The Hindu Business Line : A bias against agriculture?

Notwithstanding the Rs 25,000-crore package announced by the Prime Minister at the National Development Council meeting eve, the farm sector faces problems on various fronts — poor extension services, the threat of imports, the fertiliser subsidy issue and the Minimum Support Price. SHARAD JOSHI on the ailing agriculture sector.

TO KEEP SMILING, the farmer needs more than generous packages.

The setting for the third anniversary of the United Progressive Alliance regime at the Centre was quite dismal: Farmers committing suicide by the thousands in the Congress-ruled Maharashtra and Andhra Pradesh, the packages announced by the Prime Minister and the Chief Ministers proving entirely futile, the Congress party performing poorly in Assembly and local elections, Congress workers themselves complaining that the benefits of the 9 per cent growth rate were going to the `India shining' leaving the masses high and dry, and the dissenting voices in the UPA against the rising inflation rate, attributed mainly to a stagnating agriculture sector.

With two more years to go, the Prime Minister had to do something to dispel the general impression that his government was indifferent to the travails of the agriculture and the wails of the farmers.

A well-thought-out strategy for addressing the ills of agriculture would involve making a U-turn from Nehruvian policies and could have been announced after some kind of consultation with the Chief Ministers at the National Development Council (NDC) meeting on May 28. However, one could not be sure that the NDC would endorse a plan that would be acceptable to the UPA Government. It was also vital that the strategy should bear the UPA imprimatur.

The Biggest Package

Thus, the Prime Minister announced a massive package, worth Rs 25,000 crore, for agriculture on the eve of the NDC meeting. The media loved it — after all, it was the biggest package ever announced by any government for agriculture. Never mind how the funds would be used on area-specific and time-bound programmes in which the State governments would have a say (after all, agriculture is primarily a State responsibility). The focus would be on:

Giving special attention to rural infrastructure,

Accelerating the Bharat Nirman programme,

Making the National Rural Employment Guarantee Scheme a key instrument of improving the lot of the poor,

Improving credit delivery to the farmers, and

Ensuring remunerative prices for farmers.

But will all this make a qualitative difference?

Parallel with the grand announcement, appeared reports of differences of opinion between the Ministers of Agriculture and Finance. The former proposed sizeable hikes in the Minimum Support Prices (MSP), and there were reports that the Government was contemplating fixing the MSP 50 per cent above the cost of production, as suggested by the Chairman of the National Farmers Commission.

In fact, this recommendation, coming from a technocrat, was not taken too seriously by the experts in the field. However, the Agriculture Minister proposed increases as high as Rs 100 per quintal for pulses and oilseeds. The Finance Minister, reportedly, warned the Cabinet that if the proposals were accepted the responsibility for the increase in prices would have to be shouldered by the Minister for Agriculture. Eventually, the increase in the MSP was minimal.

Fertiliser Subsidy

After the May 29 National Development Council meeting that did not discuss how to use the Rs 25,000 crore, the Finance Minister is reported to have asked: "With fertiliser subsidy bill touching Rs 50,000 crore, where will the additional funds come from?"

In his Budget speech, the Finance Minister had expressed dissatisfaction with the existing systems of paying the fertiliser industry in the name of subsidy to farmers and mooted the idea of a committee to go into the matter and devise a system that would reach the benefit to the farmers directly.

A committee is looking at the issue. Indeed, the fertiliser subsidy should be scaled down substantially as there is nothing more bizarre than the current scheme of fixing prices and making good to the industry the difference between the unit cost of production and the price collected from farmers.

The system encourages poor management and inefficient production, leads to imbalance in the use of nitrogen, potassium and phosphate, and effectively keeps out competition.

The problems of the farm sector are not going to be tackled by these measures. The weakest link in the agricultural story is the extension services. The Finance Minister, in his last Budget speech, had said that the extension system had all but collapsed. He made a substantial allocation for energising the system. But no major development seems to have happened on this front.

Import Deluge

Farmers will also be under siege from imports. Production of edible oilseeds is an important aspect of any programme for agricultural growth. Recently, the Government announced its intention of reducing the Customs duty on a number of edible oilseeds. The consequence would be that domestic prices will drop on imports, and farmers will not be left with any incentive to produce more oilseeds.

Further, the Agriculture Minister had already declared his intention of importing about 5 million tonnes of wheat in the coming year. The response to the international tenders showed that international prices were much higher than the prices prevailing in the domestic market. The Minister has announced that fresh tenders will be called soon. The effect of such imports on the farmers can be easily imagined.

Benign Neglect?

India's farm sector appears to have three masters, all pulling in different directions. Dr Manmohan Singh, in his bureaucratic avatar had stood for the policies of the socialist epoch of depressing farm prices. The Agriculture Minister has a primary interest in the cooperative sector which is often contrary to the interests of the farmers.

The Finance Minister would seem to be prepared to take the position that Indian agriculture can stand "benign neglect". He is on record that for maintaining a high rate of growth for the economy as a whole, the rate of growth of agriculture is not the most important thing; there are such sectors as Information Technology and Services that have assumed even more importance.

Only, the farm sector's benign neglect comes with a bill of Rs 25,000 crore!

(The author, a member of the Rajya Sabha, is Founder of the Shetkari Sanghatana. He can be contacted at sharad.mah@nic.in)

More Stories on : Agriculture | Politics | Down to Earth

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Sell differently

A bias against agriculture?

Duty and Quota Free Market Access to LDCs — India, China must act now

Coalitions vs the two-party system

World textile market — India must weave new designs

`The opportunity goes beyond IT and services'

Something rotten in...

Sasan issue