By Parth M.N.
The Modi government says it will double farmers’ real earnings by 2022, but so far, it has only delivered committees and reports.
In early 2016, Prime Minister Narendra Modi promised to double farmers’ income by 2022, and the government subsequently set up an inter-ministerial committee led by Ashok Dalwai, additional secretary in the agriculture ministry, to prepare a roadmap. About two weeks ago, the committee submitted its fourteenth and final report of recommendations, according to a news report.
Two and a half years into the six-year race to double farm income, the Dalwai committee has asked for the appointment of an “empowered committee” to monitor the progress towards the objective. The report, full of jargons, notes that it is “time to look at agriculture in India as an enterprise”, and suggests remedies like land pooling, contract farming, water management and so on. It also proposes a radical shift from supply-led farming to demand-led farming.
A move towards a demand-driven growing would require better communication between governments and farmers. Currently, it seems like a long shot because only 6 per cent to 8 per cent of farmers in India manage to sell their harvest to government agencies at the prescribed Minimum Support Prices (MSPs). Due to lack of procurement centres, the rest of the farmers deal with traders and middlemen, who buy the stock at market prices, which may or may not correspond with MSPs.
Even after the recent hike, farmers are selling their harvest well below the support prices. In Kota, for example, urad is being procured at Rs 2,000 per quintal against the MSP of Rs 5,600. In Mandsaur, maize farmers are selling their produce at a loss of Rs 400 per quintal.
A news website carried out an analysis of paddy and wheat production in the past five years because the two crops occupy almost 40 per cent of the total cropped area. Moreover, out of the total procurement by the government, over 30 per cent consists of rice and wheat. The article noted that the Compound Annual Growth Rate (CAGR) of productivity of wheat and paddy was minus 63 per cent and a measly 0.9 per cent, respectively. Negative productivity means wheat farmers need better returns “just to hold on to the same income levels”.
The real earnings, at average price, for paddy farmers have gone down since 2011-12, when they used to make Rs 460 per quintal. Currently, it is around Rs 370. The decline began during the UPA years and the situation has not improved under the Modi government. While the initial check on MSPs was aimed at curbing excess stock in the market, the subsequent MSP hikes just about covered inflation, even though the stock had become manageable. As a result, the real income has remained more or less stagnant for the past four years. In the case of wheat, the real income on the average price of Rs 700 per quintal in 2013-14 fell to Rs 610 the following year and it stood at Rs 660 as of 2016-17.
It’s important to remember that the government has promised to double the real income, not the nominal one, and therefore it has to factor in inflation and the increase in production costs. “Given that a large majority of farmers grow paddy and/or wheat and that nearly 40 per cent of cropped area is used for these crops, one has to conclude that increasing farmers’ income has not been high on the government’s agenda at least till this year,” the article concludes.
The seasons after demonetisation have been particularly hard for farmers. Diesel prices have increased by around 20 per cent in the past year and fertilisers such as DAP and zinc sulphate have also become expensive by 25 per cent and 60 per cent, respectively, pushing up production costs. But the hike in MSPs has hardly been proportionate.
The Dalwai committee, in one report, said the real income of farmers must grow at 10.4 per cent of CAGR to meet the 2022 target. When Ashok Gulati, Infosys chair professor for agriculture at the Indian Council for Research on International Economic Relations, calculated the CAGR under Modi, it came up to a paltry 2.5 per cent, nearly 8 per cent below what is required. At this rate, one wonders how exactly the setting up of various committees will help double farmers’ real income. The nominal income, however, doubles every six years irrespective of government intervention, according to the National Sample Survey Organisation.
Maybe Modi, if he is still in power in 2022, can hold another Mann Ki Baat with farmers who parrot the government’s lines, and repeat his earlier vague claim that farmers’ income has doubled. By then, there might not be many Punya Prasoon Vajpayees in the mainstream media to call out him out on it.
This article first appeared in the Mumbai Mirror.