Opinion

Will the new scheme give Aasha to farmers?

Devinder Sharma | Updated on September 16, 2018 Published on September 16, 2018

Farmers woes   -  THE HINDU

Hiking MSPs is not enough. The govt must work out a mechanism to provide income transfers to farmers

The launch of a new umbrella scheme — Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) — last week, is a response to the growing farmers’ anger over the last few years. Farmers have been demanding an assured income to emerge out of the continuing agrarian crisis. With open market prices often prevailing at lower levels than even the cost of production, farm indebtedness had multiplied.

For several years now, farm protests have increased manifold. According to the National Crime Records Bureau (NCRB), farmer agitations had almost doubled in two years, to 4,837 protests in 2016, up from 2,683 a year earlier. From 687 protests in 2014, these protests have multiplied seven times in a period of three years, a clear reflection of the growing farmers’ anger.

The reasons are not far to seek. The NITI Aayog has in a study shown that the real farm incomes have increased by less than half a per cent every year, 0.44 per cent to be exact, between 2011-12 and 2015-16. The Economic Survey 2015-16 observes: “According to NSS data, the average annual income of the median farmer net of production costs from cultivation is less than ₹20,000 in 17 States. This includes produce that farmers did not sell (presumably used for self-consumption) valued at local market prices.”

Inflation fixation

It is not that these farmers are unproductive. Farm prices are suppressed to ensure that food inflation remains in control as well as to provide cheap raw material for industry. Take the case of Punjab, the food bowl. Despite having among the highest productivity in the world as far as cereal crops are concerned, it has turned into a hotbed of farmer suicides. Farmers are therefore victims of public policy.

A higher MSP, if actually implemented, will play a role in alleviating farm distress, but more steps are needed. Although the government has tried to assuage farmers’ anger by promising its version of ‘MSP plus 50 per cent profit’ (recommended by the MS Swaminathan committee) farmers’ groups are not satisfied, and rightly so. The cost calculated here does not include land rentals. Therefore, against an MSP of ₹1,750 per quintal for paddy that the government has announced under the new formula, the support price should be ₹2,340 per quintal. Farmers are therefore losing ₹590 on every quintal of paddy sold. For maize, the loss is ₹540 per quintal.

The moot issue is that the enhanced price would benefit only a small percentage of the farming community. As per the Shanta Kumar committee, only 6 per cent farmers benefit from procurement prices. What about the remaining 94 per cent who do not have enough marketable surpluses or are far removed from procurement operations?

Redesigning CACP

Even under the newly rolled out PM-AASHA scheme, the government has made it clear that only 25 per cent of the marketable surplus will be procured. The better option is to redesign the existing Commission for Agricultural Costs and Prices (CACP). It should be renamed ‘Commission for Farmers Income and Welfare’ with a mandate to work out the minimum living income for a farming family, and to spell out means to provide it.

If we take the minimum income that a farmer should receive to be equivalent to the salary of a government employee at the lowest level, at ₹18,000 per month, the Commission must work out the average that a farmer earns in a region, and ensure that the deficit be paid by way of income transfer. The Telangana model, where a fixed amount of ₹8,000 per acre per annum is paid to every land-owning farmer, is a form of income transfer, and this should be clubbed by the Commission to provide income support to farmers.

There is a need for a course correction in the way MSP is provided. The government should continue to procure wheat from farmers at MSP, which will eventually determine the retail price. But to ensure that farmers are given 50 per cent profit over ‘C2’ (which includes land rentals), it should directly transfer the profit over the MSP to their Jan Dhan accounts. For example, in case of paddy the government should procure at ₹1,750 per quintal from farmers, and transfer the remaining ₹590 per quintal directly into their bank accounts. Income support can be provided by clubbing existing schemes with new approaches.

The writer is a commentator on Indian agriculture

Published on September 16, 2018
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