Farmer Crisis Waiting to explode

THESE three incidents are symptomatic of the crisis in Indian agriculture and industry. In past 22 years, more than 3,30,000 farmers have committed suicide in India. That’s over 12,000 farmers a year, or 33 every day. The government recently admitted in the Supreme Court that in the last four years nearly 48,000 farmers took their own lives, mainly because of losses and indebtedness. Data from the government’s National Crime Records Bureau (NCRB) reveals that this trend goes back several years, with nearly 2,50,000 farmers having taken their lives during 1997-2012, after which the government stopped giving details. The irony is that government changed the name from Ministry of Food and Agriculture to Ministry of Agriculture Cooperation & Farmers’ Welfare.

• 1957 – Recall Sukhilala (Kanhiya Lal) of 1957 epic film Mother India, where Sukhilala, a treacherous village money lender, exploits Radha (Nargis) and his two sons and husband. The wedding between Radha and Shamu (Raaj Kumar) is paid for by Radha’s mother-in-law, who borrows the money from moneylender Sukhilala (Kanhaiyalal). The loan was a meagre Rs. 500, which gains gargantuan proportions. More than six decades later, the mother India has not changed in rural India. There are hundreds of Sukhilalas exploiting the poor farmers; the only difference is that their modus operandi has changed.
• 2002 – When I was working as political editor in Jain TV, in one of my TV shows I met industrialist Shekhar Bajaj. I asked him about the state of his brand Bajaj Fan. He paused and said, well we have closed the factory, now we import from China and stamp it as Bajaj Fans. We manage quality only through after-sale service.
• 2018 – I met one of the senior-most IAS officers of Haryana, who owns an ancestral farmhouse. Sir, you must be earning hell of a lot from the farmhouse, I asked. He smiled and said, I am just custodian of property; forget the income, sometimes I suffer loss of Rs. 1-3 lakh in a year.

Look at the contradiction! Public investment in agriculture, which drives the economy, over the years has reduced drastically. The government spent 12-16 per cent of the total Plan amount on agriculture in the year 1960-65. But by the time our country progressed to the 11th Plan in 2007, spending on agriculture had dipped to just 3.7 per cent.

Another symptom of agricultural crisis is that between 2001 and 2011, nearly 9 million farmers abandoned farming, according to census data. In the same period, the number of agricultural workers (labourers) grew by 37.5 million, an increase of 35 per cent. Agriculture directly and indirectly occupies 70 per cent of India’s workforce but comprises only 14 per cent of the GDP. “The average annual growth rate of agriculture and allied sector during the first four years of the current Five Year Plan period (2012-17) has been 1.6 per cent as against the 12th plan target of 4 per cent per annum,” Minister of State for Agriculture Mohanbhai Kundariya said in a written reply to the Lok Sabha on March 15, 2016.

The loan waiver saga was started by the Bharatiya Janata Party (BJP) in Uttar Pradesh and Maharashtra. The newly elected three Congress Chief Ministers too have waived off farmers’ loan. The demands of farmers rally mostly around two issues: loan waivers and setting Minimum Support Price (MSP) at 50 per cent above cost of production, as per the Swaminathan Committee report. Unfortunately for Prime Minister Narendra Modi, he had promised these two things in his election speeches in 2014 and that is what the agitating leaders want him to fulfil. It doesn’t help that after forming the government at the Centre, Modi realised the impossibility of implementing these two conditions. The ruling BJP government came to power in 2014 riding on the wave of support from farmers. None of the promises to them however have been fulfilled.

Public investment in agriculture, which drives the economy, over the years has reduced drastically. The government spent 12-16 per cent of the total Plan amount on agriculture in the year 1960-65. But by the time our country progressed to the 11th Plan in 2007, spending on agriculture had dipped to just 3.7 per cent

The crisis in agriculture is phenomenal in the US, Europe, Japan, Australia and many other nations. In India, it is more perceptible only because almost half the population here is directly involved in farming. India has the largest crop land in world at 179.8 million hectares, whereas US has 167.8 million hectares.

Debts have increased shockingly, harvests of all produce except rice and wheat rot in place because of high imports and a lack of cold storage facilities. The government though is undeterred. The previous Congress party-led coalition government announced farm loan waivers worth nearly Rs. 720 billion. On February 29, 2008, P Chidambaram, the then Finance Minister of India, announced a relief package for bestiality farmers, which included complete waiver of loans given to small and marginal farmers. Called the Agricultural Debt Waiver and Debt Relief Scheme, the Rs. 600-billion package included the total value of the loans to be waived for 30 million small and marginal farmers (estimated at Rs. 500 billion) and a One Time Settlement scheme (OTS) for another 10 million farmers (estimated at Rs. 100 billion). After this charity, the Congress came to power with a bang in 2009.

ECONOMISTS caution that farm loans waivers would widen the fiscal deficit the government has aimed to cap at 3.3 per cent of its gross domestic product (GDP), or Rs. 6.24 trillion.

It was a wake-up call. Starting June 1, 2018, farmers in 10 states, most of them headed by BJP governments, began a 10-day strike. In an attempt to stem the glut of low-cost imported vegetables and milk products, millions of farmers dumped produce instead of sending them to market.

The ruling NDA is not finding a way out of the vicious circle. The paramount issue is, why farmers are trapped in a loan jam? Why agriculture is becoming a non-remunerative vocation?

