What the farmer is owed -Ashok Gulati

-The Indian Express

Implicitly taxed through restrictive marketing and trade policies, farmers need a stable income policy.

The Narendra Modi government is entering its proverbial “last 10 overs”. All the stops are being pulled to win over targeted segments of society that could potentially bring the BJP/NDA back to office.

One important segment, perhaps the largest one, is that of farmers. The attempt to woo them by announcing higher minimum support prices (MSPs) based on 50 per cent margin over paid out costs plus imputed value of family labour (cost A2+FL) has fallen flat on its face as market prices of most of those commodities remain 20 to 30 per cent below MSPs. Procurement by government agencies has been limited, as they already have overflowing stocks that they cannot offload without incurring massive losses. The meagre budgetary provisions under the PM’s AASHA scheme to lift market prices have, therefore, failed to erase farmers’ nirasha (gloom). In any case, as highlighted in my last article (‘An answer to rural distress’, IE, January 7), the MSP policy cannot reach more than 20 per cent of peasantry even with augmented procurement of pulses and oilseeds, and, therefore, cannot be a solution to farmers’ distress.

The loan waiver, which the Congress president is promising, will also not benefit more than 30 per cent of the peasantry, who have access to institutional credit. Already, the bill from loan waivers announced by some state governments is touching about Rs 1.8 trillion (lakh crore). The policy of zero-interest on loans too is riddled with loopholes, leading to massive diversion of funds out of agriculture.

So, now, many state governments are trying to innovate with new ways of reaching the largest number of farmers. Telangana’s Rythu Bandhu scheme, which gives Rs 4,000/acre to land-owning farmers for two seasons in a year, is costing the state exchequer roughly Rs 12,000 crore per annum. It appears to have reached more than 90 per cent farmers, and yielded political dividends. Many experts have criticised it, saying that it is pro-big farmers and neglects tenants.

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The Indian Express, 21 January, 2019, https://indianexpress.com/article/opinion/columns/farm-distress-elections-farm-loans-msp-5547547/

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