Expect a Budget for angry Bharat

The year 2017 was roiled by rural discontent. After two consecutive drought years (2014-15 and 2015-16), when agriculture growth plummeted ( see table ), the countryside was awash with hope after a good monsoon in 2016-17.

However, record foodgrain output (272 million tonnes) did not translate into gains for the farmer as market prices fell below support price levels across a range of commodities, arguably also due to demonetisation. Horticulture crops too were hit by volatility.

This led to protests across central India. It also manifested itself in the erosion of the Bharatiya Janata Party’s support base in rural Gujarat. With BJP-ruled Madhya Pradesh, Rajasthan going to polls this year -- States that have seen rural unrest in 2017, besides Maharashtra -- a Budget to placate the sullen rural populace is a distinct likelihood. Unlike in Gujarat, which has an urban-industrial base to absorb the rural shock to an extent, Madhya Pradesh and Rajasthan are predominantly rural.

“Farmers are forced to sell maize for ₹600 per quintal and soyabean for ₹2,200 per quintal, whereas the minimum support price [MSP] is ₹1,400 per quintal and ₹3,050 per quintal, respectively. We want the government to allocate sufficient funds so that the MSP for all farm commodities could be increased to one and a half times of the actual cost,” says Sunilam, former MLA from Madhya Pradesh and a farmers’ leader.

Says Yudhvir Singh of Bharatiya Kisan Union: “Urad farmers in certain parts of Uttar Pradesh and Madhya Pradesh are getting only ₹ 2,600-2,700 per quintal whereas the fixed MSP is ₹5,700 per quintal.”

Echoing the rural mood, Sunilam says: “The government should include all farm produce, including forest produce, under MSP and ensure that farmers get it. We want the government to allocate sufficient funds so that the MSP is increased to one-and-a-half times to the actual cost.”

Farmers’ organisations have been demanding a loan waiver for agriculture workers, small and middle farmers, MSP that is 50 per cent higher than input costs, higher allocation for MGNREGA and effective crop insurance.

Says Singh: “Every Budget increases credit available to farmers by ₹1,000-2,000 crore (the current annual target is ₹11-12 lakh crore). The more you increase the loan availability, the more the farmers commit suicides. The government should increase the credit availability only when farmers have an income security.” “Farmers in rain-fed areas – who constitute 60 per cent of Indian farmers -- benefit very little from fertiliser or power subsidies. It’s time the Budget did something for rainfed farmers,” he says. Driving home the point, farm policy specialist Devinder Sharma says: “Each farm family must get a monthly income of ₹18,000 matching the minimum basic salary of the lowest government employee.”

Given this irate mood, the Budget is likely to consider higher outlays for market intervention schemes, MGNREGA, higher crop insurance outlay (at present ₹9,000 crore), price deficiency payments (already in force in Madhya Pradesh to compensate farmers for the difference between market price and MSP) and spread of e-NAM or National Agriculture Markets ( see box, ‘Pain points’ ).

However, Chairman, Karnataka Agriculture Prices Commission, TN Prakash Kammaradi observes that the BJP, keen not to antagonise its traditional urban base, has been more focussed on food inflation than in ensuring adequate prices to the farmer ( see box ‘What the experts say’ ).

Rural-urban cocktail

A combination of price pressures, and low levels of MGNREGA work and industrial jobs (after GST and demonetisation), has sharpened rural angst – a fact the Budget may take into account, with eight Assembly elections due in 2018. MGNREGA jobs and incomes have suffered, coinciding with a medium-term rural slump ( see graphics on MGNREGA and farm growth ).

Himanshu, Associate Professor, JNU elaborates: “Every year five million people are leaving agriculture, looking for opportunities elsewhere. In other words, employment needs to be found for not just those who newly join the workforce, but also for those who leave farm sector looking for opportunities in non-agricultural sector, mostly in the urban areas. So, the employment opportunities need to be created is much more than earlier times, say the early 2000s. If urban areas fail to do so, it creates an unrest in the rural economy.”

Richa Gupta, Senior Economist, Deloitte, explains: “It is expected that in Budget 2018-19 there will be a further increase in allocation to both MGNREGA and as well as upward revision to MSPs and or increased coverage of MSPs.”

Income security

Hence, the challenge for the Budget is to push both farm and non-farm jobs.

“Industries have a high capacity to absorb the rural workforce. But that is limited to the skilled workforce.

However, due to the cheaper alternative of migrant workers, industries prefer non-Gujarati migrant workers, hence, the prospects for local rural workforce gets restricted,” observed an office-bearer with Ankleshwar Industries Association.

“My two sons will explore work somewhere nearby in building-construction, but not prefer rely on farming,” said Vitthalbhai Boghani, a farmer from Lodhika taluka of Rajkot district, adding that being closer to their villages will help the youth to contribute in farming during sowing seasons. But Jitta Bal Reddy, a farmer with five acres near Bhuvanagiri town in Telangana, is unhappy with the way MGNREGA is implemented.“What you need is value-added business ventures in rural areas to create job opportunities that can give people livelihoods over the year, and not just 100 days as promised in MGNREGA,” he points out. Ironically, while people need jobs there are not many available for tilling and harvesting.

“This looks strange but true. Wages of labour shot up to ₹600 for a day’s work from ₹350 two years ago,” he says.

“Processing units to produce value-added products from crops such as maize, soya, oilseeds and chillies would generate jobs on a much larger scale rather than giving them just a few days of labour work,” he feels.

Farmers’ leader and general secretary of Khedut Samaj Gujarat, Sagar Rabari, stated that government investment in farm infrastructure, along with adequate commodity price mechanism, is called for. He says the rural workforce now prefers to work near their villages rather than expose itself to industrial uncertainties.

The Economic Survey 2015-16 places the problem in a nutshell: “According to NSS data, the average annual income of the median farmer (of each State by net income) 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.”

Against this backdrop of crisis in incomes for half of India’s population, the Budget has its task cut out, more so as the political takes centrestage.

With inputs from KV Kurmanath, KR Srivats, Bindu Menon, Ronendra Singh

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