The Finance Minister Arun Jaitely in his Budget speech (2016-17) expressed a nation’s grateful thanks to our farmers for having delivered food security to the country. Another Union Minister, the then Agriculture Minister C Subramanian openly praised farmers for having enabled the Green Revolution in the late 1960’s and for having staved off starvation for millions, especially after the two successive droughts of 1965 and 1966 and the wasteful war of 1965 when Pakistan sought to win Kashmir by force after our Chinese debacle in 1963. The PL-480 food imports from the US kept us from starvation and then CIMMYT/IRRI provided us dwarf high-yielding varieties of wheat and paddy, which needed higher doses of fertilisers, pesticides and much water but improved food production dramatically. Credit availability had to be increased and bank nationalisation was the easiest way out but one must give due credit to the ability of the farmers to master the nascent technologies and improve food availability for the masses. Hailed as the Father of the Green Revolution, the Agriculture Minister gave all credit to the farmers who took upon themselves the risk of adopting new technologies using new seeds and new techniques without any de-risking mechanisms or support from the government except for the sustained campaign for training, field-trails and supply of HYV seeds.
Between 1967-2016, dramatic changes have taken place in the agriculture sector. The tremendous government support and drive between 1967-1985, soon dwindled to a period of muted support for the sector between 1985 to 1992, when self-sufficiency had already been achieved. Thereafter, from 1992 to 2004, there was a period of benign neglect followed by a major push for agriculture with the doubling of agriculture credit in three years in 2004 (actually achieved in 2 years) with huge amounts of credit earmarked for agriculture in the Union Budget, thereafter. But in 1990‑1991, the first debt write-off of all rural credit up to Rs 10,000; was announced and again repeated in 2008 for electoral gains, with debt write-offs up to Rs 300,000 for agricultural dues of farmers. Both write-offs were politically motivated but led to electoral victories for the Congress. But the entire banking system took about 10-12 years to recover from the shocks of these debt write offs.
Game Changers
One very important step taken was the introduction of Kisan Credit Card in 1998 by the then Finance Minister Yashwant Sinha, to provide affordable and timely credit to farmers. It was merely a passbook, which gave continuity of crop loans for 3 years and saved farmers from the anxiety and uncertainty of securing funds every year. Today, the KCC is a chip-based card with five-year tenure (over the entire crop cycle of 2 bad years, 2 normal years and 1 excellent year). This single move empowered the farmers like never before and though it benefitted the big farmers, it is actually available for all farmers who have proper documentation of land records in their names and a credible history of stable banking relationships.
The UPA government also took another step, ostensibly to help farmers access credit on affordable terms and along with increasing directed credit volumes for agriculture every year, they started subsidising banks (through RBI/NABARD), to provide credit at the rate of 7 per cent interest to farmers from 2006-07 onwards and followed this up with a further 3 per cent rebate (from 2011-12) if agricultural dues were repaid in time. Some State governments like Karnataka, AP, MP etc, gave further subsidies to their farmers for on-time repayment of crop loans and farmers from these states now get credit at virtually 0 per cent rate of interest. But this pushed farmers to avail of cheap credit on very favourable terms and big farmers and Adtiyas/agents started taking huge loans and diverted them for fixed deposits or started money lending operations with extremely high rates of interest, repaid all dues in time and availed of larger crop loans in succeeding years. While the banks and agents were happy, overall food production did not get much boost as the small holder farmers were deprived of credit access (82 per cent of all land holdings are those of small holder farmers). The banks happily achieved their agricultural sector loan targets, but with funds diversion, agricultural productivity remained muted.
