Ignorance isn't bliss

Ignorance, innumeracy and misinformation make a volatile cocktail in the present troubled times

“Half-knowledge is dangerous,” Vinoba Bhave had chastised me some six decades ago, as I, a typical overenthusiastic schoolboy, answered one of his questions. That admonition is more than merited now with reference to the sudden spurt of violent farmer protests in Madhya Pradesh and Maharashtra, since mostly there is no knowledge and little awareness. This column highlights two major issues. 

What angers farmers? 
 

Clearly, this outburst is not caused by distress due to adversities such as droughts. Most of India recorded bumper harvests of almost all crops. Some analysts have suggested political instigation as the probable cause backed by some evidence, albeit inconclusive. That would be fishing in troubled waters, but as a friend, a perspicacious observer of the Indian economy, remarked, the water has to be troubled in the first place. 

Ironically, the bumper harvest leading to commodity prices crashing is the trouble. This paper editorially observed, “farmers continue to be losers regardless of whether production rises or falls” (“Farmers on the brink”, June 9, 2017).  Farmers starve in famines, but they seldom feast in boom-times; presently, they may even be starving. Surjit Bhalla valiantly made the case based on averages that for the past several years, including the last year, producer prices and incomes have risen, and in case of pulses too (The Indian Express, 10 June 2017). 

This requires a caveat. The anger arises not out of reasoned discourse and detailed analyses but perception. That in turn is based on comparison with the immediate past and not trends.  Space permits illustrating this with only one commodity, tur (pigeon peas), where the situation is most dramatic. 

Tur prices crashed last kharif. Even as on date, they are around Rs 3,700 per quintal or 25 per cent below the minimum support price (MSP) of Rs 5,050 per quintal. A more relevant point of comparison would be this time last year, when they were Rs 9,000 a quintal. With a 25 per cent higher output, farmers stand to get the same income this year as they did the year before at the MSP.  But they believe with ample justification that their income from tur this year is a little over half of the previous year’s, even though they have produced one quarter more than earlier.  Rare would be an individual not enraged by such a perception.   

Numbers would vary for other crops, but they only fan the seething anger.  Infuriated farmers have asked for everything including the kitchen sink, the most prominent being a clamour for loan waivers. Economists view these demands as not addressing the root cause, as this column had argued recently (April 11, 12 and 13, 2017), but they do not farm, nor do they contest elections needing rural support. 

  

This is where the first and most critical lack of awareness surfaces. State administrations do not factor in a market crash when they get into self-congratulations after bumper harvests. They have no fair weather plans to cope with problems of plenty, which must include efficacious on-ground arrangements to purchase all the crop on offer at MSP. Perhaps the NITI Aayog should compile a bumper harvest manual. The “fasting” Shivraj Singh Chouhan should realise that an ounce of forethought is far more effective than a ton of after-the-fact piety. 

What is farmers’ income? 
 

In the current cacophony that passes for a debate, a figure of Rs 1,600 per month as the average farm family income has gained currency, thanks to one “expert”. He observed on NDTV last week that our monthly phone bills are often higher than that. I tried to engage him in a phone discussion about this. He said The Economic Survey 2016 was his source and abruptly ended the conversation with uncalled-for arrogance. 

Arvind Subramanian is too meticulous a scholar to make statements bordering on the sensational.  The Survey says that according to the National Sample Survey (NSS) 70th round, the median income from crops in 17 states is under Rs 20,000 a year (vol I, p 73, emphasis added). Punjab, Haryana, Tamil Nadu, undivided Andhra Pradesh, Maharashtra, Madhya Pradesh and Gujarat are among the states not included. So Rs 1,600 is hardly the relevant average because of large exclusions of geography and activities. It is also dated. 

The NSS reported the monthly agriculture household income averaged across all holding classes and states to be Rs 6,426 in 2012-13 (Report No 579, pp 17, 21). That would be Rs 8,482 in current prices.  A disaggregation of the current GDP according to activities would yield a figure of about Rs 9,500–10,500 a month as farm household income. Another straw in the wind: a January 2016 survey of a typical Varanasi village with agriculture as its sole occupation showed the average annual income for 191 families as Rs 1,03,000 per annum or Rs 8,580 per month. This extraordinary convergence provides a convincing estimate of average farm family income of over Rs 9,000 per month, not a king’s ransom, in fact only three-quarters of the global poverty line of $1.25 per capita per day, but still more than five times higher than the pitiable Rs 1,600 the sensation-mongers would have us believe. 

Ignorance, innumeracy and especially misinformation make a volatile cocktail in the present troubled times. 
 

The writer is an economist and Founder-Director of Institute of Rural Management, Anand