A toxic brew of subsidies and loan waivers has ensured farmers become dependent upon government dole instead of reacting to market forces, says Shreekant Sambrani.
Columnists seldom experience regret, leave alone regret combined with outrage, on being proven right, something that I can feel now. Just few days ago, the prime minister studiously avoided the dreaded ‘d’ word in his Independence Day address, calling it a monsoon deficit instead. Just a couple of days prior to it, his man for all inter-ministerial groups, Mr Pranab Mukherjee, had snapped at reporters, asking them to stop chanting drought. Mr Sharad Pawar was again downplaying the situation by saying that the rice output may suffer a fall of 10 million tonnes (about 10 per cent of last year’s output), even as the sowing was down by 20 per cent and the new crop was threatened by a continuing absence of rains.
All of this changed on August 21. Mr Mukherjee not only called it drought, but also termed it an extraordinary one. Mr Pawar was gravely concerned about saving what remains of the kharif crop. The government announced hefty increases in minimum support prices for paddy and pulses for this season. Over 240 of the country’s 600-odd districts have been declared drought-affected and, surprisingly, those do not include any of the districts from Maharashtra, Andhra Pradesh and Rajasthan, all badly affected and ruled by the Congress and its partners. It does not require rocket science to conclude that the situation is as grim, if not worse so, as has been argued in these columns in the last few weeks (July 5, July 16, 2009 and August 8, 2009).
The government seems to have accepted that it is futile to downplay the obvious, as the spectre of the drought can no longer be sugar-coated. Its wishful thinking this year is only a part of the reason for the sense of outrage. The tragedy is that agriculture has been treated so poorly by our crackerjack economic policy-makers that even after 60 years of planning, the country is still vulnerable to the vagaries of nature and the livelihood of more than half of its population depends on the rain-bearing clouds.
In his address, the prime minister read out a list of UPA’s achievements in this field: The foodgrains output is at a record level, procurement prices have been raised sharply, and loan waivers and NREGA offer policy support to agriculture. A little reflection would show that all these are half truths at best and tend to disguise the harsh reality facing agriculture and agriculturalists (see ‘Sisyphean Challenge of Indian Agriculture’, April 17/19/24, 2008).
India did manage to produce harvests of 230 million tonnes of foodgrains both in 2007-08 and 2008-09. But that is on the upswing of a roller-coaster ride through the decade.
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Before the government rushes to take credit for halting the yo-yo swing of the earlier years, it should pause to realise that 2009-10 may well rank close to the two worst Indian droughts, 1965-66 and 2002-03, when the output fell by nearly 20 per cent in one year. This year, rice production alone is likely to be off by 20 million tonnes or more, with losses in rabi also possible. Thus, volatility, mainly caused by weather factors, continues to rule agricultural production, much as it has from times immemorial.
Minimum support prices in the UPA regime went up by over 50 per cent, but the bulk of that rise was confined to the last two years, with only marginal increases in the first three. It would not be entirely cynical to infer that this sudden upsurge in price had more to do with electoral calculus than with a reasoned response to agricultural trends and the plight of the farmers.
The great loan waiver of 2008 and UPA’s star attraction, NREGA, are more by way of palliatives than developmental measures. The relatively new field of palliative care as practiced in American hospitals deals with easing the pain of the dying, not restoring them to health. The term is, therefore, used advisedly in this context as well.
The present government has only continued to do what all the other regimes of independent India have done: Treating agriculture as provider of cheap food for the populace, employer of the last resort, absorbing the burgeoning numbers who cannot find work in the increasingly jobless growth, a vote bank to be palliated with sops at election times. The government hasn’t recognised agriculture for what it is: The main economic activity for an overwhelming proportion of Indians. Had it been so recognised, concerns such as appropriate technology, proper risk coverage, remunerative pricing and timely remedial action would all have received adequate and commanding attention. Can we imagine a situation where a major sector of the economy facing a business cycle downswing approaching most likely 20 per cent is left to languish in the doldrums until the damage is already done?
The great failure of Indian agricultural policy is that the income-generation from agriculture is always considered a side issue, and not the motive force of the farmers’ decision-making. This has robbed it of all dynamism. The stagnant or falling per person productivity or per capita food availability is hung around the necks of risk-averse, ‘lazy’ farmers, rather than being seen as the rational response of those facing a no-win situation of rising costs and stagnant prices. That the farmer responds as rationally as would any other person, to market stimuli, can be seen even in these dire times: The tur acreage this season has shot up by 12 per cent and that under all pulses by 7 per cent, even as the foodgrains sowing is off by 12 per cent. This is clearly a response to the triple-digit retail prices of dals.
As I had argued last year, the bane of Indian agriculture is the income-deficit syndrome. Even the most rudimentary reforms elude agriculture; the farmer is shackled and fed the toxic brew of subsidies and waivers, instead of being made free to enjoy the benefits of the market as the rest of us do. He is then blamed for being in a stupor! This is truly a case of giving the dog a bad name and shooting it.
Footnote: The Director-General of IMD told Business Standard (August 10, 2009), “By June ... the El Niño phenomenon surfaced” and IMD had to revise its April forecast. Thank you, Mr Tyagi, for confirming precisely the point this column has made ad nauseam: IMD misleads us by predicting the unpredictable based on models that do not work, and wastes precious time and resources in the bargain!