Withered hopes

Vegetable farmers in western Uttar Pradesh bear the brunt of the ripple effects of demonetisation and the spluttering start to the GST regime.

Harvesting potatoes in Meerut, Uttar Pradesh, on March 30. India consumes one lakh tonnes of potatoes a day and is the second largest producer after China.

TWO SUCCESSIVE bad years in terms of earnings on account of demonetisation and its persisting ripple effects, compounded by widespread apprehensions on how the Goods and Services Tax (GST) regime will play out on the ground, have left farmers of Uttar Pradesh with an overwhelming sense of despair on the eve of the anniversary of demonetisation and amid the spluttering start of the GST regime.

As was the case during the period immediately following demonetisation in November 2016, vegetable farmers, particularly potato farmers, have been the worst hit by the ripple effects this year.

“In the period after the announcement of demonetisation, market agents and middlemen in the mandis refused to pick up our produce because of cash flow constraints. This year there is no evident cash flow problem but the government’s much-touted support systems to get over last year’s losses have been absolutely ineffective,” said Anil Kumar Awasthi, a potato farmer of Singauli village in the Makhanpur-Bilhaur region of Kanpur district.

“The net result is the same: the produce rotting in and outside cold storage. Once again, there is distress selling and throwing away,” he added.

Awasthi and four of his brothers, who collectively farm on some 17 acres (one acre is 0.4 hectare) partly owned and partly on lease, are feeding their potatoes to stray cows that have multiplied manifold in the village in recent months.

“What else can we do? At least they would get something to eat and this perhaps may deter them from barging into fields and houses,” he said.

When the Bharatiya Janata Party (BJP) came to power in 2017 in the State, it admitted that demonetisation had caused severe losses to farmers and promised measures to help them. This was followed by announcements that there would be a steady and massive potato purchase scheme, but in actual implementation this too has turned into usual political bombast.

Empty promises The scheme was launched with much fanfare, with pictures splashed all over the media, and initially purchases did take place in a few instances. But soon the programme lost steam and is now being pursued in a totally haphazard manner, Awasthi said. The net result was escalation of farmers’ woes, he added.

“One could say that post-demonetisation, almost every harvest has marked the doubling of losses. Between last November and January 2017, our loss of produce was to the tune of Rs.8 lakh. This year, we have already lost around Rs.13 lakh of produce. Initially, we put potatoes worth a few lakh rupees in cold storage but have been forced to pull them out since the cold storage fee adds to our debt burden on a daily basis. With no buyers around, keeping the produce in cold storage is like slow bleeding that will ultimately take your life,” Awasthi told Frontline .

Across Uttar Pradesh, especially in the Doab region consisting of the central Doab districts of Etah, Kasganj, Firozabad, Kannauj, Mainpuri and Etawah, the lower Doab districts of Kanpur and Fatehpur, and the the upper Doab districts such as Saharanpur, Shamli, Muzaffarnagar, Baghpat, Meerut and Ghaziabad, thousands of farmers are facing a situation similar to the one faced by Awasthi’s family .

From across these regions, there are murmurs about taking out a march to Lucknow with truckloads of potatoes and dumping them in front of the Chief Minister’s residence. If such agitations happen, the agrarian situation could develop into a major law and order problem. Fateh Singh Bhatti, a medium farmer of Sikandrabad in Bulandshahar district of western Uttar Pradesh, who suffered massive recurring losses in 2016-17, told Frontline that the mayhem in the fields of the State simultaneously exposed the callous attitude that the ruling dispensation had towards farmers and the ineptness of and lack of creativity in the administrative setup. He is of the view that the manner in which the GST regime has been rolled out is another stark example of the lack of imagination and inefficiency.

“The impact of GST on agriculture is yet to manifest itself in concrete terms. But if demonetisation and related measures later are any indication, GST too will only aggravate the problems of the farmers. Already, it is clear that the price of fertilizers and pesticides will go up with GST. This is bound to increase the cost of cultivation. This, in turn, will impact supply and demand and ultimately reflect in the markets,” he said.

A consistent build-up throughout the government’s movement towards the GST regime was that it would benefit the agricultural sector substantially. The reasons cited included the potential that GST offered to improve the supply chain as it would subsume many indirect taxes that were prevalent in the earlier tax structure. It was also argued that GST would facilitate easier transportation of agricultural products across States and ultimately lead to the creation of a national agricultural market.

However, the increase in the prices of fertilizers and pesticides has led farmers to look at these claims with suspicion. Speaking to Frontline on condition of anonymity, a wholesaler of fertilizers and pesticides said that several important products used by farmers were bound to become more expensive in the days to come.

In the earlier VAT [value added tax] regime, nitrogen was taxed at 6 per cent (5 per cent VAT and 1 per cent excise) while potash and phosphorus had 0 per cent VAT. Under GST, all three would be taxed at 5 per cent. Pesticide-grade sulphur would be taxed at 12 per cent under GST as compared to 5 per cent earlier. Taxation for fertilizer sulphur, however, will remain unchanged at 5 per cent.

Organic farmers, too, are not happy about GST. An organic farmer from Saharanpur told Frontline that under GST bio-fertilizers are to be taxed at a flat rate of 18 per cent. Previously, taxes for different bio-fertilizers varied from 0 per cent to 5 per cent. “This big hike will certainly reflect in prices and virtually push Indian organic produce out of the international market.”

Beyond all this, said the fertilizer trader, the manner in which the GST regime was being rolled out, with multiple revisions, was bringing back memories of the tumultuous implementation of demonetisation, which was marked by constantly changing rules and directives. “This reminder is certainly not one that Uttar Pradesh’s farmers cherish. It has also added a mental burden to their mounting financial burden,” he said.