The crisis in agriculture is phenomenal in the US, Europe, Japan, Australia and many other nations. In India, it is more perceptible only because almost half the population here is directly involved in farming. India has the largest crop land in world at 179.8 million hectares, whereas US has 167.8 million hectares

“We will not let Prime Minister Narendra Modi sleep until loans of all farmers are waived,” Rahul Gandhi, President of the Congress Party, roared outside Parliament. In response, Modi said in a Ghazipur public meeting, “such measures (waiving off farmer loans) are nothing more than lollipops” and dubbed the Congress a “lollipop company”. Unfortunate part of the story is that both the top leaders are not talking about the main issue: Why the farmer has been reduced to such a pathetic state and what the solution is if loans are not waived off?

The plight of farmers have compelled every Indian to think as to what went wrong in India in the last 72 years—why farmers are committing suicide and is there no way out? Are we completely taken over by international forces or the powers that be who decide what is to be sold in the market and what is to be produced in the field?

According to economic think-tank, National Institution for Transforming India (NITI) Aayog, the average income growth of a farming family, in 2011-2016, was only 0.44 per cent. This basically means that income for farmers was stagnant but expenses rose, since, while their income mirrors inflation month-on-month in the same period, food inflation is at 2.8 per cent. If a common man had his incomes frozen for this long, lot of us would meet the same fate. The government’s Economic Survey of India 2016 states that the average income of a farmer (or of a farming family) is only Rs. 20,000 (roughly $294) a year in 17 states of India. It amounts to a monthly income of a farming family—of an average of five members—less than Rs. 1,700 ($25). One can imagine how farmers are surviving on this meagre income. Even if it is doubled, the scenario will remain dismal.

THE responsibility of such a mess rests solely on the government: not one particular government, but successive governments. The problem lies not ‘in the farm but outside the farm’. Farmers are suffering not because of nature as much as they are suffering because of policy design. Raghuram Rajan, former governor of the Reserve Bank of India, had said that the biggest reform would be to move people out of agriculture into urban areas, because the market there needs cheap labour.

The successive governments have been advised by the World Bank to take 400 million people out of the rural areas to urban areas to provide labour to industries. No one can actually force people out. But if the system creates economic conditions in such a way that force farmers to abandon agriculture and relocate for survival to the urban areas then who can save the poor farmers? This phenomenon of shifting of population is happening all over the world. Does this fit in the frame of agrarian India; more so, as the industrial scenario too is rapidly looking down. Are we not becoming a predominantly trading nation rather than a manufacturing one?

This is not happening only in India: it is a bigger and dangerous faulty economic design that the whole world is following. If the wealth of a few crore individuals (or families) is equal to the earnings of half the world, it means that something is wrong in the way the economic growth model has been designed. The paradox is that we have been presented with such a design to make believe that there is no way to development except to follow the same model. The World Trade Organisation (WTO) claims to bring huge benefits to the world. But where is the benefit? Poverty, hunger, inequality… everything is still out there.

The responsibility of such a mess rests solely on the government: not one particular government, but successive governments. The problem lies not ‘in the farm but outside the farm’. Farmers are suffering not because of nature as much as they are suffering because of policy design

Unfortunately, everything is so well-programmed that even if the wealth of a few families grows, India too appears to be growing at a phenomenal rate.

Back in 1951, agriculture provided nearly 70 per cent of the total employment of the country and contributed more than 51 per cent to the GDP. But 60 years later, in 2011, agriculture and allied sectors provided nearly 55 per cent employment while its contribution to the GDP had dramatically dropped to just 14 per cent.

This means that agriculture sector is absorbing too many people to produce much less value. It is oversaturated with workers and farmers who are dependent on ever smaller returns from it. This has happened because the growth in industrial sector, that was supposed to absorb the excess population engaged in agriculture, did not happen. The slow pace of industrialisation, caused by not just flawed policies like export orientation, but also reluctance of Indian businessmen to invest in heavy industrialisation and instead go for the services sector are some of the reasons behind this threatening situation.

In 1970-71, the average size of landholding for families dependent on agriculture was 2.28 hectares (ha)—one hectare is equal 2.47 acre. By 2010-11, the Agriculture Census states, on an average only 1.15 ha of cultivable land was available per cultivator. If we look at the status of farmers belonging to SC and ST communities, the situation is far worse. In 1980-81, the average land holding size for SCs was 1.15 ha which reduced to 0.8 ha in 2010-11. Similarly, for ST farmers it went down from 2.44 ha to 1.52 ha in the same period.

This means high number of dependants on agriculture and falling land holding size. Nearly 67 per cent of the farmers work on land less than 1 ha and 18 per cent of farmers own between 1-2 ha of land. This means that 85 per cent of the farmers in India are marginal or small farmers while 0.7 per cent of farmers own more than 10.5 per cent of agricultural land.

THE Committee on ‘Doubling Farmers’ Income’ headed by Ashok Dalwai had, in its report, estimated that in 2011 a person engaged in non-agricultural occupation earned 3.1 times more than a farmer. A person who was employed as an agricultural manual worker earned 60 per cent less than a farmer.

The neglect by successive governments in failing to implement land reforms and not having a policy to provide alternative employment to the large population dependent on agriculture has multiplied the crisis.

What we need today is massive investment in the agriculture sector and, simultaneously, economic capacity in the hands of farmers. Almost 600 million people in India (or almost double the total population of the US) are involved directly in agriculture. The best way to develop India is to provide more income in the hands of these poor, especially farmer, because once these people get more money, they will create demand and this is how the wheel of development will start moving.