Opinion

‘Atmanirbhar’ does not compensate farmers for losses incurred during lockdown

Ramandeep Singh Mann | Updated on June 11, 2020 Published on June 11, 2020

Rather than address the immediate need of putting money in their hands, the package is more reforms oriented with possible long-term benefits

Prime Minister Modi had announced that India’s combined economic package would be worth ₹20 lakh crore or 10 per cent of GDP, and that this package will make India self-reliant. He also stated that the announcements made by the government after the lockdown, and decisions of the RBI and the Finance Minister will come under ‘Atmanirbhar Bharat Abhiyan’.

Breaking up the announcements for the farm sector, on March 26, the Finance Minister announced that 8.7 crore farmers out of the 14.60 crore land-holding farmers will receive the first instalment of ₹2,000 through the PM KISAN scheme in the first week of April, but the fact is that farmers were already receiving ₹6,000 as annual support income under this PM KISAN, and the first instalment payment of ₹2,000 for 2020-21 was anyway due in April.

So, there was no extra money being passed to the farmers, the farmers were getting what was allocated in the Budget under PM KISAN. Allowing the farmers to avail themselves of the 3 per cent concession on interest rate on crop loans even if they fail to repay loans till May 31, was effected by the government, which did help the farmers in the lockdown.

Agri Infrastructure Fund

The Finance Minister announced the setting up of a ₹1 lakh crore Agri Infrastructure Fund for farm-gate infra, a welcome step, as this could ramp up the “farm to fork” chain; a scheme for formalisation of micro-food enterprises, with an outlay of ₹10,000 crore, aiming to help nearly two lakh unorganised micro-food enterprises achieve technical upgradation in line with FSSAI standards and to also provide them with marketing and branding support; and a ₹500 crore scheme to encourage bee-keeping, and ₹4,000 crore for promotion of herbal cultivation. These are welcome steps, which, if implemented, will effect a positive change in the future.

A Credit Suisse report stated that, despite a bumper harvest in the rabi season, the arrival of fruit and vegetables in the country’s wholesale markets has fallen by 50-95 per cent, as after the lockdown, many of the 7,000 wholesale markets were shut. Factoring in the fact that in 2019-20, Indian farmers had sold 284 million tonnes of horticultural produce amounting to ₹5 lakh crore, and assuming only a 50 per cent fall in market arrivals over a month of lockdown, it can be safely inferred that vegetable farmers must have lost around ₹20,000 crore.

On the basis of inputs from sources in the trade and farmer communities, Financial Express also reported a loss of at least ₹20,000 crore to the horticulture farmers; it further reported that if the lockdown turns out to be a three-month affair, the farmers’ losses could swell to ₹50,000 crore, if not more.

To offset these losses, the Finance Minister announced the extension of ‘Operation Green’ —a scheme for integrated development of tomato, onion and potato (TOP) value chain, with an allocation of ₹500 crore — to all fruits and vegetables. This will be a pilot project and will have a 50 per cent subsidy on transportation from surplus to deficient markets and 50 per cent subsidy on storage, including cold storage. Though it is a good step, the million dollar question is how will this help the horticulture farmers who suffered big losses estimated between ₹20,000 crore and ₹50,000 crore?

Dairy sector

The dairy sector has also suffered heavy losses. With the lockdown came also the slowdown in demand, which resulted in the cooperatives and the private companies cutting back on milk collection. Conservative estimates put the decline in milk sales at around 30 per cent. This demand dip hit the farm incomes of around 7.5 crore dairy farmers.

The Finance Minister announced the setting up of an Animal Husbandry Infrastructure Development Fund worth ₹15,000 crore to support private investment in dairy processing, value addition and cattle feed infrastructure. This is again a welcome step, as this investment (if it happens) will increase the dairy and milk processing capacity of the dairy sector.

But it again leaves those dairy farmers in a bind, whose income was dented on account of the lockdown. This fund will be set up in the near future, and has no bearing upon the losses incurred by the dairy farmers during the Covid crisis. The FM also announced a new scheme wherein interest subvention of 2 per cent per annum will be provided to dairy cooperatives in 2020-21, and an additional interest subvention of 2 per cent per annum will be provided on prompt payment of loans. This measure will help the cooperatives who had converted the surplus milk procured from the farmers, to skimmed milk powder and white butter.

Poultry and fisheries

The poultry sector’s losses have been pegged between ₹13,000 crore and ₹22,500 crore. Forget helping the 10 lakh strong workforce in the poultry sector, the government did not even acknowledge the losses suffered by the poultry sector.

On May 11, 2019, the Union Cabinet cleared a new initiative to control Foot and Mouth Disease (FMD) and Brucellosis to support the livestock rearing farmers, the total outlay under this scheme was ₹13,343 crores till 2024, but strangely the Finance Minister again rehashed this scheme under ‘Atmanirbhar Bharat Abhiyan’.

