Maharashtra Chief Minister Devendra Fadnavis did the right thing when an army of 40,000 barefoot, largely Adivasi farmers descended on Mumbai earlier this month. The right thing, that is, if the objective was to as quickly as possible remove this disturbing reminder of farm distress from the glare of the media — and future, non-farmer voters. He caved in, extended his previous loan waiver scheme to yet more farmers for an even longer period, and also promised to transfer land to Adivasi farmers as guaranteed by the Forest Rights Act of 2006.
Convenient moves
It was, however, exactly the wrong thing to do if the objective was to address the root causes of the farmers’ problems and prevent such acute distress from building up again. But a loan waiver is easier to promise, and does not upset any of the existing political apple carts. And it is easily marketable as a farmer-friendly gesture by a magnanimous government.
Except that it isn’t. If anybody knows the issues Indian farmers grapple with, it’s the father of India’s Green Revolution, M.S. Swaminathan. And he said that loan waivers provide at best temporary relief but actually work against the creation of a reliable farm credit system in the long run. Worse, because of the large sums of money involved in such gestures, money that is required for things farmers actually need and will benefit from, like crop and seed research, soil improvement or pest protection, is eaten up by such futile gestures.
In the Union Budget for 2018-19, only 12% of the spend is for investments — the rest was eaten up by subsidies, crop insurance schemes and the like. Worse, most of the direct beneficiaries of farm subsidies are in the organised sector — fertiliser companies, tractor manufacturers and so on. The actual farmer gets to see little of the money.
But loan waivers are politically sexy, so every State is trying to outdo the other in such competitive populism, particularly as the general elections draw near. While the fiscal position takes a hit because of such write-offs, most of the money, due to corruption and inefficiencies, does not reach the intended beneficiaries. In Maharashtra, of the ₹34,000 crore loan waiver announced in 2017 (prior to the latest announcement), only ₹13,580 crore was actually disbursed, according to data given to Maharashtra legislators by the State government, Firstpost reported. And even here, it is anybody’s guess as to who actually got the money. A Shiv Sena MLA created a furore in the Maharashtra Assembly by pointing out that he had received ₹25,000 from the government under the scheme even though he had neither applied for relief, nor, being a legislator, was actually eligible. To be fair, such mix-ups are not the preserve of any one State. More recently in Tamil Nadu, farmers in Dindigul were up in arms after getting compensation cheques for ₹5 and ₹10, when the government had promised up to ₹26,000 per acre for yield loss in paddy!
The same old problems recur with depressing regularity. The Odisha Assembly was disrupted last Friday after Opposition MLAs protested the alleged distress sale of tomatoes in the State. Meanwhile in Karnataka, there is acute distress among both toor dal growers and dal millers. The growers, responding to last year’s surge in retail dal prices, and the government’s response of steeply hiking the minimum support price, had produced a bumper crop. Now, they want the government to buy at the promised price, while refusing to sell to millers at the prevailing market price, which is nearly 50% lower.
The government says it is seized of the matter and is working on solutions. At a talkfest in the capital last week, Rajiv Kumar, Vice Chairman of NITI Aayog, said, “It is finally time we must focus only and only on farmers and farmers’ distress.”
That’s all very well, but it is not as if the solutions are not known. What farmers actually need is a robust and reliable credit infrastructure which allows them to access credit when they require it, better infrastructure to prevent yield loss (Prime Minister Narendra Modi himself said in a speech last year that agri products worth ₹1 lakh crore are ruined annually due to insufficient infrastructure in the agricultural sector), better market access for their output, access to better information on crop prices and, of course, reliable weather-proofing and yield loss insurance.
Political turf
But that will mean upsetting many cosy political fiefdoms. Political parties across the spectrum have prevented the flawed agricultural market yard system from being revamped, because it is the basis for exercising political power and influence in rural areas. MSPs remain on paper, arbitrary and irrational price and import/export curbs in the name of the consumer actually end up hurting both consumers and producers… one could go on.
Perhaps the real lesson to be learnt from farmers’ protests like the ‘long march’ is that pushed long enough and hard enough by the current system, the India farmer will eventually rise up and try to change it — with or without your consent.
