Difficult terrain

The BJP’s manifesto has accorded high priority to agriculture but the new government must integrate various schemes if it wants to work out an effective plan to enhance agricultural profitability.

A farmer and his family ploughing a field without the assistance of machinery or livestock in Wadla village of Lakhtar taluk, some 90 km from Ahmedabad.

THE Bharatiya Janata Party-led National Democratic Alliance (NDA) has come to power at the Centre at a juncture when the Indian agricultural sector is facing paradoxical situations at many levels. Consider this. While foodgrain production touched a record 263 million tonnes this year (2013-14), the rate of inflation on the basis of the consumer price index (CPI) hovered at 8.59 per cent in April 2014. Ironically, while the country has a foodgrain stock of 38.11 million tonnes, the 2013 global hunger index found that 210 million people in India are undernourished and 40 per cent of the children are underweight. The farm loan waiver of Rs.72,000 crore announced in the 2008-09 Union Budget and the Rs.7 lakh crore agricultural credit fixed for the current fiscal were supposed to reduce the hardship of farmers, but there has been no abatement in suicide by farmers. Again, 38.6 per cent of the population in rural India relies on casual labour, but there is an acute shortage of labour for farming operations even in Punjab, the Green Revolution State. Sixty-five per cent of the agricultural land is dependent on monsoon rain. The threat of a deficient monsoon (10-15 per cent) is looming large. The other important issues are declining profitability, technological fatigue, proliferation of small and marginal holdings, widening of the gap in income and opportunities between rural and urban India, and casualisation of labour in agriculture.

How well can the new government address these issues? What exactly will its plan for the agricultural sector be? If one goes by the manifesto and other pronouncements of the BJP, one can see that the party has identified some of the major problems and offered some solutions. These need critical examination at this stage.

The BJP has promised to increase public investment in agriculture and rural development. At present, more than 90 per cent of the investment made by farmers on farm production is through loans from formal and informal sources. The agricultural sector needs public investment mainly in infrastructure such as roads, electricity, post-harvest logistics and agricultural education, research and extension. Major and medium irrigation projects are delayed owing to cost of escalation. The Comptroller and Auditor General (CAG) in its 2010 report and Parliament’s Public Accounts Committee (PAC) raised in 2011 serious objections about the status and functioning of the Accelerated Irrigation Benefit Programme (AIBP) designed to cater to the irrigation of 12,50,000 hectares in 1996-97. There are various schemes of the Central and State governments for agriculture and rural development, such as the Rashtriya Krishi Vikas Yojana (RKVY), the Pradhan Mantri Gram Sadak Yojana (PMGSY), the National Food Security Mission (NFSM), the National Rural Livelihood Mission, and the Rajiv Gandhi Awas Yojana (RGAY). However, none of these represent a prospective long-term plan for rural India. If the government is to make any substantive change, it needs to integrate the various schemes in a well-coordinated long-term plan.

The BJP has also talked about taking steps to enhance profitability in agriculture by ensuring a minimum of 50 per cent profit over the cost of production, and cheaper agricultural inputs and credit. It has also held forth on introducing the latest technologies and high-yielding seeds. Apart from this, the BJP has suggested linking the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) to agriculture. Of all this, the 50 per cent profit is the most attractive proposition for farmers and rural India. At present, the Commission for Agricultural Costs and Prices (CACP) is entrusted with the job of calculating input prices and advising the government on the minimum support price (MSP). Various State governments and farmers’ organisations have raised doubts over the methodology of calculation. These doubts have pointedly referred to the underestimation of the rental value of land and family labour. Sample this. On the recommendation of the CACP, the Central government fixed the fair and remunerative price (FRP) at Rs.210 a quintal for sugarcane for 2013-14 (that includes profit), while in Uttar Pradesh the cost of production is calculated at Rs.251 a quintal. Against this background, the government must come up with concrete and balanced measures. One of the foremost tasks would be reorganisation of the CACP with more representatives from different States and farmers organisations for a fair calculation of the input price. The 50 per cent profits over input cost would make farming sustainable and may improve the economic condition of the farmer. There is a need to bring small and marginal farmers into the ambit of public procurement as only 2-5 per cent take advantage of the MSP. The sugarcane arrears of almost Rs.12,000 crore should be the first priority for the Narendra Modi government. The C. Rangarajan Commission recommendation on linking of the sugarcane price with the sugar price is the antithesis of input-based price. The sugarcane price policy needs reconsideration after taking into account the views of the stakeholders. There is strong criticism from various quarters, including sections of the media, that the 50 per cent profit over input price and the resultant increase in the MSP could increase the risk of inflation. But there is also the argument that the risk can be minimised by streamlining the supply chain. The argument is that increased money supply into the rural economy in the form of better price for agricultural produce is the fastest way to revive the industry and the service sector.

