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Posted at: Oct 4, 2018, 12:28 AM; last updated: Oct 4, 2018, 12:28 AM (IST)

Farm economics deteriorating

Devinder Sharma

Devinder Sharma
The basic problem is that neo-liberal economics does not consider agriculture to be an economic activity. That's the primary reason why farmers are despised and are considered to be a national burden.
Farm economics deteriorating
MULTIPLYING: Angry protests by farmers.

Devinder Sharma
Food & agriculture specialist

IN a tweet to mark Gandhi Jayanti, Prof MS Swaminathan wrote: "Once Mahatma Gandhi was asked by the National Dairy Research Institute, Bangalore, to fill in its visitor's book. Under the column occupation, he wrote 'Farmer'. And, ironically, it was on the Mahatma's birthday that the police lobbed teargas shells and fired water cannons to keep thousands of peacefully protesting farmers on a 10-day march, which started from Haridwar, from entering New Delhi. 

The same day, a 65-year-old farmer, Ranbir Singh, from Haryana died in police custody in the Bhiwani jail. He was convicted in a cheque bounce case 10 days ago for his inability to honour the repayment commitments. He had an outstanding loan of Rs 9.83 lakh and was sentenced to jail for two years. As per news reports, he died of shock when visiting relatives informed him two days ago that his standing crop had suffered losses due to recent rains. Ranbir Singh was not the only farmer to have been sent to jail following a bank default. Hundreds of farmers who have defaulted on bank loans are in jail in Punjab and Haryana. 

This news comes at a time when the government has superseded the governing board of the debt-ridden IL&FS, which has 169 group companies, and had accumulated bad loans exceeding Rs 90,000 crore. None of the top executives has been arrested so far. 

Both the developments on the Mahatma's birthday signify what is wrong with agriculture. Farmers have since gone back, promising to return if their demands are not met, but have loudly conveyed the brewing discontent prevailing in the rural hinterland. 

In the past six months, the nation has seen a peaceful long march, from Nasik to Mumbai, followed by a 10-day protest in June to stop food supplies to the cities, and then again another march to New Delhi by the All-India Kisan Sabha. In addition, numerous protests across the country have gone unnoticed. 

While some more marches are under way, including one of adivasis and the landless that started from Gwalior a few days ago, the angry farm protests are only multiplying. According to the National Crime Records Bureau, from 687 protests in 2014, these demonstrations increased to 2,683 in 2015, and then doubled to 4,837 a year later. In other words, protests have multiplied seven times in three years, a clear reflection of the farmers' growing anger. While the reasons could be many, the fact that farming is passing through a terrible distress is widely acknowledged. 

That is exactly what the march by the Bhartiya Kisan Union that started from Haridwar was trying to reaffirm. Among the 15 demands listed in the demand charter, at least half a dozen pertained to the deteriorating farm economics. While simple and local issues like lifting the entry ban for tractors that have completed 10 years in operation, removing GST (5 per cent) on farm implements etc have received a positive assurance, it is the economic issues that remain largely unaddressed. In fact, all previous protests have also returned empty-handed, with the government citing inadequate resources for its inability to measure up to farmers' expectations.  

Two demands which have now become central to every protest that happens across the country pertain to writing-off farm loans and the implementation of the government's own promise of providing minimum support price (MSP) plus 50 per cent profit as per the recommendation of the Swaminathan Commission. The government has, instead, manipulated the formula that measures the production cost, and presenting it as action taken. Against the comprehensive (C2) cost estimate, which includes interest over capital investment and the rental value of own land, the government has lowered the estimate by only taking into account farmers' paid out cost (A2) and added to it family labour cost (A2+FL). For illustration, the procurement price announced for paddy is Rs 1,750 per quintal. But if calculated as per Swaminathan's formula, the paddy price works out to Rs 2,340 per quintal, which means a loss of Rs 590 on every quintal of paddy sold. Similarly, for maize, the loss is Rs 540 per quintal.

To say that the government doesn't have the resources to procure each of the 23 crops for which the MSP is announced is not correct. Estimates show that the total amount required will be a little over Rs 1 lakh crore every year. The question, therefore, that arises is where the money will come from. Well, the immediate need is to discontinue the economic stimulus package of Rs 1.86 lakh crore that was doled out to the industry for one year after the economic meltdown of 2008-09. The package has continued for 10 years with no questions being asked.  

Since farmers' incomes have remained frozen when adjusted for inflation for almost four decades now, it is obvious that farmers have been denied their rightful income all these years. Studies have shown that even in the frontline agricultural state of Punjab, 98 per cent of the rural families are in debt, and 94 per cent of these have more expenditure than income. For the country, the total farm loan has been computed at Rs 12.60 lakh crore as per a statement presented in Parliament. 

Compare this with the Rs 10.3 lakh crore of bank defaults that the country is faced with. Already, Rs 3.16 lakh crore of corporate NPAs have been written off between April, 2014 and April, 2018. However, the moment the demand for farm loan waivers is raised, policymakers, economists and business writers are quick to scream that it will lead to an increase in fiscal deficit. Strangely, no question of widening fiscal deficit is ever asked when corporate NPAs are written off. That's how the economic design has been so cleverly laid out. 

The basic problem is that neo-liberal economics does not consider agriculture to be an economic activity. That's the primary reason why farmers are despised and are considered to be a national burden. But what is not being understood is that only agriculture, the largest employer in the country, has the potential to reboot the economy. That's what the Mahatma had strongly advocated, and that's what we have ignored. 


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