Union Budget 2016-17: Anything but farmer-friendly
by Sankara Narayanan on 20 Apr 2016 1 Comment
How much is the actual increase in the total allocation to agriculture in the budget for 2016-17? This year’s budget markets itself as a pro-poor and pro-farmer budget. Ashok Gulati, chair professor for agriculture at ICRIER, tells us why this budget is insignificant for reducing farmers’ distress, despite all the tall talk:


“The RE of last year for the Ministry of Agriculture and Farmers’ Welfare was about Rs 16,000 crore. This year they have budgeted about Rs 36,000 crore. So if you look at that, it appears as though there is a 127% increase, and therefore everybody jumps to the conclusion that it is wonderful. But then you look into the details, the Rs 15,000 crore interest subsidy on short-term credit is actually a transfer (which was Rs 13,000 crore earlier) from the Department of Financial Services. It is not really an addition at all. So the increase is actually very limited. Also, last year the budgeted amount was higher than the actual spending, so we don’t know how much will be spent.


The actual allocation to the Department of Agriculture, Cooperation and Farmers’ Welfare has gone from about Rs 16,000 crore to about Rs 20,000 crore. That’s a Rs 4,000 crore increase compared to last year’s RE. This is peanuts, it really doesn’t mean anything. It is a very marginal percentage point change; not a game changer. The agrarian crisis is much deeper than that, farmers’ distress is very acute. But people in Delhi don’t care as long as food is available and prices don’t shoot up. They feel that everything in the country is fine.” (‘Actual Increase in Budget Allocation to Agriculture is Peanuts’, Ashok Gulati, The Wire, March 2, 2016).


Yet the finance minister claims the above three (Agriculture, farmers’ welfare and rural sector) are among the nine pillars of his historic budget. Rural folk are managing to keep their body and soul moving, in spite of governments of all hues and urban vultures, for all these seven decades in free India. But we can’t live without them even for a day. Out of the 880 million rural population, about 660 million (50 per cent of Bharat Mata’s uncared for children) live with an average per capita monthly income of Rs 1260.


Another government data tells us that the average income a farmer earns from farming activities, including what he keeps for his family’s consumption, is Rs 20,000 a year in 17 states across the country. This means the monthly income of a farmer in these states is a paltry 1,666 rupees (‘Don’t believe the budget hype, Farmers have been short-changed again’, Devinder Sharma, The Wire, March 1, 2016). These being the bare facts, broadcasting tall claims (factually bogus) are nothing but exhibition of urban arrogance by an unelected tyranny. Now, put yourself in this situation. If you were a farmer and made only 1,666 rupees a month, what would you like to do?


But Jaitley said, “We need to think beyond food security and give back to farmers a sense of income security.” But all he promised was to double farmers’ income by 2022 - five years away. He wants farmers to wait five years for their income to rise to 3,332 rupees a month, if the promise is realised. In reality, by 2022, adjusting for inflation, the doubled income would be equivalent to what a farmer makes now. This is the income security promised by the government Doubled from what level? Last year’s level, which is already the second drought and farmers’ incomes have crashed? Or the last year of the UPA? And is he talking in terms of nominal or real income? In nominal terms everything goes up in five years, everybody’s income doubles in about 7 years anyway, it’s the impact of inflation. What do they have to do in this? Everything adjusts on its own in that amount of time.


Ashok Gulati observes, “But if they mean it in real terms, and are able pull it off in 5-7 years, I will be impressed. For that they need to get a strategy in place, what is their strategy? The way they have phrased it now is only lip services, only wishes. For many crops at the moment, the cost of production is higher than the MSP. Is that what the MSP is supposed to be doing?”


Gulati adds, “Rs 5,000-10,000 crores allocation for irrigation is not going to solve any problems. You need to put in Rs 40,000-50,000 crores every year for five years. Only then can you tap the potential of this country’s agriculture. Once irrigation is in place, it is also easier for farmers to adopt better seeds and fertilizers. It is not possible to control productivity without water, and wherever irrigation goes, productivity goes up by 70 to 80%”.


Devinder Sharma has a different take on the extension of irrigation facility in his article referred to above. He says, “The current crisis is not an outcome of low agricultural productivity. Farmers are aware of how to increase crop productivity, but if this is not backed by remunerative prices, they will continue to suffer. Take for instance Punjab. Punjab’s farmers produce 4,500 kg/hectare of wheat and 6,000 kg/hectare of paddy - a very high crop productivity indeed - in an area that has 99 per cent assured irrigation. All development indices projected by the government in this year’s budget, including expanding irrigation, already exist in Punjab.


