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Union Budget 2018: This is What Finance Minister Jaitley Needs to Do to Reduce Farm Stress and Prevent Farmer Suicides

Central Statistics Office has predicted farm sector growth to slow down to 2.1% for the current financial year – this anger is unlikely to subside in the coming days.

Suhas Munshi | News18.com

Updated:January 25, 2018, 2:13 PM IST
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Union Budget 2018: This is What Finance Minister Jaitley Needs to Do to Reduce Farm Stress and Prevent Farmer Suicides
File photo of Union Minister for Finance and Corporate Affairs Arun Jaitley. (Image: PTI)
Last year was in many ways the year of the angry farmer. The anger manifested itself in many ways – from protests in more than a dozen states, including Delhi, Rajasthan, Madhya Pradesh, Karnataka and Maharashtra, to voting patterns in Gujarat.

So severe and visible was the distress in agriculture sector, which is the source of livelihood for 60% Indians, that it became a rallying point in almost every state election fought last year.

As official figures suggest – Central Statistics Office has predicted farm sector growth to slow down to 2.1% for the current financial year – this anger is unlikely to subside in the coming days.

It is with this in mind perhaps that Finance Minister Arun Jaitley, who will deliver the final full Budget of the present Union government on February 1, announced agriculture to be “the top priority” in the Budget.

So what could Jaitley do to arrest the slump in agriculture sector (between 2016 and 2017 the sector grew at more than twice the rate – 4.9%) and reduce the number of farmer suicides?

News18 spoke to a number of people in the sector – former government consultants, thinktank chiefs, international experts, lawmakers, farmer leaders and union leaders, and farmers – to understand the crisis unfolding in the farm sector and to seek their suggestions.

These are the five subjects, broadly speaking, that they talked about.

Loan waivers

There are clearly two schools of thought on this subject. One set of experts think loan waivers are ineffective and populist measures that only cripple farmers further. The other school claims this to be the departure point for farm sector reforms. Under the burden of mounting loans farmer suicides will only increase is the argument.

“I am absolutely against loan waivers. There should be no further announcement on this. What we do through loan waivers is take away the dignity of the famer, who works to earn his bread just like you and I do. Loan waiver policy should not be encouraged under any circumstance,” says RB Singh, a Padma Bhushan awardee and the current chancellor of Central Agricultural University in Imphal. Singh is also a former Assistant Director General of Food and Agriculture Organisation of the United Nations.

On the other hand, Surjit Singh, a farmer based in Punjab, thinks that farm loan waiver is his most urgent necessity.

“I was looking forward to the loan waiver scheme when our Chief Minister announced it. Farming under growing debt is crushing. But the loan wavier scheme has turned out to be just a formality. We haven’t got anything so far. We want all our loans waived off immediately.”

This sentiment was echoed by Shiv Kumar Sharma, popularly known as Kakkaji, who led farmer protests in Madhya Pradesh in June last year during which five farmers were shot dead by police in Mandsaur.

“Most of the anger against government is about the pending loans. No reform in this sector is worth mentioning unless the government waives off all the loans of farmers in this country. After all farmers have been burdened with these loans because of the faulty initiatives of the government.”

Fixed monthly income

Experts in this sector have often argued that farmers’ incomes often are subject to several variables including market fluctuations and weather. This is why all measures to bolster farming – through expanding irrigation canals to providing credit – will fail unless farmers are assured a minimum monthly income.

“The crisis really has been of farmer incomes. Over last two years we have seen prices of all commodities falling. And this has happened across the board. The challenge therefore is how to get farmers a fixed working capital and source of sustenance. I have written to the Finance Minister, who himself has said that GDP growth is unjustifiable unless benefits reach farmers, recommending setting up of a commission to set fixed wages for farmers,” said Devinder Sharma, a food and trade policy analyst.

He has recommended that an existing commission ‘Commission for Agricultural Costs and Prices’ be renamed to ‘Commission of Farmers’ Income and Welfare’ to find out ways of providing the minimum wage of Rs 18,000 to farmers.

Raju Shetty, an MP from Maharashtra, who recently broke ties with NDA claiming that NDA had not implemented the MS Swaminathan Commission report as promised, also spoke in favour of a fixed monthly income.