Stock Taking
The Indian agricultural production base has widened over the years and today, India is the world’s largest milk producer and the second largest in production of fruits and vegetables. Comparing our agricultural productivity with that of China, our crop productivity is low, ranging from 30 per cent to 70 per cent of China’s crop productivity in all major crops. Tragically, after the wide-ranging economic and banking reforms dictated by the IMF/World Bank from 1992 onwards, the agriculture sector was totally neglected and from 1995 onwards, over 3 lakh farmers have committed suicide and on an average one farmer commits suicide every 30 minutes. If this is not a true indicator of agrarian distress there can be no other index for the agriculture disaster that has been unleashed, since then. On the one hand, input prices, especially for seeds, fertilisers and pesticides have been increasing exponentially while crop prices are controlled for political reasons. Again, for political reasons, sugar prices are being propped up when cheap sugar can be available, locally and from abroad. The government lacks the guts to de-control sugar prices and take decisions on GM-brinjal and other GM seeds, while the US, China and even Bangladesh can take swift decisions to help benefit their farmers. Political lobbyists, without any shred of scientific evidence and lots of political backing, have held all farmers to ransom while the Government dithers from carrying out even field trials of GM crops due to doomsday predictions from lobbyists and so called environmentalists.
A decision taken by the then Prime Minster Atal Behari Vajpayee in 2002 permitting GM cotton, has benefitted Indian cotton farmers and earned the country over Rs 50,000 crore by way of exports and not having to resort to costly imports. From a net importer of cotton, India is now the largest exporter of Cotton and Yarn due to that one bold decision by our Prime Minister. If Americans and Chinese have not been affected adversely, why Indians are resisting these GM seeds? We need more such brave decisions on GM seeds of various crops so that our farmers can enhance their earnings. Farmers too, need to enhance the seed replacement rates and access better quality seeds with germination rates exceeding 90 per cent. The government should also come down heavily on fly-by-night operators who cheat farmers by selling seeds having germination rates of 20 to 30 per cent only.
Rural Indebtedness
Especially after the 1992 economic reforms, it has become difficult for the farmers to secure a decent income from farm operations as the terms of trade since then have squeezed the smallholder farmers who have an average land holding of about 1.4 hectares only. Farmers borrow largely from non-institutional sources (agents/big farmers/moneylenders) as they rarely possess documents relating to land ownership or land tax receipts in their names, as mutation of land holdings have not been registered for ages due to deaths/births in the family. These farmers are denied bank credit at subsidised rates, which are generally preempted by the bigger farmers. Also, women farmers and agricultural labourers are being denied classification as farmers although they cultivate/own small plots of lands and are also denied subsidised credit. So, the big farmers with access to institutional credit take cheap loans and on-lend the same to smallholder farmers at very high rates of interest (as per risk perception). Farmers take loans for seasonal agricultural operations and also to meet family/societal obligations like funerals, marriages, hospitalisation, children’s education etc. Farming being one of the riskiest of operations, insurance should be available to farmers, but most farmers avoid crop insurance and other insurance facilities. And if the monsoons have failed as in the last two Kharif seasons, then farmers fail to repay loans and with mounting interest dues, fall deeper and deeper into debt. Sometimes, farmers are reduced to being bonded labourers for generations due to past debt obligations. The Royal Commission on Agriculture, 1928, was colonial India’s effort to examine and report on the conditions of farmers and the famous phrase “The Indian peasant is born in debt, lives in debt, and bequeaths indebtedness to his successors”, was recorded therein. The Report examined the major causes of indebtedness of Indian farmers and it is distressing to learn that 88 years later, the basic reasons for farmer indebtedness, remain the same. Some of the reasons for indebtedness of Indian farmers are:
- Low income
- Poverty and lack of education
- Unproductive and wasteful expenditure of loans
- Inherited debts
- Waste of money on litigations
- Poor financial inclusion
- Poor knowledge of banking facilities and services
- Faulty money lending systems
- Uncertain monsoons
- Wasteful expenditure on social customs
- Rising cost of agricultural inputs
- Result of past indebtedness
- Forced sale of mortgaged lands for non-repayment of dues giving rise to landless labourers
- Exploitation by moneylenders
- Growing poverty due to lost capacity as labourers
- Discrimination in rural societies
- Social unrest causing crimes and suicides
- Rural societies divided into landlords (Haves) and landless agricultural labourers (Have-nots)
- Growing problems of bonded labourers
- Overall decline of the Rural Economy
- Poor infrastructure as also poor socio-economic development parameters
- Political exploitation as farmers are unable to select leaders wisely, due to avarice.
