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Union Budget 2018: Waking up to farmer crisis this late won’t help Modi government

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DailyBiteFeb 01, 2018 | 21:08

Union Budget 2018: Waking up to farmer crisis this late won’t help Modi government

Union Budget 2018 has been hailed as a pro-farmer budget in mainstream media, but is it really? Union finance minister Arun Jaitley’s claim that the Narendra Modi “government is committed for the welfare of farmers”, and the launch of “Operation Green” for micro credits in the agri-produce sector, as well as the maximum selling price (MSP) hike for kharif crops by 50 per cent of the production cost – are all well meaning on paper, until we sit down to do the hard fact check, specially tallying with the Economic Survey 2018, released just two days back.

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What have been the big sops announced by FM Jaitley at the outset of his bilingual Budget speech? The Rs 46,700-crore budget allocation for agriculture is only a marginal increase from last year, and barely 2.3 per cent of the grand total of Rs 21 lakh crore for Union Budget 2018.

With 86 per cent of farmers being described as small and marginal, the focus has been on “linking” them to markets to get adequate remuneration for their produce.

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The volume of institutional credit for agricultural sector has been raised to Rs 11 lakh crore, most will still remain outside the agri-credit net. Photo: PTI

In this light, the increase by 50 per cent of the MSP for kharif crops sounds like a good deal, but there’s a rider attached to it.

The MSP hoodwink

As activists and Opposition leaders have flagged, the increased MSP has no clarity whether it would mean a raise over and above the “C2” cost of production, which includes the cost of family labour, working capital, land rent, etc.

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In fact, activists have highlighted that “outlays for market intervention and price support scheme fell from Rs 950 crores of revised estimates of last year to Rs 200 crore, by five times”.

In fact, former finance minister of the UPA era, P Chidambaram has called this a “big let-down” and “mere tokenism”. On agriculture, Chidambaram has said: "There is a promise to increase MSP 1.5 times, but there are no details. (The Swaminathan Committee has been remembered in the last year of the government’s tenure!).

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Besides, Rs 2,000 crore for e-markets and Rs 500 crore for Operation Green (whenever the Cabinet will approve the schemes) amount to a pittance. There is nothing to indicate that farmers’ real income will rise. Farm sector distress will continue and deepen, putting in peril the lives of a majority of the people primarily dependent on agriculture."

Agri-credit for a minority

While “Operation Green” to spur credit in agri-sector and link markets has been given a paltry Rs 500 crore, and the volume of institutional credit for agricultural sector has been raised to Rs 11 lakh crore, most will still remain outside the agri-credit net. Similarly, the initiative to use digital technology to bolster the agri sector is a redux from last year’s push to support NABARD computerise 63,000 primary agricultural cooperative societies to make micro credits available to the small and distressed farmers eliminating money-lenders.

Even as the Economic Survey spoke extensively of making micro irrigation a priority, there’s only Rs 600 crore allocated under Pradhan Mantri Krishi Sinchai Yojana. This, after prolonged drought in many agriculture-heavy states and monsoon uncertainties bound to make a comeback, is upsetting for farmers who held massive rallies in many states, including Rajasthan where the Congress has won all three by-poll seats today.

According to Swaraj Abhiyan’s press statement, Kiran Vissa of Rythu Swarajya Vedika has said: “While the Budget Speech refers to the plight of tenant farmers, despite a Bhoomiheen Kisan Credit scheme announced a few years, there is no difference in their situation. Most of the farm suicides in several states like Andhra Pradesh, Telangana, Odisha etc., are of tenant farmers.

In this Budget, too, there was no support provided for tenant farmers and lessees. The FM referred to the the NITI Aayog’s Model Land Leasing Act 2016 which has nothing to protect the interests of tenant farmers, and in fact, has no takers on the ground.”

Crop insurance, but for whose benefit?

While the Union Budget 2018 has earmarked Rs 4,000 crore for crop insurance under Pradhan Mantri Fasal Bima Yojana, the past record shows that much public money was wasted as farmers’ interests were not safeguarded, even as private insurance companies ended up bagging most of the profits.

Paltry allocations, no debt relief

Some of the flagship schemes from both current NDA and previous UPA years have not seen any renewed focus, with either reduced or constant outlays. This includes MGNREGA, PMAY, Swachh Bharat, National Drinking Water Mission, Mid-day meals scheme, price stabilisation fund, among others.

In addition, massive loans weighing down the small farmer after crop loss have not been addressed in the budget, even as access to credit has been made slightly easier, in theory. While loan waivers were given by individual states like Uttar Pradesh and Maharashtra, they came down to meagre and embarrassingly inadequate per capital amounts, thereby adding fuel to the fire of unrest within the framing community.

Women farmers overlooked

While there have been a few key schemes aimed at women, such as the free LPG gas connections for 8 crore poor women, the government contribution in EPF for women employees up to 8 per cent for first three years, etc, women farmers seem to have been completely neglected by the government, even though they were categorically mentioned in the Economic Survey.

Many of the demands of women farmers – such as beginning gender-segregated land records, access to agri credit, disaster relief and loan waivers, land purchase schemes for dalit women, special schemes for single women farmers, as well as women survivors in families where the male farmer breadwinner has committed suicide – have been given a miss in this budget.

Disaster relief reduced

Despite the sharp focus in the Economic Survey on climate change and disaster as crucial factors in agricultural sector, the outlay for disaster relief has been brought down. The chapter on Climate, Climate Change and Agriculture says that climate induced triggers can bring down agri income by 20 per cent.

“Using district-level data on temperature, rainfall and crop production, this chapter documents a long-term trend of rising temperatures, declining average precipitation, and increase in extreme precipitation events. A key finding—and one with significant implications as climate change looms — is that the impact of temperature and rainfall is felt only in the extreme; that is, when temperatures are much higher, rainfall significantly lower, and the number of “dry days” greater, than normal.

A second key finding is that these impacts are significantly more adverse in unirrigated areas (and hence rain-fed crops) compared to irrigated areas (and hence cereals). Applying these estimates to projected long-term weather patterns implies that climate change could reduce annual agricultural incomes in the range of 15 percent to 18 percent on average, and up to 20 percent to 25 percent for unirrigated areas.

Minimising susceptibility to climate change requires drastically extending irrigation via efficient drip and sprinkler technologies (realising “more crop for every drop”), and replacing untargeted subsidies in power and fertilizer by direct income support. More broadly, the cereal-centricity of policy needs to be reviewed.”

Given that farm revenues have declined and market prices has fallen below MSPs, income volatility caused by climate factors must be addressed, said the Economic Survey. Yet, on the contrary, the budget brings down relief in this important quarter.

Hype won’t feed farmers

While the hype around the “pro-poor budget” might shape tomorrow’s headlines, truth is this budget has seen a slither of increase in agri allocation, and that too most of it has been taken up by fertiliser nd chemical subsidies. Hence, FM Jaitley’s assertion that the government is serious about living up to PM Modi’s original promise of doubling farmers’ income by 2022, should be taken with a pinch of salt, for it would take an additional Rs 6,39,900 crore investment.

As the Economic Survey warns: “Agriculture matters for economic reasons because it still accounts for a substantial part of GDP (16 per cent) and employment (49 per cent). Poor agricultural performance can lead to inflation, farmer distress and unrest, and larger political and social disaffection — all of which can hold back the economy.”

Evidently, Modi government finally waking up to agrarian distress is proving to be a classic case of too little, too late.

Also read: Gurmehar Kaur on what actually happened that February at Ramjas College

Last updated: February 01, 2018 | 21:08
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