The Congress party, which leads the United Progressive Alliance (UPA) government, pushed successfully for higher allocations for the farm sector in the union budget that was presented to the Indian Parliament last week by Finance Minister P. Chidambaram. The party obviously wanted to take credit for the huge hike in allocations.
But the BJP-dominated National Democratic Alliance opposition, together with the United National Progressive Alliance (UNP) – the so-called third front – and even the Left parties, which ironically support the UPA government, paralysed Parliament for most of last week, demanding complete waiver of farm loans and other drastic remedies. They, however, refused to allow any discussions on the issue.
Obviously, these parties wanted to score brownie points and project themselves as the saviours of farmers. But as Somnath Chatterjee, the speaker of the Lok Sabha, the lower house of the Parliament, told the unruly members, “you are all working overtime to finish democracy in this country.”
Interestingly, just a few days earlier, Rajnath Singh, the president of the BJP, was demanding “an emergency session of Parliament” to discuss the agrarian crisis. But the last few years have seen Parliamentary debates degenerate to slanging matches, and nearly half the time the functioning of the august house is crippled by members rushing into the well. And when serious debates are held on issues like farmers suicides, most members disappear from the house, after their leaders’ speeches.
Citing government statistics, Singh claimed that 17,000 farmers had committed suicide in 2006. The BJP and other opposition parties have been demanding the implementation of the recommendations of the National Commission on Farmers, which was headed by eminent agricultural scientist M.S. Swaminathan.
Contrary to what politicians have been projecting, the comprehensive report by the commission was not just focused on one aspect – waiving off of farm loans. The commission had worked out nearly two-dozen policy prescriptions to improve the lot of farmers in India.
According to Swaminathan, the commission’s recommendations are simple and affordable. It calls for “a change in our mindset to look at farmers as partners in development than looking at them as small beneficiaries of government programmes.” Swaminathan wants an ‘ever-green revolution’ for the rural sector, not one time sops.
The commission has suggested expanding the scope of the minimum support price (MSP) to cover all crops, establishing a market-risk stabilisation fund to insulate farmers from wild price fluctuations and setting up of an agricultural risk fund, which would aid them in times of drought.
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The survey blames reduced capital investment and plateauing of yields of major crops, together with weather-induced productivity fluctuations, for the poor performance of the farm sector. Both public and private investments in the sector have declined sharply – agriculture’s share in gross capital formation has fallen from 10.2 per cent in 2001-02 to just 5.8 per cent in 2005-06.
Agriculture’s share in the country’s GDP has also declined sharply, from 36.4 per cent in 1982-83 to 18.5 per cent in 2006-07. Worryingly for India’s food security, the rate of output of food-grains has slipped below the population growth rate over the last 17 years. Between 1990 and 2007, the population grew at an annual rate of 1.9 per cent, while food-grain production was at 1.2 per cent.
Taking a much longer time frame – of 1950-51 to 2006-07 – food-grain production averaged 2.5 per cent annually, while population grew at an annual rate of 2.1 per cent.
Similarly, the pace of creation of additional irrigation potential has fallen sharply – from three per cent a year between the 1950s and the 1990s to 1.8 per cent in the 10th Five Year Plan period (which ended last year).
Food-grain production in 2007-08 is once again likely to miss the target by over two million tonnes. It is expected to be 219.32 million – a record high – as against a target of 221.5 million. In the previous year, actual production of 217.3 million, was 2.7 million tonnes below the target.
The Survey feels there is need for a second green revolution, especially in rain-fed areas, which account for 60 per cent of the cultivable area. The first green revolution happened in the 1960s in northern states like Punjab. “A second green revolution, particularly in areas which are rain-fed, maybe necessary to improve the income of persons dependent on the agriculture sector,” said the survey.
Nearly 500 million depend on agriculture for their livelihood in India. But the past decade has seen devastation in rural areas and over 150,000 farmers have committed suicide.
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BEFORE the introduction of economic reforms in 1991, the Indian economy on the whole was witnessing anaemic growth rates of about 3.5 per cent annually. Reforms in the industrial and services sector boosted economic growth in the last 17 years, bringing prosperity to millions of urban residents.
However, reforms in the agricultural sector have been blocked by politicians both at the centre and in the states, which has crippled growth in rural areas. “Reforms were limited to industry and finance and left agriculture totally untouched,” remarks Sharad Joshi, a prominent and pragmatic farm leader, and a member of the upper house of the Indian parliament. Joshi believes that suicides by over 150,000 farmers in the last decade “has brought in a sense of urgency to reforms.”
According to him, restrictions on export and trade, inadequate storage, processing and transport have kept agriculture mired in poverty.
Setting up storage, processing and transportation facilities need a lot of capital and technology, which poor farmers are unable to access. Corporates are willing to invest in the sector, but lack of transparent land laws – and reluctance on the part of governments to allow companies to acquire huge tracts of agricultural land – are preventing the infusion of much-needed funds.
In states like Maharashtra, co-operative societies have significant control over agriculture. But as Joshi points, these co-operatives have failed, except where there has been inspired leadership or a situation of monopoly prevails.
Other issues that need to be debated thoroughly are also brushed under the carpet. For instance, land holdings are coming down sharply, as families break-up and the land gets divided among children. Most politicians, however, are for ‘land reforms,’ which results in further fragmentation of land holdings.
Despite brave attempts by several finance ministers, banks – both public and private – are also chary of lending funds to farmers; in many parts of the country, it is the traditional money-lender who provides much-needed funds to the farmer. However, after the spate of suicides in regions like Vidarbha in Maharashtra, the government cracked down on the money-lending trade, depriving farmers of vital funds.
Joshi believes that instead of aping the Bangladesh model of micro-finance, it would make more sense to institutionalise private money-lenders, but at the same time reviving the Usurious Loans Act to eliminate unsavoury practices.
Many Indian politicians wrongly assume that farmers are enamoured of free power and water, government support and subsidies for fertilisers and other inputs and also minimum support for their products. In states like Punjab, where political parties won elections by promising free electricity to farmers, many are now asking the government to charge them for electricity and ensure regular supplies, instead of declaring ‘free’ power and crippling their operations with massive cuts.
PS: India’s finance minister proposed $15 billion write off of debt owed by small farmers on Friday.