New Delhi: The Narendra Modi government’s agricultural reforms — be it the PM-KISAN scheme for direct cash transfers or the three farm Bills that are currently the topic of controversy — are based on the recommendations of a committee headed by veteran BJP leader and former Himachal Pradesh chief minister Shanta Kumar.
Many farmers who have hit the streets to protest have said the bills will end the minimum support price (MSP) regime and impact their incomes. But Shanta Kumar told ThePrint in an interview that MSP only helps 6 per cent of farmers who are “elite”, and it’s these elite farmers, propped up by opposition parties, who have been protesting, not small farmers.
Kumar also said reforms to the Agricultural Produce Marketing Committees (APMCs) and purchase of farmers’ produce were long overdue, but advised the Narendra Modi government to do more on his committee’s recommendations to make agriculture viable — such as direct transfer of fertiliser subsidy to farmers, and restructuring the Food Corporation of India.
The three farm bills that have sparked controversy were originally brought in by the Modi government as ordinances. They have now been passed by both houses of Parliament, though the passage of two of them — the one that reforms APMCs/mandis and the one on contract farming — by voice vote in the Rajya Sabha Sunday drew massive protests from opposition members, eight of whom were suspended for their aggressive behaviour towards Deputy Chairman Harivansh.
Soon after coming to power in 2014, PM Modi had set up the committee under Kumar to restructure the FCI and give inputs for agriculture reform. The committee, which submitted its report in 2015, recommended several bold reforms about agriculture policy, rationalising subsidy on food and fertilisers, and restructuring the FCI. The report was mentioned by several MPs during the debate on the farm bills in both Houses of Parliament.
It was on the Shanta Kumar committee’s recommendation that the government launched the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme before the 2019 elections, giving cash incentives to farmers. Other recommendations the government implemented were the launch of a crop insurance scheme, soil testing, and discouraging the bonus on MSP.
The 86-year-old Shanta Kumar, who now lives in Palampur in his home state of Himachal Pradesh, said the current farmer protests were confined to only two points — MSP and the dispute resolution mechanism under the contract farming legislation, which entails the farmers taking up the matter with local sub-divisional magistrates.
“On MSP, the government has clarified that it will stay, but the question we (the committee) have raised is that MSP only relates to 6 per cent of big, elite farmers who sell their crop in mandis. About 86 per cent are small farmers who don’t go to the mandi to sell their produce, and the bill will give them strength to sell outside the mandi at better prices,” Shanta Kumar said.
“Those who are protesting are big farmers, mandi operators or arhatiyas (middlemen) who get commission. But think about small farmers who are outside the mandi system, who will be strengthened through this bill. It has been pending for a long time,” the BJP leader said.
“We have recommended giving incentives directly to farmers. Across the world, agriculture is not highly remunerative for small farmers, and many countries give incentive to farmers through direct benefit. The prime minister has taken the right decision to give incentives to farmers,” he continued.
“This is only profession where one invests but does not get premium on investments, which needs to change. But these are only few recommendations the government has accepted — there is a lot that needs to be done to revolutionise Indian agriculture.”
FCI needs to be restructured
Speaking about another one of his committee’s major recommendations, the restructuring of the Food Corporation of India, Kumar said there was a lot of corruption and leakage that needed to be fixed.
“If you look at the 2011 NSSO report, 40 to 60 per cent of PDS grains either rotted or were siphoned off to the black market. We have recommended outsourcing procurement to state governments where the system is strong, like in Punjab, Haryana, Madhya Pradesh and Chhattisgarh. The FCI should procure only in those states where the system is weak, such as Uttar Pradesh, Bihar, West Bengal and Assam,” Kumar said.
“We have recommended stopping the practice of giving bonuses on MSP for political reasons, which the government has accepted, but a lot needs to be done to stop leakage,” he said. “FCI procures grain worth one rupee for three rupees due to various factors, which inflates the government subsidy bill. FCI’s open-ended purchases have led to excess grain stock, which normally rots. There is need to reduce excess stock.”
In the case of fertiliser subsidies, the Shanta Kumar committee has recommended deregulation of prices and payment of subsidy to farmers through direct benefit transfers (DBT). The subsidy is currently given to fertiliser producers, but Kumar said the government needs to give incentive directly to farmers to make agriculture viable.
“The government has put in place a point-of-sale system, but it is not totally effective. Now, the government has a large database of PM-KISAN beneficiaries, which was one of the factors cited by officials for their inability to provide direct subsidies. Now that the government has the data, it can be rolled out,” the former Himachal CM said.
Rationalising food security act
Kumar said the farm bills will transform agriculture, but the next target should be to rationalise beneficiaries of the National Food Security Act. He said removing non-poor beneficiaries and restricting the scheme to only below-poverty-line people will save the government Rs 30,000-40,000 crore in subsidies.
However, due to the politically sensitive nature of this recommendation, the food and consumer affairs ministry had rejected it.
“There is need to gradually introduce cash transfers in PDS, starting with 1 million people. This will save resources, plug leakages and empower consumers. This can save the Government of India Rs 30,000-40,000 crore annually. But this is a political decision and no government wants to risk its constituency,” he said.