There Is No Quick Fix To Indian Agrarian Crisis

st February has offered a measly annual amount of Rs6,000 to 120m farmers with cultivable land of up to 2 hectares. The amount to be transferred directly to bank accounts of beneficiaries in three instalments will cost the exchequer Rs75,000 crore a year. Expectedly Gandhi has found the grant of “Rs17 a day an insult to our farmers.” Orissa chief minister Naveen Patnaik who would not give anything more than 2.5 out of ten to the interim budget was disappointed that the centre should have at least matched what his KALIA scheme was to do for the state farmers. As if all this was not enough, Yogendra Yadav, national president of Swaraj India, finds the PM Kisan Samman Nidhi “far from being a samman (respect) is an apaman (disrespect) for farmers. Frankly, it would have been alright if the government had made no declaration at all” in this regard. There is no quick fix to the Indian agrarian crisis. From the shrinking size of agrarian land holdings – the average size is down from 2.3 hectares in 1970-71 to 1.08 hectares in 2015-16 and it is likely to be even smaller now – to low productivity to unremunerative prices season in and season out with sector debts piling up all the time, small and marginal farmers are exposed to growing privation. From time to time, governments controlled by political parties of different hues at the federal level and in the states have responded to the crisis by periodic waiver of farm loans and granting of financial support. Many have argued that loan waiver done as part of redemption of promise made ahead of elections is completely wrong. But Professor Sen has a different take on it. He says: “Loan forgiveness is not as silly a policy as you might think. Those who have got into debt have a set of problems and it may be their fault in some way.” But he also argues that most farmers have done nothing to deserve that indebtedness. Given their pretty small income from their pretty small land holdings they are doomed into that difficult situation. The popular perception is that loan waivers are pro poor farmer in nature. The regressive kind of the waiver scheme comes to light when it is seen that not even 15 per cent of poor farmers take loans from official sources. What is more, on average, borrowings of rich farmers are four times as much as poorer ones. The agrarian crisis resulting from a combination of factors needs to be seriously addressed. Let’s consider the farm input water, which in many parts of the country, including Maharashtra and Karnataka remains in short supply. Despite this, India continues to indulge in the luxury of using up to three times the water used to produce grains than in countries such as the US, Brazil and China. New Delhi and also state governments have a major role to play in bringing about improvements in water-use efficiency and preservation of surplus water during the monsoon. More than 60 per cent of irrigation water here is used by rice and sugar cane. Should we then commit around 5.4 million hectares to growing sugar cane when year after year because of surplus production and, therefore, low sugar prices, crushing factories are not able to settle cane bills of farmers in time? Curing the farm sector of its many ills will require of New Delhi to take actions based on thorough studies and not knee-jerk steps of which the country has seen many in recent years and involving the state governments. What we have mostly noticed so far in the absence of concerted moves to make the farm sector vibrant, the authorities are providing cash assistance to give some relief to farmers. In the meantime, Arvind Subramanian, former economic adviser to Indian government and three other economists have presented a programme called a quasi-universal basic rural income (QUBRI) under which there will be a direct cash transfer to rural households. The crisis is agrarian but the rural economy is depressed. This justifies the broader focus of QUBRI. The programme will have rural universality that will only exclude “the demonstrably well off based on the rural Scocio-economic Caste Census.”]]>

#MyVote2019 – ‘I Want Modi As PM, But…’

in bhar me 100 rupay ka petrol kharch ho jata hoga mera (I often end up spending `100 on fuel every day). I have been pursuing news and current affairs for several years. I know all about rise in international crude oil prices and OPEC countries production et al. I know about the American sanctions against Iran and the exemption given to India too. But I also believe that whatever the government is doing vis-à-vis the price rise of fuel is best for the nation. All economic/ national interest reasoning aside, the fuel cost still pinches on a personal level. I have to cut corners from the money that I earn by giving tuitions as well as the pocket money given by my family, so that I can manage petrol for my bike. I admit that on many counts I am happy with the current government. Modi ji is making a genuine effort to clean up the politics from the top. But he is often ill-advised when it comes to implementing certain avoidable decisions. Demonetisation, in my opinion, was a total failure.  Where’s the black money which Modi ji promised to bring back? Will he answer these questions when he comes here to ask for votes in 2019? I want to advise Modi ji to think twice before taking any big decision or making big promises in election rallies. I would like to see him become the PM again, but this time with certain checks and balances in place. I know right now there is nobody in our politics who deserves to be prime minister more than Modi ji. But he better choose a good cabinet and then use his time to take important decisions after getting an in-depth understanding of their impact on people’s lives. The Opposition needs to pull up their socks. They can beat many BJP leaders but they still have a long way to go to challenge Modi ji’s stature. They need to build a personality of their own and not one that is built in contrast to Modi ji’s personality.]]>

