According to Ashok Gulati, the system’s bias towards consumers needs to be dumped, as do the dole model and export bans.
New Delhi: Prioritising food subsidies over the price paid to farmers for their produce has stoked agrarian distress across India, eminent agricultural economist Ashok Gulati has said.
“All the resources are going towards food subsidies. Something costs you Rs 30 and you sell it at Rs 3,” Gulati said. “Food subsidies to the tune of Rs 1.70 lakh crore have been given. But investment in agriculture is only about Rs 3,000-Rs 4,000 crore.”
According to Gulati, the system’s bias towards consumers needs to be dumped, as also the dole model, export bans, the Essential Commodities Act for its frequent government intervention in price regulation, and the Agricultural Produce Marketing Committee Act which he said curtails the farmers’ freedom to sell.
He advocates fewer freebies and higher investment in agriculture research, irrigation and better infrastructure.
A sector in distress
Farm distress has been making headlines for some years now. The issue came to the fore again this week as thousands of farmers marched to Mumbai from Nashik with several demands, including a complete waiver of loans and electricity bills, the implementation of the Swaminathan Commission recommendations, including a minimum support price 50 per cent higher than the cost of production, and the transfer of forest land to the tribals tilling it for years.
The farmers called off the protest Monday after Maharashtra Chief Minister Devendra Fadnavis agreed to most demands.
The loan waiver & MSP question
Gulati said loan waivers were not the solution to resolving farmers’ woes.
“For the Congress or the Left, asking for only loan waivers will not solve the problem. That’s a short-term solution,” he added.
In the Union budget earlier this year, the NDA government declared the MSP would be increased by 1.5 times or 50 per cent. However, the increase would be computed on the ‘A2+FL’ model [which takes into account ‘paid-out expenses on seeds etc (A2) as well as cost of family labour (FL)], in use for 15 years. “A2+ FL is 38 per cent lower than C2 (comprehensive cost, which also accounts for rentals etc) and the whole debate is on C2. The farmers have already been getting the A2+FL cost for 15 years now,” Gulati said.
The government had also announced an increased target for agriculture credit for fiscal 2019 at Rs 11 lakh crore, but Gulati pointed out that 30-40 per cent of rural credit was leaking out of the system. Farmers avail of credit at an interest rate of 3-4 per cent and then make fixed deposits of the sum, he added.
Farmers’ income: To double or not to
One of the biggest promises of the NDA government has been the doubling of farmers’ income by 2022. However, Gulati said the rate of growth required to achieve this feat was beyond the government’s reach.
“You need a growth rate of 13 per cent for the next five years in agriculture. A 13 per cent growth is not being achieved in the economy, and we are unable to reach a growth rate of 2.5 per cent in agriculture, then how can farmers’ income be doubled by (2022)?” he asked. “It cannot be achieved till 2030.”