Significantly, in its manifesto the BJP has talked about adopting a “National Land Use Policy”, which will look at scientific acquisition of non-cultivable land and its development, in order to protect the interests of farmers and keep in mind the food production and other economic goals of the country. Apparently, its implementation will be monitored by the National Land Use Authority, “which will work with the State Land Use Authority to regulate and facilitate land management”. In recent times, more than two million hectares of agricultural land has shifted every decade for non–agricultural use.

The BJP has promised fast urbanisation by developing 100 cities and fast industrialisation for job creation. If these goals are implemented, they will exert pressure on the cultivated area and affect farmers adversely. The United Progressive Alliance (UPA) government enacted the Land Acquisition, Rehabilitation and Resettlement Bill (which came into force on January 1) to ensure that the rights of farmers are protected when land is acquired. Various industrial bodies, including the Confederation of Indian Industry and the Federation of Indian Chambers of Commerce and Industry (FICCI), termed this Bill anti-industry and lobbied for the dilution of its provisions, especially the provision relating to compensation. The BJP is considered to be pro-industry, and there are apprehensions that the new government will tweak the Act in favour of industry.

Gujarat’s own track record under the chief ministership of Modi increases this apprehension. During his tenure, corporatisation of agriculture increased and legislative measures facilitated the transfer of village commons and wastelands for private use, displacing marginalised communities who lost their de facto and de jure rights over pastoral lands. The advantage of a higher growth rate was mainly limited to large farmers and corporate agriculturists, while marginal farmers and landless labourers suffered owing to limitation of resources and the mechanisation of farming.

There has been a shift in cropping patterns from food to non-food and high-price crops in terms of cropping area, output and price. The land size inequalities worsened in Gujarat after the introduction of commercial agriculture. In 2001-11, the number of farmers plummeted by 3.55 lakhs, while the number of agricultural labourers increased by a staggering 17 lakhs. This is contrary to the all-India trend. The position of the Scheduled Tribes and the Scheduled Castes has conjointly deteriorated overall, except in the case of the S.Cs in the highest income class, resulting in an increase in intra-caste inequalities.

Another area where the BJP has focussed on is incentivising the setting up of the food processing industry through agro-food processing clusters. Indeed, the wastage of perishable vegetables and fruits with growing urbanisation provides great scope for the food processing industry. However, the pace of growth of this industry is below expectations, and it needs massive investment in infrastructure and amendments in the Agricultural Produce Marketing Committee (APMC) Act at the State government level.

When the UPA government allowed foreign direct investment (FDI) in retail, it was with the help of the BJP. Both mainstream parties had then argued that multinational corporations would invest in back-end infrastructure to strengthen this segment. But, as things stand now, it is a non-starter. How far will the Modi government change things in this segment? Since the policy parameters of both the UPA and the BJP are the same, what remains to be seen is how well the new government will carry out its plan and how best it will be suited for the farming community as a whole. Clearly, there is going to be much tight-rope walking to be done here and the latent apprehensions on the FDI have not faded away.

Another related apprehension is about genetically modified (GM) crops. This is a controversial subject at the international level, with both pro- and anti-GM food lobbies coming up with strong logic and scientific facts for the justification of their respective positions. The UPA postponed the decision on GM crops in the name of moratorium and shifted responsibility of giving permission to test GM crops on to the State governments. This issue needs serious thinking and decision-making at the level of the Central government after considering the Technical Advisory Committee (TAC) report and taking into account the interests of farmers and consumers.