“One time loan waivers will not work. What we need to do for our farmers is provide them with fixed incomes. Unless they know that a fixed amount of money is getting credited to their accounts in following months, why should a farmer work under huge debts today?”

A fixed monthly income could also be assured if the government implements the Swaminathan Commission report and pays up the promised MSP+50%, says Kakkaji.

"We are not asking for the moon. It was the government itself that had promised to implement the Swaminathan Commission report. Till the time they take care of our investments and pay us according to this formula, which would assure a monthly income for us, more and more farmers will drop out of this sector."

Research

“We depend on foreign universities for our research. But what we don’t understand is that their seeds and their technology are not suited for us. Our climate and soil conditions are vastly different. A major reason for mass scale farmer suicides has been because of failure of imported seeds. Green revolution was propelled by our technology, our seeds. Till the time we invest in world-class research facilities we will not be able to stand on our two feet,” says Yudhvir Singh, general secretary, Bhartiya Kisan Union.

These research facilities also shouldn’t remain confined to cities, Singh added. “We should set up these universities in villages where actual farming is happening.”

“Our research universities are either non-existent or are in very bad shape. Most of funds that the government allots in this area go towards meeting salaries of the employees. Very little is being done to bring in new talent and improve the infrastructure of these facilities,” said RB Singh.

Subsidies

Apart from one-time loan waivers, reforms in agriculture sector inevitably lead to discussions on subsidies to farmers. Many claim these farm sector subsidies should be increased. But some experts also argue that the government ought to understand the nature of farming in India before doling out subsidies indiscriminately.

“We have to think about the manner in which we give subsidies. Farmers based in areas with enough water supply don't need subsidies as badly as farmers working in arid areas do. Farmers in Punjab, for instance which has a good network of irrigation canals, are relatively better off that farmers elsewhere. Subsidies that were launched to reach lower-rung farmers have mostly benefited the well-off,” says Mohan Guruswamy, Chairman of the Centre for Policy Alternatives.

The issue of subsidies also needs a rethink, he added, because “Free power has also put a lot of pressure on depleting groundwater resources.”

Guruswamy also supports increasing subsidies on all farm implements such as tractors and pump-sets, on food processing, and also talks of another sort of financial support that farmers in India badly need.

“More than 65% of farmland in India consists of marginal and small farms less than one acre in size. We need to give loans to farmers to buy adjacent properties so that they get farms that are spatially viable to work on. We should understand how division, through inheritance, of farm land has shrunk farm land sizes exponentially.”

Infrastructure

According to one estimate post-harvest losses for Indian farmers – losses incurred on crops for which farmers have already spent money – is around Rs 63,000 crore, which is around 70% of the investment needed to make enough storage facilities to avoid these losses.

This is why several experts, when News18 reached out to them for their suggestions, said that government should invest heavily in creating infrastructure, including storage facilities to provide the necessary fillip to agriculture.

“In the recent Kharif season, farmers were forced to sell their soyabean crop for Rs 1800 per quintal. This was substantially below the Minimum Support Price (MSP) of Rs 3500 but they had no choice because they had no place to store their produce. Right now the same crop is selling for Rs 3,400. If only government had created enough infrastructure for our farmers so many of them wouldn’t have had to sell their season’s harvest at a loss,” said Raju Shetty.

“Water, water, water. That’s the most important issue and I can’t stress it enough. Till the time our farmers get water for their crops all other talk is futile,” said Siraj Hussain, former Secretary of Agriculture and Farmers’ Welfare (GoI) and currently Visiting Senior Fellow at Indian Council for Research on International Economic Relations (ICRIER).

He added that of the 99 major and medium irrigation projects identified for completion by 2019 through the Long Term Irrigation Fund (LTIF), not more than 10 have been completed so far.

“The micro-irrigation fund has not taken off yet. No wonder, with such a lacklustre performance, one cannot expect much improvement in agriculture or farmers’ incomes”

What if the government created an infrastructure industry in rural India and used it to boost agriculture? This is what Mohan Guruswaymy suggests.

“The government must step up its expenditure for infrastructure and habitations to create a demand for labour. They should start huge infrastructure projects in rural India. This would not only provide a solid support to farmers, it would also generate a lot of jobs for youth that are unemployed right now.”

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