Aadhar Card and Mobile Phones
After the 1992 economic reforms, farmers have suffered and the weaker ones have no way out except to commit suicide. Debt write-offs are regularly touted as a panacea by various state/central governments. But, such announcements play havoc with the bank repayment cycles. Other steps like creation of RRBs and NABARD, revival of Co-operatives, 2007, various agricultural insurance schemes, especially the 2016 version, called the Prime Minster Fasal Bima Yojana (PMFBY) with very low and affordable premium rates (2 per cent for Kharif crops and 1.5 per cent for Rabi crops) would be a boost to the farmers and a good safety net for their risks. The efforts at promoting financial inclusion in utilising Jan Dhan Yojana, the Aadhar Card and the Mobile Phones are noteworthy and will be a boon for the farmers.
The new health insurance and accident insurance schemes and the micro-pension schemes are very important in securing financial inclusion for the farmers. The doubling of farmer incomes by 2022 is also very important if the net income is considered. There must be a mechanism to control the galloping input costs of farmers. At a National Seminar held by the Bombay Chamber of Commerce and Industry at Mumbai in November 2016, some comprehensive steps for de-risking the smallholder Indian farmers
were recommended.
The costs of HYV seeds, fertilisers and pesticides have trebled in just 6 to 7 years and have negated the gains made in the Eleventh Five Year Plan when the agriculture sector recorded 14 per cent overall growth. The creation of the National Agricultural Market using the e-platform in 2016 is another important innovation and will reduce the impact of APMC controls, which have become trader-dominated and have strangled farmer incomes. The Pradhan Mantri Sinchai Yojana (PMSY) announced in the 2016-17 Budget for providing irrigation to farmers (only 44 per cent of our agricultural farms, is irrigated today) is another boost to the farmers as the idea is to irrigate all fields of farmers. The Accelerated Irrigation Benefits Programme will help irrigate 80.68 lakh hectares while the PMSY would bring 28.5 lakh hectares under irrigation. These need to be followed up and monitored systematically. The Soil Health card and the Organic Farming Initiative in the North East, are very important schemes. But such initiatives must be accompanied by proper training and technical advice as regards manure, green manure, chemical fertilisers and crop certification processes. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has to be revived with the budgetary expenditure increased to Rs 38,500 Crore and must be accompanied by systemic efforts to ensure that these funds are not wasted as was being done earlier. Irrigation facilities like ponds and wells must actually be dug so that farmers benefit ultimately and not the politicians or contractors.
Perspectives
Some major initiatives are yet to be taken. The computerisation of land records was initiated in 1975 and as on date has only been completed in Karnataka. Land consolidation and land re-alignment as also land mutations need to be taken up on an urgent basis. Co-operatives need to be revived and without the help of vested interests. More Farmer Clubs, Joint Liability Groups and Farmers Associations as also Farmer Producer Organisations need to be set up urgently. Mobile-based apps for farmers about crop prices, agri-inputs and prices, various central/state government schemes and farmer advisories need to be in place with the help of NGOs/State Governments. Local seed villages, better connectivity with Mandis (roads/bridges) are essential as are stable input costs. The need to use water judiciously and not waste water, better water drainage systems and micro-irrigation devices (drip, sprinklers) are all very essential. More producer companies and production co-operatives are urgently needed. HYV seeds, diversification of risks with animal husbandry, dairy, fisheries, floriculture and vegetable cultivation are needed urgently. How to increase the net income of farmers is the ultimate test of the rural economy. To achieve double digit GDP growth, agricultural GDP must be enhanced to 5 per cent soon. That is the challenge to India if we aspire to be a world power. Without enriching our farmers, India will find it difficult to succeed.
