The farm crisis in this country only seems to be getting worse. The fact that the crisis is worse in the BJP-ruled States — where the protests have been more vehement — has made the Centre sit up and take notice. A number of State governments, bowing to the pressure mounted by the farmers, have declared loan waivers, the latest being Punjab. Incidentally, in fiscal terms, Punjab will be the worst affected by the loan waiver, according to a research report by the State Bank of India.
Apart from loan waivers, the other major demand from farmers has been raising the minimum support prices (MSP). The MS Swaminathan Committee report, which had suggested an MSP of at least 50 per cent above the cost of production. has emerged as a major rallying point. In fact, the implementation of this recommendation was a major electoral promise of the BJP during the 2014 general elections. That the government has not bothered to fulfil this promise in these three years in power has come back to bite.
The recent rally of Opposition parties on the farm crisis also made hiking the MSP by 50 per cent over the cost of production a major plank, with CPI (M) General Secretary Sitaram Yechury leading the call.
It’s not surprising that the current discourse on the farm crisis has centred around support prices, as it is the crash in prices owing to a bumper crop that led to the current crisis. Also, the Centre and the States’ lackadaisical approach towards procuring grains and other farm produce made matters worse. As media reports suggest, in some States the minimum support prices were far lower than the market prices for many commodities.
But is the discourse on the current farm crisis focusing excessively on support prices? Loan waivers too are only a temporary solution and economists both on the Right and the Left have warned of its grave long-term implications.
Pick-and-choose
It is interesting to see how even political parties have picked out one major recommendation of the Swaminathan report and turned it into a major plank. The MS Swaminathan Committee was formed in 2004 when the UPA government first came to power after the BJP-led NDA suffered a surprise defeat. Even then, the NDA’s ‘India Shining’ campaign was marred by reports of a serious farm crisis made worse by reports of farmers’ suicides, especially in Maharashtra and Andhra Pradesh.
The UPA government, immediately after coming to power, set up the committee under MS Swaminathan — widely known as the father of the Green Revolution. The committee went to work in December 2004 and submitted five reports by October 2006.
Among the major recommendations of the report, land reforms tops the list, which included the distribution of ceiling surplus lands, preventing diversion of prime agriculture land for non-farm purposes and regulating sale of agricultural land.
The other major recommendations were enhancing irrigation, especially in rain-fed areas, improving credit and insurance for farmers, ensuring food security (which included implementing universal PDS and an entitlements-based Food Security Law).
The report also recommended a series of measures to prevent farmer suicides.
Interestingly, the recommendation of the MSP being fixed at 50 per cent over the weighted average cost of production comes way down on the list.
Losing sight
Most major political parties, including the CPI (M), have picked on the recommendation on MSP from the report and ignored the others. That the malaise in Indian farming goes deeper than the issue of prices seems to be lost on our political class for the moment. It is ironical that the CPI (M) is also focusing on the price front given how important the issue of land reforms was for it in the past. It was the implementation of ceiling on holdings and tenancy reforms that helped the Left Front to remain in power in the State for more than three decades.
The Agricultural Census of 2010-11 brought out by the Centre has some disturbing findings. Out of 129.22 million operational holdings, the small and marginal holdings (below 2 hectares) formed a whopping 85.01 per cent of the holdings. The next was the semi-medium and medium operational holdings (2-10 hectares) that formed 14.29 per cent. The large land holdings (10 hectares and above) form a mere 0.70 per cent of the operational holdings. Even in terms of operated area, close to 90 per cent of it is constituted by small, marginal and medium farmers.
Also the average size of operational holding is 1.15 hectares in 2010-11, which is a marginal decline from 1.23 hectares in 2005-6.
These alarming numbers show that the crisis in Indian farming goes far beyond support prices and there is a structural issue crying out for attention. The average size of operation farm holding is far too small to make farming a viable occupation, especially given the zooming input prices in recent years.
The recent farm crisis is by far the biggest challenge the Modi government has faced in these three years, which has so far thrived on the extraordinary goodwill of the people. The BJP had managed to even turn the botched-up demonetisation exercise to its electoral advantage. So it will be interesting to see how it deals with the angry farmers, as this issue is likely to play out in the next general elections which are barely two years away.