It’s now the farmer Vs the Narendra Modi government, ironically a government which has, for long, put farmer welfare at the top of its agenda and wanted to double their income in the next five years.
Farmers of major agrarian states -- Tamil Nadu, Maharashtra, Punjab and Madhya Pradesh -- are on an aggressive war course with the same government, which was originally supposed to emerge as their saviour.
The Tamil Nadu farmers went to the extent of staging naked protests and threatening to eat human faeces in the national capital only to bring their problem to the attention of the elected government. A few lives have been lost already in Madhya Pradesh, one of India’s biggest agrarian states, when security forces allegedly opened fire on the agitating farmers. In Maharashtra, the farmers are so angry against the government that they want Raj Thackeray to steer their agitation.
Remember, Thackeray is not known for leading peaceful agitations earlier.
How did the present situation come about? Look at the irony. Ever since the Modi government came into power in May 2014, it has been chanting the sabka-saath-sabka-vikaas mantra and has put the ‘kisan’ at the top of its priority list. Record amount of loans are being given to the farm sector under the target fixed by the Union Budget and to fulfill the mandatory lending requirement under the priority sector lending norms stipulated by the Reserve Bank of India (RBI).
Kisan has always found place as a dominant figure in Modi’s election speeches. Despite all these, the farmer is up in arms against the same government. Is there a political script behind this? Are farmer protests in Maharashtra and Madhya Pradesh a job of the Congress and other opposition parties?
If not, what made the Modi government the enemy No. 1 of the farmer, particularly at a time when the country is not facing a drought situation and monsoon this year is predicted to be good?
The reason, clearly, is the failure of the government to understand the needs of the farmer beyond ‘bank loans’ and forgetting the fundamental links connecting the farm economy in the rural India.
The government failed to understand how the farm economy works on the ground and what has sustained it for long. The Modi government did four major mistakes in dealing with the farmer community.
For one, the government failed to foresee the lasting damage of the Uttar Pradesh farm loan waiver on farmers, the banking sector and the government itself. It used the ‘loan waiver plank’ as a convenient political tool to win votes in the run-up to the UP elections, but it later boomeranged.
As this writer has repeatedly pointed out in the earlier columns, crop loan waiver is like a harmful tranquiliser administered in a weak body. It causes the pain to vanish only for a short while. But, the pain will inevitably return unless the wound is healed with proper medicine and care.
Any farmer will be happy the moment a waiver is announced and will stop repaying bank loans instantly. Even the farmer, who have been repaying or has the wherewithal to pay back, will stop repayment. But the reasons that led to high indebtedness do not change. The banker will be double-cautious to give a fresh loan to this ‘defaulted’ farmer’ next time. The credit culture goes for a toss. Banks see rise in NPA and the government’s fiscal management face trouble. Unless the fundamental reasons that led the farmer to a crisis are not solved, the farmer will return to the government with a begging bowl every season, seeking a waiver.
In fact, the ongoing agitations in Maharashtra and MP can be mainly attributed to the loan waiver announcement in Uttar Pradesh by the Yogi Adityanath government following an election promise of the prime minister. This triggered similar demands in other states. Even Maharashtra Chief Minister Devendra Fadnavis, who initially spoke against the idea of loan waiver, was forced to backtrack. The onus of the ongoing economic/political implications of the agitation thus lies with Modi and Yogi Adgityanath.
Second, steps like ban of cattle sale for slaughter in livestock markets created a negative sentiment among farmers and meat traders, who are employers of large number of people in meat trade and related industries such as tanning and leather works. While the stated intention of the law was to bring in discipline, hygiene and legality in cattle trade, the rule on market place came as a shocker to farmers and meat traders since 90 percent of the trade for slaughter-cattle normally takes place in livestock markets.
By banning this, the government jolted the rural economic structure, where the farmer sells his old, unfit cattle to the neighborhood market for slaughter and invest that money in buying a new one or other farm equipment. With strict documentation, the government also made the process of sale-purchase of cattle difficult for an illiterate farmer. Only large scale, organised meat traders could manage to procure cattle travelling across the hinterland on a regular basis to procure slaughter-cattle while the poor farmer was left to shell out Rs 60-80 per day to maintain his unused cattle. Instead, the government could have retained the livestock markets for slaughter-cattle trade by making rules more stringent.
Third, there was a huge communication gap between the government and the farmer all along. The Modi government failed to engage with the agitating farmers and sensitise them instead of offering a farm loan waiver, the better alternative is to invest in building long-term infrastructure and technology for the farmer to get warehouse facilities, better pricing for products and easier access to fertilisers and farm equipment. Instead, the prime minister publicly offered the farm loan waiver bonanza hoping to win the support of the farmer.
In the hindsight, that didn’t appease him. Instead, this will likely put additional debt burden on state governments cracking their already constrained balance sheets. According to a PTI report in February, every citizen of Madhya Pradesh bore a 'debt' of Rs 13,853 as the state government had a liability of Rs 1.11 lakh crore at the beginning of current fiscal (2016-17). "The debt of the state government increased to Rs 1,11,101.10 crore in March last year from Rs 77,413 crore in March 2014. So the average debt of every citizen of Madhya Pradesh was Rs 13,853 as of 31 March, 2016," the report quoted state finance minister Jayant Malaiya as saying.
Arguably, the government failed to study the results of the 2008 farm loan waiver sponsored by the UPA government on the farmer and the government — it didn’t do much good for both parties. Without learning from the past, the Modi government chose to throw the same card on the table in the form of UP loan waiver.
Fourth, one can’t rule out the possibility that demonetisation too has had its share in adding to the farmer distress as this is one segment where cash transactions were highly dominant. When the tap was closed overnight, it sent shock waves to the rural farmer, the impact of which is yet to become visible fully. The impact on informal economy will reflect in the macro-numbers with a lag.
To calm the protesting farmers, Madhya Pradesh government has now offered some sops, Maharashtra has offered a Rs 30,000 crore loan waiver promise. But, none of these will solve the fundamental problems that have set the farmer community on a collision course with the government. Clearly, the Modi government failed to learn from the past.
Updated Date: Jun 08, 2017 11:48 AM