in farm incomes didn’t happen because agriculture was unproductive or inefficient. It was part of an economic design that relied heavily on increased urban migration to keep economic reforms viable. As I have often said, agriculture has been deliberately kept impoverished to enable farmers to abandon farming and move to the cities. A senior economic advisor has recently acknowledged the need to keep rural wages low so as to increase urban migration.
While agrarian distress worsened over the years, a reflection of the severity of the crisis comes from the never-ending spate of farm suicides. As per the National Crime Record Bureau, more than 3.5 lakh farmers and farm workers have committed suicide in the past 25 years. Even in Punjab, the food bowl of the country, a joint house-to-house survey by three public sector universities – Punjab Agricultural University, Ludhiana; Punjabi University, Patiala; and the Guru Nanak Dev University at Amritsar – had shown that more than 16,600 farmers and farm workers had ended their lives in a 15 year period, between 2000 and 2015.
And yet, despite the economic hardships, Indian farmers had toiled hard to produce a bumper harvest year after year. Saddled with overflowing food stocks, with a current grain surplus of around 100 million tonnes, the abundance of food grains came in handy to provide subsidised rations under the National Food Security Act to over 800 million people. In addition, free rations were made available to the needy during the lockdown period. More recently, at a time when a pandemic-hit economy was faced with contraction, agriculture continues to be the only bright spot clearly showing that a healthy and buoyant agriculture is what the country needs.
But because of a sloppy understanding of the phrase - reform -- seen only as a euphemism for privatisation, the government has brought in three central farm laws it claims will encourage private investments in agriculture, allow free market to prevail thus providing farmers with higher incomes.
This has triggered massive farm protests, with hundreds of thousands of farmers camping at the borders of New Delhi for over nine months now, demanding the laws to be repealed. Farmers’ fear these laws will bring them under corporate control, drive them out of agriculture and further reduce farm incomes. Besides repealing the laws, farmers also demand that Minimum Support Price (MSP) be made a legal right for all the 23 crops for which the prices are announced every year.
While the stalemate continues, the fact remains that free markets have failed to enhance farm incomes anywhere in the world. In America, where less than 2 per cent population is engaged in farming, the median farm income has been on the decline for almost ten years. Despite massive subsidies, American farmers are saddled with a bankruptcy of $ 425 billion in July 2020.
America too is faced with a severe agrarian distress with the rate of suicide in rural areas being higher by 45 per cent as compared to the urban areas. In the European Union, continuing farm crisis has brought angry farmers in tractor protests in several cities demanding higher and assured prices. Every year, $100 billion is the subsidy support for agriculture, of which nearly 50 per cent goes as direct income support.
That free markets have failed to prop up farm incomes in the rich developed countries clearly shows that something is fundamentally wrong in our economic thinking and approach.
Instead of borrowing from abroad, our emphasis should be on creating our own models, banking on our own strengths, our own needs and requirements. In other words, Indian policy makers should instead layout a desi model of economic reforms that is built on making agriculture the second powerhouse of economic growth.
Instead of pushing people out of agriculture, the emphasis should be on providing more income in the hands of small farmers, and making agriculture sustainable and economically-viable to achieve the Prime Minister’s vision of Sabka Saath Sabka Vikas.
This should be possible by constructing three new pillars to rebuild the farm economy:
1) Make MSP a legal right for farmers, with a commitment to ensure that no trading takes below that benchmark. That will be the real freedom for farmers.
2) Expand the network of APMC regulated mandis. India presently has nearly 7,000 APMC mandis. If a mandi has to be provided at 5 km radius, a nation-wide network of 42,000 mandis will be required.
3) Adequate investments and provisions be made to replicate the successful Amul dairy cooperative model, for vegetables, fruits, pulses and oilseeds.
(The Kannada version by the writer, an Agriculture and Policy expert, has been published in Prajavani)