THE FARM REALITY CHECK

 CONTEXT:

1. Seven years of low crude prices, five years of above normal monsoon topped by good agriculture production, and everything looked positive for a strong economic performance.
2. But, the promises made in 2017 of doubling farmers’ income by 2022 for instance, seemed hollow.
3. In Union Budget 2021-22, the two departments—Department of Agriculture, Cooperation and Farmers’ Welfare and Department of Agricultural Research and Education— under the Agriculture Ministry have been allocated a total amount of Rs 1,31,531.19 crore, lower than the current financial year’s budget estimates (BE) of Rs 1,42,762.35 crore, but a little higher than RE of Rs 1,24,520.3 crore.

 

THREE TO FIVE YEAR VISION OF BUDGET:

1. The government validating its commitment to MSP procurement, which has expanded across regions and more farmers are benefitting.
2. Allowing the APMCs to tap into the Agriculture Infrastructure Fund is also commendable as the money borrowed to develop mandis will now be eligible for interest subvention.
3. Extending the Operation Green scheme to all perishables is noteworthy and so is starting the Kisan Rail. 

 

ISSUES IN IMPLEMENTATION:

1. Policies in India and their implementation lack an active interface between those who frame them and the supposed beneficiaries.
2. This is also evident in the way the contentious farm laws were drafted and enacted.
3. In the words of economists Anne Case and Angus Deaton, “The government needs to correct the process, not try to fix the outcomes”.

 

AGRICULTURE IN BUDGET:

1. A budget is more than an allocation-making exercise — the timing of an announcement is equally important.
2. Increasing import duties on cotton when farmers have sold their crop to the Cotton Corporation of India, traders and textile companies.
3. Farmers rightly feel the terms of trade are steadily getting skewed against them. For example, since 1973, the price of gold has increased more than 169 times, the price of diesel 91 times, but the price of wheat has increased merely by 25 times. This dynamic does not appear to be self-correcting.
4. The agriculture insurance pipeline that drains precious government resources in the name of the farmer should have been turned off.
5. For example, the government owned Agriculture Insurance Company of India has incurred losses of Rs 10,000-crore, while the private insurance sector raked in profits of approximately Rs 50,000 crore. 
6. Many states have stopped participating in the programme — Bihar, West Bengal and Jharkhand have stopped, while Maharashtra and Madhya Pradesh are also about to dump the scheme.
7. In the 18 states where the programme is working, 20 districts account for about 80 per cent of the losses.
8. Investment in human capital, science and research remains the Achilles heel of Indian policy.
9. The budget allocation for agriculture research and education has constantly declined from 0.31 per cent of the gross value added of agriculture and allied activities in 2011-12 to 0.24 per cent now.
10. In India, most of the agriculture related works fall under the preview of the states or require proportionate funding from them.
11. Almost invariably, there is failure in delivery as the states are financially strained to invest their share.
12. The central government also holds the states to ransom by withholding their share of GST funds. The Central government has, in fact, often transferred revenue from the common shared pool to the central pool by imposing a cess, as in the case of the agriculture infrastructure fund in this budget.

 

WAY AHEAD:

1. Only a holistic approach developed in conjunction with practitioners for better utilisation of resources and redirecting them appropriately can work.
2. It has been always advocated a farmers’ commission to assess government programmes pertaining to rural India, because it would be futile to expect the departments to self-assess.
3. The unintended consequences of the diesel tax add to food inflation, compress consumer demand and reduce their appetite for nutritious food.
4. Taxes on fuel should be reduced as this leads to a vicious cycle where the government is compelled to suppress farm gate prices which adds to farmers’ distress and leads to protests.
5. To realise India’s growth story and to be in the big league with the developed nations, India needs to match their Research and Education allocations of 2.5 per cent. 

 

CONCLUSION:

1. In the second quarter of this financial year, glimpses of the V-shaped recovery were, no doubt, accurate depictions of the moment, but they do not indicate what lies ahead.
2. Rising crude and international agriculture commodity prices along with a high probability of a failed monsoon loom over the horizon and will adversely impact government finances.
3. Protesting farmers have also raised the issue of MSP and APMCs among several points of concern during talks with the government.