In the weeks leading up to the 2019 budget presentation, political observers keyed in on a vital question — what was the current administration going to do to tackle the growing distress in India’s agricultural sector? The increased public scrutiny — a result of vocal collective movements precipitated by Indian farmers — put significant pressure on the Government to respond appropriately, especially in the light of upcoming elections. The rejoinder provided by acting Finance Minister Piyush Goyal on 1 February 2019 during his interim budget presentation was tepid, at best.
As part of its purported support for the agricultural sector, the Central Government introduced a new scheme — the Pradhan Mantri Kisan Samman Nidhi (PM-Kisan) designed to benefit approximately 12 crore small and marginal farmers. Under the scheme, farmers are expected to receive ₹6,000 per annum in income support, backdated from 1 December 2018. The funds are to be transferred directly to the farmers in three installments of ₹2,000, with the first installment due on 31 March 2019.
Under this new scheme, the Central Government has allocated ₹75,000 crores for small and marginal farmers — almost a four-fold increase from the previous year’s budget. Additionally, in an attempt to provide for the welfare of farmers and deliver on a promise to double their income, the government has also promised substantial increases in the Minimum Support Prices (a backstop protecting farmers against crop price fluctuations) for 22 crops — nearly doubling expenditure on food subsidies from the 2017-2018 fiscal year.
While it cannot be denied that these schemes will be of some assistance to farmers, the policies have not answered the central question that could plague the National Democratic Alliance (NDA) in this election year. Has the NDA Government been able to truly alleviate the distress of farmers in its four and a half years in office? According to the Agricultural Ministry, between 2014 and 2016, 36,370 farmers committed suicide. In 2018, there were 13 massive protests held by farmers across the country. These issues are further exacerbated by a decline in the prices of agricultural commodities in the international and domestic markets and the lack of support through the Minimum Support Prices over the last two years.
While it cannot be denied that these schemes will be of some assistance to farmers, the policies have not answered the central question that could plague the National Democratic Alliance (NDA) in this election year. Has the NDA Government been able to truly alleviate the distress of farmers in its four and a half years in office?
While income support is necessary to ensure farmers can procure necessary inputs — will 6,000 rupees per annum, broken down to 17 rupees a day, be able to make a difference? With the expectation of a continued decline in the price of
produce and
erratic rainfall portending looming losses in the future, can this low sum truly act as any kind of a buffer?
It is inevitable that the policies of the Central Government will be compared to the ones being implemented at the State level — and it will inevitably be found lacking. The Government’s proposed income support is significantly less than what State governments have offered to its farmers. Under Telangana’s
Rythu Bandhu scheme, the State provides a grant of ₹8,000 per acre per farmer in two installments while Odisha’s
KALIA model gives a grant of ₹10,000 per household.
The central policy makers do seem to have incorporated parts of the Telangana’s Rythu Bandhu model which focuses on land holdings to help determine agricultural disbursements. Policy makers might have been better served in examining the more comprehensive KALIA scheme. Based on income levels, Odisha provides for landless agricultural labourers while aiming to help vulnerable agricultural households and promising interest-free crop loans. PM-Kisan seems to completely ignore the landless, tenant farmers and those who migrate seasonally.
Perhaps most crucially, the proposed scheme fails to account for the bureaucracy’s poor administration of land records. Historically, gaps in India’s legal framework have led to disputes over land ownership — a problem that seems to plague the agriculture sector in particular. As such, one of the key tenants of PM-Kisan, identifying the farmers who own less than two hectares of land for the State Government, is going to be extremely challenging.
The proposed scheme fails to account for the bureaucracy’s poor administration of land records.
As the governance of the agricultural sector falls under the purview of both the Centre and the State and the concurrent list, it is perhaps unfair to draw a comparison between national and subnational policies. If the Centre wishes to act as a supplement to the State, existing State policies should be accounted for, to address the challenges efficiently. For example, while Punjab faces issues with regard to the scarcity of water, Bihar faces the challenge of poor supply chains and lack of infrastructure. It might have been more judicious, then, for policy makers to find synergies and areas of alignment rather than pushing a one-size fits all prescription.
Upon close scrutiny of the PM-Kisan, an obvious question comes to the forefront: was the scheme a governance measure or political manipulation? The central ruling party has already faced defeat in the recent assembly elections in the States of Madhya Pradesh, Rajasthan and Chhattisgarh, primarily because the opposition proposed loan waivers to the farmers. Was this, then, simply a necessary step for the administration, in order to fight the perception battle? What then are the consequences of political policy making?
While presenting the budget, Piyush Goyal
threw light on the fact that providing income support to farmers would increase the fiscal deficit in both 2018-2019 as well as 2019-2020. This stokes further concerns that the Reserve Bank of India (RBI) may not cut rates in the immediate future, a measure that could end up affecting GDP growth for the fiscal year.
Despite its political maneuvering, it is obvious the Government cannot continue to attempt temporary fixes to the deep problems afflicting the agricultural sector by providing basic income to every farmer in the nation. They instead need to opt for a nuanced, targeted approach. Any good solution must involve the Central and State governments working together. Structural reforms in the agriculture sector are important. With approximately 50 percent of India’s population working in the agricultural sector, the emphasis for the administration should be on governance rather than political theatre.
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