Yet, according to calculations by the Commission for Agricultural Costs and Prices, the net income from a hectare of cultivating wheat and paddy (the usual cropping pattern followed in a year) is about 36,000 rupees, which is a monthly income of only Rs 3,000. Compare this to the basic monthly salary of Rs 18,000 a peon will get after the Seventh Pay Commission is implemented.


In 1970, the minimum support price (MSP) for wheat given to farmers was Rs 76 per quintal. By 2015, the MSP for wheat had increased a mere 19 times, to Rs 1,450 per quintal. In the same period, the basic salary (plus dearness allowance) of government employees has increased by as much as 150 times, for college teachers and university professors by as much as 170 times, for school teachers by up to 320 times and for top corporate executives by a whopping 1,000 times.


While the salaries of employees rose phenomenally over the past 45 years, farmers were starved of their legitimate dues. If only the wheat price had been raised by the same yardstick, perhaps by 100 times, the MSP for wheat would have been at least 7,600 rupees per quintal.”


A common argument is that if wheat prices go up, food inflation will skyrocket. Thus farmers have been penalised merely to keep food inflation in check. Protecting the poor from high prices shouldn’t be the farmers’ responsibility; that is up to the government. In the effort to protect the poor, you are impoverishing the farmer. MSP for all crops, bank credit at lower interest rates, proper crop insurance scheme, not surrendering agriculture for urban convenience etc are the steps that are needed if the government is serious about increasing farmers’ incomes. But the government has backtracked (jumla) on its promise to provide farmers a 50 per cent profit over the cost of production.


A few thousand crores to the farm sector in any sense of proportion is not a lion’s share. 0.013% of total budget has been allocated for farmers, which is only Rs.700 for each farmer if we look at the population of farmers. What a whopping lion’s share and how graciously pro-farmer!


Truly the lion’s share of Rs six plus lakh crore (30 per cent of the total budget amount of Rs 19,78, 060 lakh crore and 110 per cent over the plan budget amount of Rs 5,50,010 lakh crore), as usual, is allocated under the new jumla-fied head “Revenue Impact of Tax Incentives”. Beneficiaries are close friends of government. Another lion’s share of one lakh crore (Five per cent of the total budget) will go to meet the increased salaries of a select class called civil servants.


Another confident assertion from a writer is: “Farm loans have been waived ‘several times’ in earlier budgets, but that never solved the issue”. I would like to know how many times were farm loans waived in earlier budgets? To my memory, Rs 70,000 crore out of the total farm loan burden of five lakh crore was waived during UPA-I regime. It could never solve the issue because hardly 15 per cent of the farm loan (of affluent farmers) was waived. And also the devil lay elsewhere - MSP. Similarly the loan waivers, bail out packages and mega annual loot called ‘Revenue Foregone’ in favour of the dollar billionaires had never solved any of the issues of the majority Indians. Why not we advise the government to stop this daylight robbery?


Another funny suggestion came while analysing the budget that MSP is irrelevant in the drought situation. Has any farmer been consulted about this brain wave? Drought or no drought, MSP for all produce is a sine qua non for the survival of farmers and the sovereignty of Bharat Mata. The country as a whole is not affected by the drought. Why starve all farmers by denying MSP?


May I know when was the last time private traders offered a better price for the produce in comparison with the miserly state-administered MSP? And how many crops are included in the MSP bracket? Even if by accident the market price shoots up (very very rare), the government immediately intervenes with lightning alacrity to allow massive imports to protect its favoured citizens.


Today on an average 52 farmers are ending their life each day. A writer doing budget analysis suggests the government’s efforts will definitely benefit the farm sector in the ‘long term’. How long will it take to reach that coveted ‘long term’? In the meanwhile, can we close our eyes to the dance of death in the farm fields?


In contrast, corporate sector, several service sectors and civil servants are scores of times better placed than the farmers. Rarely anyone from the privileged classes commits suicide due to debt burden. Why not we, the conscious citizens, demand that government stop the mega freebies showered on these privileged children of Bharat Mata and divert that lion’s sum towards the farm sector for its survival and for our own food needs?




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