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BW Businessworld

Agriculture: Holding The Farmer's Hand

Now that the Congress Party has upped the ante on the agrarian distress, BW Businessworld pieces together the farm policies it is likely to adopt should it form the government

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Ghana’s inspirational speaker, Israelmore Ayivor, has some quirky advice for farmers. “It’s not a surprising news that manna should fall from heaven in these days,” says the author of The Great Handbook of Quotes, “But this manna will fall for those who cultivated manna farms on the clouds above!” In India, though, manna from heaven has sustained farmers for decades, irrespective of what they have sowed, since the days of the “loan melas” of the 1970s.

During the long tenures the Congress Party has had in government, it has primarily tackled farm distress by channelling cheap credit to cultivators. In 2018 the Indian National Congress (INC) posted an article titlted ‘No respite from Farm distresses’ on its official portal.  The article referred to the massive increase in “ground level credit to agriculture and allied activities” during the second term of the United Progressive Alliance (UPA) government. Credit flow to agriculture shot up then from 9.19 per cent in 2011-12 to 15.75 per cent in 2014-15, before dipping to 8.28 per cent in 2015-16, when the National Democratic Alliance (NDA) government was at the helm on Raisina Hill.

Indeed, the Congress Party’s strategy for agriculture has oscillated between cheap credit for farmers and loan waivers, taking the non-performing assets (NPAs) of  banks from agriculture to abominable heights. In 2002 the overall institutional credit given for agriculture had been Rs 53, 713 crore which jumped four-fold to Rs 2,40,803 crore in 2008-09 (the first term of the UPA).
An RBI bulletin for the period 2004-12 shows the gross NPA ratio in agriculture to be higher than that of the corresponding ratio in the non-agricultural sector during this period, except in 2009 and 2010. In 2011-12 when NPAs in the non-agricultural sector rose by 40 per cent, agricultural NPAs rose by 47 per cent, stoked no doubt by agricultural debt waivers and relief schemes. The statistics may also reflect the new system driven identification of NPAs by the RBI, but is certainly linked to agricultural credit flow between 2006-07 and 2009-10.

“The Private Entrepreneur’s Guarantee (PEG) Scheme for Storage Godowns for central pool stocks was also started by them (the UPA),” points out Siraj Hussain, former Secretary in the Union Ministry of Agriculture. “About 15 million tonnes capacity has been built under the scheme. However their crop insurance scheme, MNAIS, was a non- starter due to the very low sum insured for crops,” he says. Hussain recalls that a shortage of wheat in the central pool had necessitated imports between 2006-07 and 2007-08. Many others remember the skyrocketing prices of pulses at the fag end of the UPA’s   tenure.  “There were a few remarkable steps taken by the UPA, like the National Food Security Mission, the National Health Mission and then there was a Bundelkhand package …” Hussain points out. Yet the pace at which the agrarian economy’s contribution to the gross domestic product (GDP) has grown peaked at a paltry 8.6 per cent in 2010-11, before dipping to an abysmal 1.4 per cent in 2012-13. (Please see chart: Percentage growth of GDP from agriculture).

Shetkari Sangathna (Joshi group) President Anil Ghanwat, therefore, is not just spewing political venom when he says, “During their tenure, Congress (UPA) didn’t achieve much. The decades old market intervention policy continued. The ban on cultivation and trials of genetically modified seeds was revived. Agricultural products exports were low and imports of edible oil, onion, raw sugar, pulses broke the backs of Indian farmers. The crop insurance scheme was in a mess!” Naresh Sirohi, Vice President of the BJP Kisan Morcha and a vehement critic of the “populist measures of the Congress” blames the Green Revolution for the deteriorating quality of agricultural produce.

Even Ghanwat though, lauds the UPA for cheap farm loans. “And the recovery from defaulter farmers was not harsh, or held back altogether,” recalls the Shetkari Sangathna chief. Cheap farm credit and loan waivers obviously do strike a chord among farmers. “Yes, we will stick to increase in ground level credits to farmers and loan waivers,” says Nana Patole, National President of the Congress Kisan Morcha and a frontrunner for a berth in the ministry should the UPA form government at the end of the 2019 polls. “Our manifesto is based on agriculture and we will implement it,” he says emphatically. Patole is contesting the Lok Sabha elections from Nagpur.
To emphasise the Congress Party’s commitment to the farmer, he points out that the INC’s election manifesto pledges a separate budget for agriculture and a special commission on prices for farm produce. Kedar Sirohi, the torch bearer of  the 2018 farmers’ protests in Madhya Pradesh (MP), is president of the MP State Kisan Congress. He says the Congress would certainly implement farm policies similar to those evident in Congress ruled states like Punjab, Madhya Pradesh and Rajasthan, which had pledged to waived loans of  debt-ridden cultivators. While farmers in Punjab have already benefited from loan waivers, their counterparts in MP and Rajasthan still await the fulfilment of pre-poll promises.

Obviously, increasing ground level credit and loan waivers will be the overriding strategies for coping with the plight of farmers in a Congress-led coalition. In its earlier avatar, the Congress government in Karnataka had focussed on Artificial Intelligence (AI) driven data collection systems, but such strategies for agriculture are no longer as audible as they were before.
Incidentally, India is today among the world’s leading producers of wheat, rice, pulses, sugarcane and cotton. It is the highest producer of milk and the second highest producer of fruits and vegetables. In 2013 India accounted for 25 per cent of the world’s pulses production, 22 per cent of its rice production and 13 per cent of its wheat production. Almost 25 per cent of the cotton produced in the world grows in India.

Yet the Indian farmer is often in distress (please see chart: Suicides by farmers). Over the past few decades, the manufacturing and services sectors have increasingly contributed to the growth of the economy, while the agriculture sector’s contribution has decreased from more than 50 per cent of the GDP in the 1950s to 15.4 per cent during 2015-16 (at constant prices).  It is also an undeniable fact that the agriculture sector employs nearly half the workforce in the country, even as it contributes to merely 17.5 per cent of the GDP.

Even though farm distress has plagued the NDA since it came to power in 2014, the root cause of it has not been farm productivity. Foodgrain production increased by 4.3 per cent between 2010-11 and 2014-15, from 241.6 million metric tonnes (MMTs) to 252 MMTs. During the tenure of the NDA government, grain output shot up by 9.7 per cent, increasing from 252 MMTs in 2014-16 to 276.5 MMTs in 2017-18. The key issues that ignited unrest among farmers were market connectivity and price realisations for agricultural produce, marred ironically, by a series of bountiful harvests.

Farmer agitations for loan waivers have invited pre-electoral promises from politicians. Writing off debts, though, could scarcely be a solution for a blight that stems from the supply chain and market dynamics for farm produce. What India’s agrarian economy really needs are market entrepreneurs who could integrate agricultural markets through a robust supply chain system.
So does the manifesto of the grand old party – which may just be able to sit in the saddle if it is able to cobble together credible post-poll alliances – offer a panacea for farm distress? Or are its policies of cheap credit and debt waivers just some wild geese that it has been chasing since the days of the loan melas?

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