Budget and Beyond: This is the Modi moment, if he gets this right, farmers will salute him, says Ashok Gulati
Agriculture needs reforms in marketing, land titling and contract law reforms, to name a few
Firstpost is conducting a series of interviews with key economic policy makers and experts, leading up to Union Budget 2018. In the second part of the series, Ashok Gulati - agricultural economist and a former chairman of the Commission for Agricultural Costs and Prices, the advisory body of the Government of India on food supplies and pricing policies - speaks with Firstpost columnist Seetha about how agriculture is suffering from misplaced priorities, with governments responding in what Gulati calls a reactive manner. Click here to read Part 1 of the series.
The very first pre-budget meeting Finance Minister Arun Jaitley had with sectoral groups was about agriculture. That was perhaps understandable, given the crisis in agriculture and unprecedented unrest among farmers. The Narendra Modi government must be smarting under the pain of knowing that agriculture growth in its last four years is lower than what it was in the tenure of the previous government.
How will this reflect in the budget? A knee-jerk reaction across governments has to announce more money for schemes or launching of new schemes, more money for irrigation and rural infrastructure and, invariably, populist sops like loan waivers and subsidies. Some of these are needed, but will they help? If you listen to the Facebook Live conversation that this writer had with Ashok Gulati, eminent agricultural economist and Infosys chair professor at ICRIER, previous budgets of this government have given huge amounts for irrigation, but of the 99 projects that were to be completed by 2019, only 10 have been completed.
And even in these channels to be field have not been completed in three. How can Indian agriculture be insulated from vagaries of rainfall if this is how a crucial issue like irrigation is being addressed? The ineffective implementation is not just a problem in irrigation. The Pradhan Mantri Fasal Bima Yojana (PMFBY) and the e-NAM – both path-breaking initiatives of the Narendra Modi government – are also suffering.
In the case of the former, farmers who have taken agricultural loans find the premium deducted without their knowledge and are not compensated for crop losses. And Gulati reveals something absolutely shocking – insurance companies, state governments and the central government passing the buck to each other.
Agriculture minister Radha Mohan Singh loses no opportunity to boast about eNAM. Figures are reeled out about mandis coming on to the eNAM platform, number of commodities traded, number of trades that have happened. And yet that it is not working the way it was supposed to is an open secret. Gulati talks about how the scheme lacks attention to issues like asaaying and grading of commodities that are traded.
But there is an another problem – physical trading has not stopped. Much of what is claimed to be online trading is physical trades being entered into the computer after trading hours. So great initiatives are fine, but clearly someone has to oversee implementation closely. And, more importantly, acknowledge when things are going wrong and do course correction as fast as possible. Agriculture is also suffering from misplaced priorities, with governments responding in what Gulati calls a reactive manner. The example he gives is of the Madhya Pradesh government spending Rs 785 crore on buying onions from farmers because prices crashed, but only Rs 7 crore in the whole year on food processing.
"The government should undertake 'Operation Veggies' where farmers will get better prices for certain vegetables. The Pradhan Mantri Fasal Bima Yojana (PMFBY) and irrigation funds are great moves, but things are not moving on the ground, fix that. Putting food and fertiliser subsidy in DBT will bring biggest savings. If the PM wants to transform Indian agriculture, he can call ministers of only the BJP states and give them a time frame and a list of things that needs to be done. Will any chief minister have the guts to say, we can’t do it?"
If even half the Rs 785 crore had been allotted earlier to supporting food processing in earlier years, he rightly points out, onion farmers would not have faced any distress. Besides, food processing units would have given a boost to employment and exports. That agriculture needs reforms is something that has been known for several years now - marketing reforms, land titling reforms, contract law reforms, to name a few. But that is something that has not been happening. There are too many vested interests in agriculture, especially in trading.
And many laws that need to go. The Essential Commodities Act is one and Gulati mentions that there is a law that prevents corn from being used to produce ethanol.
One problem could be that agriculture is a state subject and these need to come on board. There has been some progress in this respect, with some states implementing the model land leasing law that NITI Aayog drew up. But much more needs to happen.
Gulati does not believe agriculture being a state subject is a problem. All the major revolutions in agriculture – Green Revolution, the milk revolution and the cotton revolution – were initiated and pushed by the central government, he points out. And in any case, the BJP is in power in 19 states, so why can’t it get started there? Why indeed? Two BJP governments – Madhya Pradesh and Haryana – have started a price deficiency payment scheme (where the government sets a minimum price and pays the farmer the difference if the market prices are lower) but this has seen a significant depressing of prices in the case of urad in Madhya Pradesh.
So what should the Modi government do in its last year in office? Gulati is clear about three things. One, try out the Amul cooperative model in the case of fruits and vegetables. NITI Aayog vice-chairman Rajiv Kumar had told this writer that some pilots are being attempted but implementation needs to be monitored carefully. Two, implementation of PMFBY and irrigation projects needs to be set right. Three, input subsidies should be given as direct benefit transfer to farmers directly. That will help save money which can be pumped into irrigation. He believes Narendra Modi is uniquely placed to get all this done. “This is the Modi moment. If he gets this right, farmers will salute him for 20 years.” Hope this government heeds these words.
For full coverage of Union Budget 2018, click here.
(The writer tweets @soorpanakha)
Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply
The prime minister made the remarks on Wednesday while speaking at a webinar on privatisation by the Department of Investment and Public Asset Management
The tactical step of a limited agreement that seeks only to calm the borders and lessen shelling and artillery exchanges has been imbued with such lofty goals that the move is likely to get crushed under the weight of expectations
'Pop stars commenting on farmers' protest, but govt not interested': Rahul Gandhi slams Centre on agri laws
The Wayanad MP, who is on a two-day visit to his constituency in poll-bound Kerala, also took a dig at PM Narendra Modi for 'ridiculing' MGNREGA scheme