On May 14, Finance Minister announced ₹2 lakh crore concessional farm loans through Kisan Credit Card to be provided to 2.5 crore farmers, including fishermen and animal husbandry farmers. The FM also announced ₹30,000 crore Additional Emergency Working Capital Funding through NABARD for refinance support for crop loan requirement of rural co-operative banks and regional rural banks. She also informed the nation that 25 lakh new Kisan Credit Cards have been issued that will provide ₹25,000 crore loan amount to the marginal farmers.

The fact is that in the Budget Speech, the Finance Minister had stated clearly that “the NABARD re-finance scheme will be further expanded. Agriculture credit target for the year 2020-21 has been set at ₹15 lakh crore and all eligible beneficiaries of PM-KISAN will be covered under the KCC scheme,” so by that logic these announcements are not new, and steps must have been under way to implement the points mentioned by the FM well before the corona epidemic hit us.

I again want to reiterate that additional farm loans and the ₹30,000 crore additional funding for rural co-operative banks and RRBs do not make up for the losses suffered by the farmers, especially the horticulture farmers, dairy farmers, poultry farmers, and the flori-culture farmers.

The Finance Minister also allocated ₹20,000 crore under Pradhan Mantri Matsya Sampada Yojana, with an aim to address critical infrastructure gaps for the fisheries sector, and to double the exports to ₹1 lakh crore. This was what exactly she referred in her Budget 2020-21 speech, where she stated that “By 2022-23, I propose raising fish production to 200 lakh tonnes. Our government will involve youth in fishery extension through 3,477 SagarMitras and 500 Fish Farmer Producer Organisations. We hope to raise fishery exports to ₹1 lakh crore by 2024-25.”

No one is denying that this is not a good initiative, but what is troubling is that the FM has, time and again, rehashed the old announcements to inflate the numbers in the ‘Atmanirbhar Bharat Abhiyan’ package, and all this while she did not address the burning question of putting money in the hands of those whose income was severely hit after the lockdown.

Central Institute of Fisheries Technology estimates the loss to marine fisheries sector to be about ₹6,838 crore; it has put ₹6,008 crore loss to the mechanised sector and ₹830 crore for the non-mechanised sector. It is to be noted that the loss incurred in fish processing, exports and other nodes of the value chain are not considered. Despite such huge losses, there was no talk of any kind of compensation.

Marketing of produce

Now let us talk about the promises made regarding agri produce marketing. The FM promised to amend the Essential Commodities Act, and to deregulate agricultural foodstuffs including all cereals, pulses, oilseeds, onions and potatoes. She also stated that stock limits will only be imposed on these only under “very exceptional circumstances” like natural calamities and famines, that can effect a “surge in prices”.

Well, this move has been long in the pipeline, and the only red flag is that the new set-up will require robust checks and balances to address the hoarding and profiteering angle. It will also be interesting to see if the government will stop using food prices as a tool to rein in inflation, as has been the norm in the past.

The FM also announced the willingness of the governemnt to introduce a central law for a seamless and streamlined inter-State agri-commodity trade, which will remove any conditions on the farmers to sell their produce to a fixed set of traders/market, and enable them to sell their produce to anyone they wish to.

If both of the moves are conjoined, then it can be safely said that farmers will be free to sell their produce, and the traders/processors will be able to buy, store, and transport the produce across State lines without any hassles. How much will these move help the farmers vis-a-vis crop realisations has to be seen in the light of Maharashtra deregulating vegetables and fruits from the purview of the APMCs, which quite frankly is not encouraging. Another examples is Bihar, where repealing the APMC has not resulted in higher price realisations for the farmers.

So, everything will not be made hunky dory in one strike, but yes, if the intent is there, then in due course a mechanism can be perfected wherein we can have transparent markets, guaranteeing a fair share of what the consumer pays in the farmers’ pocket.

The FM also stated that the government will create a legal framework to enable farmers to engage with processors, aggregators, large retailers in a fair and transparent manner. This, without any doubt, is a step to facilitate contract farming, which does not necessarily ensure that farmers will get Minimum Support Prices or fair prices for vegetables/fruits. In that case, how can this move be called a reform?

States’ domain

The other burning question is: How will the Centre effect changes in the agri marketing set-up when this comes under States’ domain? Will the Centre bank on Article 301, which talks about the freedom of trade, commerce, and intercourse throughout the country, along with entries in the Seventh Schedule? These give powers to the Centre to regulate all inter- and intra-State trade and commerce in “foodstuffs”, which can be used to create an integrated national market by removing restrictions placed by APMC laws, says Harish Damodran in Indian Express.

The FM has said that the above measures will also be complemented by setting up a framework for electronic trading. It would be prudent for the government to learn from the shortcomings of the current e-NAM system — that is, if the government again fails to ensure a robust assaying, grading, storing infra, and fails to set up a “effective” dispute resolution mechanism, then this endeavour will also reap any dividends.

Last but not the least, there are apprehensions that the government will try to break the APMC markets, to run away from the MSP programme. I wish that government does not have any such motive on its agenda, because if that is the case, then it will open a new can of worms, which will be detrimental for all the parties involved.

The writer is a commentator on farm sector issues

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Published on June 11, 2020
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