The major inputs of agricultural production—seeds, fertilizers, energy, labour and machines—are becoming costlier. The cost of phosphatic fertilizers increased by more than 200 per cent after it was linked with international prices, while there is continuous pressure to trim the subsidies on nitrogenous and customised fertilizers. It will be interesting to see how the nitrogenous fertilizer price will behave after the gas price hike, as proposed by the UPA government.

Credit also is a major issue in the agricultural sector. Both availability and rate of interest are critical factors. The interest-paying capacity of farmers is limited, which is evident from the high percentage of outstanding loans, especially in the accounts of small and marginal farmers. The BJP has always supported interest-free credit to farmers and in some BJP-ruled States, the interest rate is 1 per cent. Therefore, farmers are expecting further reduction of interest rates on agricultural loans.

The offer to introduce and promote latest technologies for farming, low-water consumption and the optimum use of water resources is a welcome step, particularly in the context of the fast depletion of water tables, which is turning even Green Revolution areas into dark zones. Hence, water-saving technologies are welcome, but labour-saving technologies and mechanisation are the grey areas. Agriculture is still the main job provider for the rural population, and it remains to be seen how the new government will address this issue. Quality seed and high-yielding seeds replacement ratio is a basic requirement, but seed production and supply is gradually becoming the monopoly of the private sector, especially multinational corporations. The recommendations made by the Parliamentary Committee on Agriculture on GM technology need to be implemented.

Linking the MGNREGS with agriculture is a long-pending demand of farmers’ organisations. It will result in the augmentation of farmers’ income and an increase in farm productivity. However, the scheme is rights-based and primarily designed for landless labourers. Therefore, before dovetailing it with farming, the government must ensure that there are elaborate guidelines and a robust scrutiny mechanism in place to ensure that it will cater to the primary target group. The government needs to put in place welfare measures for farmers above 60 years of age, small and marginal farmers and farm labourers. This will cover almost all segments of the rural population.

The BJP has said that it will introduce soil assessment-based crop planning and set up mobile testing laboratories. Indiscriminate use of nitrogenous fertilizers, pesticides and mono-cropping has affected soil fertility in a big way. The UPA government started a soil-testing programme but it did not take off in a systematic way. Conducting soil analysis at the national level is an ambitious programme and has the potential to boost production with efficient resource management. The question is whether the government can come up with an effective mechanism to advance this programme.

Cotton seed production has become the monopoly of corporates such as Monsanto. The Reliance Group purchased large parcels of land to take up export-oriented agriculture. Agricultural land is diverted to industry in a big way at the expense of farmers. Because of the overexploitation of water by industrial enterprises and commercial agriculture, the groundwater level is declining at an annual rate of three metres. The government imposed a licensing system on farmers for groundwater use, but in the case of Coca-Cola, this mechanism was waived. In 2010-11, employment in the agricultural sector witnessed a negative growth of 1.59 per cent. The BJP claims that it will strengthen and expand credit facilities. As things stand now, big farmers and entrepreneurs avail themselves of more than 80 per cent of the agricultural credit and utilise it for non-agricultural purposes, whereas small and marginal farmers are still dependent on informal sources for their credit needs. The Central government has been increasing the limit on agricultural credit in every Union Budget, but there is a need to review the efficacy of its implementation and its contribution to agricultural growth. Again, much would depend on the plan for implementation.

Modi’s election promises and the high priority given to the farm sector in the BJP’s manifesto raised the hopes of farmers. The rural constituencies voted on the basis of these promises. The BJP secured more seats in rural constituencies than in its traditional urban-based constituencies. There is no reason to believe that agriculture and farmers are not the top priority of the new government but determined and quick action, especially on the promise of ensuring 50 per cent profit on the cost of production, is necessary. However, the test is the MSP of kharif crops and payment of sugarcane arrears.

Sudhir Kumar Panwar is professor at the University of Lucknow and the president of the Kisan Jagriti Manch.