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Feeders To The Nation Malnourished. Reforms Needs To Go Beyond Legislation

The PM must appoint an agri ‘enabler’ supported by a team of doers and thinkers that designs a holistic institutional framework, without which the opportunities from this legislation will fritter away.

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The Indian farmer is truly excluded and merely survives. The policymakers have made us all believe that the farmers’ plight is an inherited curse, and for perpetuity. 

However, it should not be so. 

Our competitive advantage lies in agriculture, and farming can be lucrative and sustainable if the solution is centred as much around the farmers as around the holistic agri ecosystem. 

Agri reforms is an economic multiplier 

The misplaced policies have caused suffering and distress. The short-sighted policy makers and the artful politicians (one for lack of understanding, other for vote bank) have neglected the farm sector, arguing that farm sector barely grows at 2%. Chinese agrarian economy grew at 7% for a decade, as did some of our own larger states. 

Our farm policies have revolved around three intertwined & related issues, catering to a diverse and yet conjoined constituencies. Every leader defines the trinity of food security, farmers’ income, and food price from the ‘political’ lens. The lens changes hues: politicians ‘adjust’, revise tone, focus and leanings based on the political climate (polling season). They plough, sow, reap, and harvest power at the cost of the farmers’ distress.

Political intertwined with economic solution

The farmers’ distress is because of declining incomes. Half of our workforce process and creates less than a seventh of our wealth. They earn a fifth of what others do and grow at a third. A Crux insight across 16 states emphatically highlights that under the present agri ecosystem it will take twenty years for the farmers to match the income of lowly paid and expansively exploited migrant labour. 90% of all land holdings reside in the books of the richest 5%.The marginal farmers lose half of their land every 6 years due to ‘emergency’ fund, family split and inheritance of the next generation.

The study eloquently presents that, faulty policy design, corrupt and ineffective state apparatus have perpetuated farm distress. Sample this. Only 25% of the farmers are aware of, less than 6% ‘market’ at MSP.  Only paddy and wheat are sold at MSP, and only a third of each. Less than a third have heard of direct cash transfer, aware of land acquisition law. Two thirds have never contacted Kisan call centres.

Most of the initiatives to increase farmers’ income including PM Kisan and crop insurance are riddled in bureaucratic and mired in state-centre gamesmanship. Similarly, loan waivers benefit rich, hurting smaller farmers, pushing them to non-formal and expensive credit, lowering productivity and income. 

Only 20% of the farmers want farm subsidies to continue in its present form.

Crushes the spirit, often takes his life

The agri market is so deviously designed that the producer i.e. the farmer has absolutely no role in the pricing or the marketing of his own product. 

Need one say more? 

State apparatus artificially ensure higher MSPs benefiting the medium, large, and influential, while bleeding the marginal farmers, who are net buyer of food grains.

The pricing mechanism hurts the consumers as well, bringing in a counter political pressure that is ‘solved’ by food subsidy. The PDS framework is a cesspool of corruption, marked by nefarious intent and equally inefficient process. The government procures approximately 30 % more wheat, about 45 % more rice than needed, that either rots in the FCI granaries or ‘leaked’ away, the report concludes. 

This vicious cycle is the sources and cause of power, enriching every middleman, most local officers in the agriculture ecosystem. 

This loot has been on for decades.

Neither harnessed potential, nor reaped benefits

Similarly, In the guise of food security we design complex, unpredictable, and often ad-hoc policies that enable plundering. We encourage an administrative milieu that perpetuates inefficiency. Inherited from the colonial administration (designed to procure cheap and abundant cotton) and worsened to suit the new ‘rulers’. These elites aided by politician- bureaucrat nexus invariably control the Agriculture Produce Market Committees and enhance their domination by usurping co-operative bank boards and, milking the other co-operatives.

There are several other operational challenges. The agri-entrepreneurs are squeezed in the middle, exploited by both suppliers and buyers. They neither have a ‘bankable’ book nor the size and resources to raise funds.

To its credit the government initiated the ‘Farmer Producer Organizations’, a concept to create and, in several ways, model the self-help group at its infancy and a joint stock company eventually. The goal incentivises farmers to collaborate within, and with other agri stakeholders outside, and emerge as a sustainable, robust economic and legal entity. Unfortunately, the design was half-baked, implemented badly. 

Its time has come though, similarly, for ‘contract farming’. Both need effective implementation.

Reforms require courage of conviction, political will. Domain knowledge and intent is necessary. Not sufficient. 

The PM’s Agri legislation is cored and concentrated around farmers, but his ambition is in line with bigger opportunities. However, it necessitates an enabling environment and nourishing ecosystem.

Technology, not capital or labour, is the key driver for industrial growth. The PM understands that ‘Jobs lag growth’ in the technology pivoted industrial future. He appreciates that only the Agri sector can create jobs, sustainable opportunities, and usher social mobility that will and transform the rural landscape. 

Reform agenda must support productivity. Enlarging, and including more agricultural facilities and support system to infrastructure statuses will strengthen output, create ‘backward and forward’ linkages. 

Robust design, holistic and effective implementation will attract much needed investment to build the agri ecosystem. An enabling environment will attract modern agri-tech companies and start-ups, and be a catalyst for innovation, necessary to leverage economic opportunities and proliferate agri-entrepreneurs.

The PM has acted decisively  

However, it won’t be easy to ‘side-line’ elite beneficiaries. He will need to invest his copious and ever-growing political capital to coax, persuade every stakeholder on the table, especially the opposition.

Similarly he must take advantage of his personal equity to create a robust and cooperative federal framework where the centre is the fulcrum around which the different states can deliver for a truly transformational rural India.

However, legislation alone won’t do.

The PM must appoint an agri ‘enabler’ supported by a team of doers and thinkers that designs a holistic institutional framework, without which the opportunities from this legislation will fritter away.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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Malnourished agriculture magazine issue 22 Oct 2020

Dr. Vikas Singh

The author is a senior economist, columnist, author and a votary of inclusive development

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