Nashik Farmer Gets ₹1,064 For 750kg Onion

By Nikhil Deshmukh An onion-grower from Maharashtra who had to sell his produce for a little over ₹1 per kg has sent his earnings to the Prime Minister to mark his protest. Sanjay Sathe, resident of Niphad tehsil in Nashik district, was among the handful of `progressive farmers’ selected by the Union agriculture ministry for an interaction with then US president Barack Obama when he visited India in 2010. Speaking to PTI on Sunday, Sathe said, “I produced 750 kg of onion in this season but was offered a rate of ₹1 per kg 1at Niphad wholesale market last week. Finally I could negotiate a deal for ₹1.40 per kg and received ₹1,064 for 750 kg,” he said. “It was painful to see such paltry returns on four months of toil. Hence I have donated ₹1,064 to Disaster Relief Fund of the PMO as a protest. I had to pay additional ₹54 for sending it by money order,” he said. “I do not represent any political party. But I am angry because of the government’s apathy towards our woes,” he added. The money order was sent on November 29 from the Niphad office of India Post. It was addressed to “Narendra Modi, Prime Minister of India”. Nashik district in north Maharashtra accounts for 50 per cent of onion production in India. Asked about his meeting with Obama eight years ago, he said, “I have been using a voice-based advisory service (run by a telecom operator) for farmers for a long time. I used to call them and get information about weather changes, and thus succeeded in increasing my production. “I had also been invited to speak about my experiments in agriculture on local radio stations of AIR. So the agriculture ministry selected me to set up a stall at St Xavier’s College in Mumbai when Obama visited it. I could speak to him for a couple of minutes through an interpreter.” (PTI)]]>

Modi speaks on jobs, GST & farm distress

In his most recent interview to the media, Prime Minister Narendra Modi spoke to Swarajya magazine on an ambitious growth trajectory for a “New India” where he asserted that his government was on course to fulfill the promises made in the run up to the 2014 General Elections. LokMarg presents an edited version of the salient features in the interview which covered a wide range of issues economic and political: LACK OF JOBS More than the lack of jobs, the issue is a lack of data on jobs. Our traditional matrix of measuring jobs is simply not good enough to measure new jobs in the new economy of New India. I don’t blame our opponents for blaming us on the issue of jobs, after all no one has an accurate data on jobs. If we look at numbers for employment, more than 41 lakh formal jobs were created from September 2017 to April 2018 based on EPFO payroll data. According to a study based on EPFO data, more than 70 lakh jobs were created in the formal sector last year. Now, you know that informal sector constitutes around 80 per cent of all jobs. We also know that job creation in the formal sector can have a spinoff effect on job creation in the informal sector too. If 41 lakh jobs were generated in the formal sector in eight months, how much would be the total formal plus informal sector jobs? There is a lack of consistency in the political debate around job creation. We have data put out by state governments on employment. For example, the previous Karnataka government claimed to have created 53 lakh jobs. The West Bengal government said it created 68 lakh jobs in the last term. Now, if states are all creating good numbers of jobs, is it possible that the country is not creating jobs? Is it possible that states are creating jobs but the Centre is creating joblessness? FARM DISTRESS AND RISING DISCONTENT We have a stated aim of doubling farmers’ income by 2022. To this end, we need to augment their sources of income and decrease the risks they face. We are following a four-pronged strategy to achieve the goal of doubling farmers’ income: 1) decrease the input costs; 2) ensure proper prices for the produce; 3) ensure minimal harvest and post-harvest losses; and 4) create more avenues for income generation. If you focus closely on our policy interventions, they are aimed at helping farmers at every step – beej se bazaar tak. If you want an idea of what changed under our government, just remember the condition of farmers during those years. They were forced to do farming which was unscientific, they faced lathis for obtaining urea, they did not have a proper crop insurance cover, nor did they get proper prices for their produce. To make farming scientific, farmers are now equipped with soil health cards. Shortage and scarcity of urea is a thing of past and neem-coated urea is improving productivity. Now the farmer has a holistic crop insurance cover with PM Fasal Bima Yojana. Not only will the farmers get minimum support price (MSP) of 1.5 times their cost, they also have more avenues to get the right price with the help of e-NAM (the electronic National Agricultural Market which provides price, production and market information to farmers). GOODS AND SERVICES TAX Let me start with some numbers. The number of enterprises registered from Independence until now was 66 lakh. In just one year after the introduction of GST, the number of new enterprises registered is 48 lakh. Around 350 crore invoices were processed and 11 crore returns were filed. Would we be looking at such numbers if GST were indeed very complex? On the multiplicity of slabs, it would have been very simple to have just one slab, but it would have (also) meant we could not have food items at zero per cent tax rates. Can we have milk and Mercedes at the same rates? Check-posts across the country have been abolished and there are no more queues at state borders. Not only are truck drivers saving precious time but also the logistics sector is getting a boost and thereby increasing the productivity of our country. Would this be happening if GST was complex? The reform merged 17 taxes, 23 cesses into one single tax. When it was finally introduced, it was our endeavour to make it simple and ensure sensitivity of the system. There are often teething troubles but GST is an evolving system and we calibrate it based on feedback from state governments, people, media, etc. PUBLIC SECTOR BANKS We had identified the problem with banks in 2014 itself. A retreat of bankers was held in Pune where topmost officials attended. I told them to go about their work with utmost professionalism and clean the sector. I assured them that the long-standing culture of phone calls from Delhi influencing their working is not the way our government works. This is what enabled the true state of affairs to come out. Earlier, if someone owed Rs 500 crore and when it was time to repay that loan, a phone call from Delhi would ensure another loan of Rs 500 crore is given so that the previous loan was repaid. This cycle persisted. We stopped this. This is why the old loans had to be shown as NPAs. Now (with the Insolvency and Bankruptcy Code), many businessmen have had to lose their companies for failing to pay bank dues. Bank mergers were merely being talked about before, but not implemented. We have moved ahead. Did you see the merger of five banks? (The complete interview can be read here)]]>

