The sidelining of agriculture

The assault on Indian agriculture is now global. While successive governments have deliberately ignored agriculture for almost two decades, the World Trade Organisation has now joined hands to destroy India’s food self-sufficiency built so assiduously over the years. At the heart of the standoff between the WTO and India is the push on dismantling the Minimum Support Price being paid to Indian farmers.  

What surprises me is that with a meager outlay every year, Indian farmers have been producing a bountiful harvest. I am sure if agriculture is provided with the much needed economic stimulus package, Indian farmers will be able to generously supply the country with food, fruits and vegetables. India can certainly emerge as one of the biggest exporters of agricultural commodities. And that is what the WTO or more importantly the United States, European Union, Australia and other developed countries are worried about. 

Public stockholding of foodgrains requires procurement from small farmers at an administered price called the procurement price. According to the WTO Agreement on Agriculture, the administered price cannot exceed the de-minimis level of 10 per cent of the total volume of production. India has already exceeded the limit in case of rice where the procurement price has shot up to 24 per cent from the base year 1986-88 that was agreed upon. 

It is therefore not the food subsidy bill that is actually on the radar, but the procurement price system that India administers to its small farmers which is now on the chopping block. If India is forced to limit the rice procurement price at 10 per cent of the total value of production, and similarly refrain from increasing wheat procurement price in the years to come, it will spell a death knell for agriculture already reeling under terrible distress.   

Now take a look at this. In 2013-14, farmers produced a record harvest of 264.4 million tonnes of foodgrains. Production of oilseeds reached a record high of 34.5 million tonnes, a jump of 4.8 per cent. Maize production increased by 8.52 per cent to reach a level of 24.2 million tonnes. Pulses production reached an all-time high of 19.6 million tonnes, an increase of 7.1 per cent over the previous year. Cotton production too touched a record high. 

With such record production, the nation remains indebted to the virile and hardworking farmers. But last year, in 2013-14, when farm production recorded a quantum jump, agriculture received Rs19,307 crore from the annual budget kitty, which is less than 1 per cent of the total budget outlay. This year, Finance Minister Arun Jaitley, provided only Rs22,652 crore to agriculture and cooperation departments. 

The neglect of agriculture has become more pronounced since economic liberalization was introduced in 1991. I recall then Finance Minister Manmohan Singh's famous budget speech when he showered all the bounties on industry and said that agriculture remained the mainstay of the economy. But since agriculture is a State subject, he left it to the State Governments to provide the much need impetus to farming. But what he forgot to say was that industry too is a State subject and should have been left to the State governments. The bias therefore was clearly visible. 

Although agriculture grew at an impressive rate of 4.1 per cent in the Eleventh Plan period (2007-8 and 2011-12), it received a dismal financial support of Rs1 lakh crore. For a sector which directly and indirectly employs 60 crore people, Rs1 lakh crore outlay for five years is simply peanuts. In the 12 Plan period (2012-13 to 2017-18) agriculture is projected to receive Rs1.5 lakh crore. Compare this with the Rs5.73 lakh crore tax exemptions showered on the industry in 2014-15 alone. It’s therefore a matter of priorities. In fact, as I have been saying for long, farmers have disappeared from the economic screen.

Despite such low budgetary allocations for agriculture and knowing that the public sector investments have been drastically falling in the rural areas, there is no visible intention of resurrecting the farm sector reeling under a terrible economic distress. 

As I said earlier, agriculture employs 60 crore people. Nearly 82.2 per cent of which are small and marginal farmers. With a meager landholding, and virtually no financial support, this majority population has somehow managed to survive. Studies show that nearly 60 per cent of farmers themselves go to bed hungry. With agriculture deliberately being turned economically unviable, more than 42 per cent farmers want to quit farming if given a choice. Mainline economists are keen to finish agriculture and move the farming population into the urban centres. But considering that temples are the biggest employer in the country, followed by security guards and the lift boys, I wonder if that is what constitutes economic growth. Nevertheless since the World Bank has prescribed rural-urban migration as the ultimate indicator of economic growth, Indian economists have been parroting the same prescription. 

Not only the WTO, rising food inflation comes in handy for the free marketers to up the ante against Minimum Support Price (MSP) being paid to farmers. APMC mandis are to be dismantled. Farmers are being pushed to accept the market doctrine, which means that distress sales will now become a norm. In Bihar, which has no APMC since 2007, markets have failed to infuse any confidence by way of economic prosperity. But that’s what the markets like. They should be able to source cheaper farm commodities thereby adding on to their profits. What happens to farmers has never been their concern. Nor will it ever be. 

It is said that the hard stand taken by India at the WTO is because Prime Minister Narendra Modi is firm in his belief that agriculture cannot be sacrificed at the altar of international trade. At the same time, he has repeatedly emphasized during his election campaign on the dire need to make farming economically viable. Taking development to the villages has been the hallmark of his political thinking. A beginning can be made by revitalizing agriculture in a manner that it brings back the smiles on the faces of farmers. But before he does that, he will have to insulate Indian agriculture from the vagaries of global markets. 

The author is a food and agriculture policy analyst