Aug 1, 2013 – Farmers in India are now threatened on a scale without precedent in history. This is not because of apathy of any one political party but driven by the collective indifference of all parties. As population shifts from villages to urban areas or even as larger villages become census towns, the country’s capacity to neglect farmers is becoming unconscionable.
There is a clear unanimity on the objectives of the Food Security Ordinance (FSO) to make the right to food a fundamental one. The debate over who qualifies to be labelled poor or the number of recipients rages endlessly. The proposed annual expenditure on the FSO will be equal to the total budget allocation for the agriculture ministry in the last decade put together. The big and rather basic question is could not the government have stepped up the allocation
for agriculture instead?
Even the interest on the payout towards storing such quantities, upwards of Rs 10,000 crore a year, will be nearly 50 percent of the budget of the agriculture ministry, with the total expenditure possibly more than Rs 30,000 crore. This humungous sum, if invested more rationally in agriculture research, extension, infrastructure and accessibility of cheap credit to marginal and small farmers could make individual farmer families prosper and render India net sufficient in food. It would also lead to inclusive growth. The greater and more lucrative dividend from such investment would be the end of poverty and malnutrition, which have been so elusive.
At the recent book launch of Y. K. Alagh’s ‘The future of Indian Agriculture’, the union minister for rural development, Jairam Ramesh, shared his experiences at the Kalahandi district of Odisha – known for its starvation deaths – becoming the most productive rice district in the state and amongst the top 15 in India, courtesy investments in agriculture infrastructure and extension work. The same approach may well be very profitably extended to other places but curiously the government refuses to learn from its own experiences.
Major cereal crops are procured exclusively by the government at minimum support price (MSP) and cost the exchequer Rs 24 per kg for rice and Rs 20 per kg for wheat. These will be distributed at subsidized rates of as little as Rs 2 per kg. This leaves no scope of any market price realization or markets itself for the farmers produce. As a consequence, the farmers will be forced to be completely reliant on the government declared MSP. As things stand, farmers will suffer because the government will constantly be under pressure not to raise the MSP adequately to keep the budget deficit and cost of food from soaring.
Yet, savings and gains can be had in a variety of ways simply by promoting competition and proper investments. The Bharat Krishak Samaj has been advocating that the government break the monopoly of the Food Corporation of India (FCI) in food procurement and storage. The Competition Commission of India is now examining the idea. The Bharat Krishak Samaj initially proposes that private sector players be allowed to procure grain at MSP – and take care of its storage and transportation under the supervision of the government – from centres where the FCI is currently not active and at a cost that is 20 percent lower than that incurred by the FCI.
The MSP is like a sovereign guarantee by the government of India to the farmers whereby it commits itself to procuring any commodity should its price fall below the announced price. Yet, save for crops like wheat and rice in some parts of a few states, the government has failed miserably to fulfill its promises.
Even though farmers usually find the declared MSP insufficient to meet the cost of production, they would not care less about who procures their crop as long as they get paid the price guaranteed by the government. The number of mandis or agriculture market yards across India has not increased while the total crop production has more than doubled over 30 years. The upshot is procurement is just not happening in most places.
At the FCI, the highest paid loader received a staggering Rs 2,25,000 per month just to load a truck with grain sacks. The FCI pays its contract labour a salary that is seven times more than the rates prevailing in the market. Then again, the organized trucking industry raises rates of transport when transporting for the FCI, making the Indian exchequer pay several thousands of crore extra over the years. This preposterous loot is possible only because there exists a monopoly bolstered by an absence of accountability.
The Indian tax payer foots the cost of this inefficiency that gets added to the cost of farm subsidies. This then needs to be defended at international trade negotiations. As a farmer, I can say with absolute confidence, India is good at making policies that subsidize inefficiency and not farmers.
It is indisputable that the FSO will not be able to fulfil its objectives. If after five years of spending Rs 10,00,000 crore, India fails to deliver nutrition and prosperity to every rural family, will policymakers accept retribution and punishment or blame implementation and governance, as they are wont to, and then come up with new schemes to win the 2019 general elections?