Rahul vs Jaitley: Who's got it right?

Rahul Gandhi’s speech on Wednesday in Mandsaur, Madhya Pradesh, where he targeted Modi government over farm distress and rising losses of public sector banks, brought the claws out, Union Finance Minister Arun Jaitley taking to social media for a rebuttal of the Congress president’s charges. So who’s right? Here’a a fact-check: RaGa 1: The Modi government waived loans of Rs 2.5 lakh crore of 15 top industrialists. This is more a political statement. We have to learn how PSU banks are run and how they make a decision on long-term industrial loans. The role of annual auditors must also be taken into account. Top appointments in any PSU banks are made by the Union finance ministry of the day. While the NDA government did appoint a Bank Board Bureau in 2016 to bring transparency into these appointments, the control largely still remains with the government. Having said that, the NPAs (non-performing assets or bad loans) are decided over a period of time. Thus, for example, a loan sanctioned in 2007 may easily be declared an NPA (or bad loan), in 2018. So it would be premature to say or put a figure of loan waiver to industrialists by the Congress President squarely on the Modi Government. The banking system and its auditors are directly responsible for such loans and actions taken thereof. Jaitley counter: The bulk of today’s NPAs or bad loans was created in the banking system during the period 2008-14. This is a debatable issue. In a PSU bank, the board of directors, and its chairman, play an important role in approving a large sum of loan to an industrial house. Often, the boards criss-cross the tenure of governments led by different parties. In addition, when a loan is declared non-performing asset depends on the alacrity of the auditors. To bring into account the role of loan approvers and the auditors has been a recurrent observation of several committees formed for banking reforms and cut down on bad loans. Often, the date of approval of loans and the declaration of it as an NPA, need not reflect the true picture. It is the view of experts that auditors take a lenient view due to political duress. Thankfully, the recent PNB fraud and media outrage have brought some of these issues out in the open. RaGa 2: The NDA government is giving loans only to industrialists and not to farmers. This is a self-defeating statement. For, Gandhi himself said that if voted to power, the Congress will waive all the loans of Madhya Pradesh farmers within ten days of forming the government. If the farming community was not given any loan, how would the government waive them off? Jaitley claim: If jobs are not being created, how can the latest GDP data make India the fastest growing economy in the world? Not quite. Most economists agree that Indian economy has been witnessing jobless growth for several years. This means there is growth in the output of industrial, agricultural and service sector front, but the job numbers struggle to grow. The Modi government has often tried to disprove this by quoting figures in provident fund accounts and even ‘pakora economics’, but all economic indicators belie their claims on the job front, which some observers call a ticking time-bomb. RaGa 3: Modi has given Rs 35,000 crore each to two diamond jewellers who have now fled the country. This is a laughable statement. Even though the charges of crony capitalism tend to stick on the NDA government, to insinuate that Narendra Modi was personally involved in loans given to Nirav Modi and Mehul Choksi is rhetoric nothing more.]]>