The one issue that was hogging the headlines in the recent past but has vanished in the din of Nitish Kumar’s re-embrace of the NDA, Ahmed Patel’s high decibel Rajya Sabha victory and Vishal Sikka’s sudden exit from Infosys, is the farmers’ crisis.
The political parties were quick to douse the fire of farmers’ agitation in various parts of the country by announcing a farm loan waiver, with Uttar Pradesh leading the way. But there was a disquieting piece of news that was buried in the inside pages of newspapers. In Karnataka, farmers suicides were still happening despite the farm loan waiver announced by the Siddharamaiah government. So the news may have left the front pages but the farmers’ distress is still very much in place.
The second volume
The government came out with the second volume of the Economic Survey a few days ago. This was the first time the Survey was spilt into two parts, with the first one being released, as always, just before the general Budget. Not surprisingly, the Survey has an entire chapter on the farm sector.
But it is quiet about the recent farmers’ agitation in the country. It starts out by talking about the fluctuating growth in the sector, highlighting that 55 per cent of Indian agriculture is still dependent on rainfall. It also makes a mention of the steadily declining size of farm holdings, and that 72 per cent of land holdings fall under the small and marginal category. This, of course, limits the scale of operations and impacts the farmers’ ability to earn more.
What is more shocking is the median income from agriculture (cultivation) was at ₹19,250 in 2012-13 — a mere ₹1,600 per month.
The other parts
Coming to indebtedness, an issue that has been in the limelight in the cultivator category, there has been a steady rise in the incidence of indebtedness from 25.9 per cent in 1991 to 35 per cent in 2012. But in this period, the percentage of debt of cultivators fell from 80 per cent to 74 per cent. Crucially, it is the small and marginal farmers who have higher levels of debt than big farmers.
Both in terms of yield per hectare and labour productivity, the Survey highlights that India lags behind other countries such as China. The skewed fertiliser subsidy policy has also taken a toll on the soil health through indiscriminate use of fertilisers like urea. It also makes a case for micro irrigation and drip and sprinkler irrigation.
On pricing, the Survey makes an interesting point about how a farmer, apart from being a producer, is also a net buyer. So if the minimum support price (MSP) announced by the government is raised for some crops, it will benefit farmers producing those specific crops but the gains will be offset as prices of other crops purchased by farmers for their consumption, remain high.
The Survey also talks about the pulses ‘crisis’ of last year and how, despite the rise in MSP and the government’s attempts to create buffer stocks, farmers in several States had to sell their stock below the MSP. But the Survey’s curious solution to this problem is to shift the subsidy disbursal to the direct benefit transfer (DBT) mode.
Credit and marketing
On agriculture credit, the Survey notes that farmers still source 40 per cent of their credit needs from informal sources, which it terms as a matter of ‘concern’. Local money lenders still form 26 per cent of the total agricultural credit, and though the Survey says that informal lending comes at a higher rate of interest, recent studies have shown that local money lenders do not charge rates that are significantly higher than institutional lenders. So the days of the ‘blood sucking’, ‘usurious’ money lenders are perhaps, thankfully, behind us.
When it comes to agricultural marketing, the Survey is honest enough to admit that the APMC regulated markets are dominated by politically influential people putting farmers at the receiving end of ‘market dynamics’.
The Survey calls for the removal of all curbs on domestic trading on agricultural produce and ‘dismantle fragmented legislation that govern agriculture’. But given that agriculture is a concurrent subject, which means both States and Centre can legislate, the Centre probably has less elbow room to bring about legislative change. Keeping perishable commodities outside the ambit of APMC is another suggestion made by the Survey.
Despite the interesting information and data given by the Survey on this crucial sector, its policy suggestions leave one dissatisfied. Its recommendations hinge on greater transfer of input subsidy on DBT and boosting of water-saving micro-irrigation. Crucial as these two suggestion are, the Survey seems to be silent on the many other structural problems that afflict Indian agriculture.