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The recent
farmers' protests in India are emblematic of the more significant structural
challenges that agriculture as a vocation continues to face in our country.
Through this article, I aim to dive briefly into the top dozen demands from the
protesting farmers and how they can be solved with a delicate balancing of acts
among the social needs, economic outlay, and policy challenges.
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What have the farmers demanded, and what can we do about it? Let's look at it
point by point, from the manifesto of demands put forward by the farmers from
Punjab and through their representative farming bodies with a presence beyond
North India.
1. Legal
guarantee of procurement of all crops at MSP using the Swaminathan-suggested
formula of C2+50%
Many sources have
confirmed this to be for 23 crops (For which the govt. announces MSP on annual
basis), of which wheat and paddy would contribute to 80% of the total
procurement. Cost+ MSP’s demands also distort farmers’ production decisions,
leading to over-supply and under-supply of crops – all artificially created,
without real market forces assisting the farmers. The lack of a futures market
has further added to the woes. Initial estimates said that “this could be a
logistical nightmare at best and fiscal disaster at worst”. Let’s understand
this better though. The main challenges in continuation an MSP regime only for
a limited # of crops, ensures that the farmers remain wedded to resource and
soil guzzling crops like paddy and sugarcane. A recent Crisil Research report
says how the additional expenditure needed for doing this for the 23 crops
would be 21,000 crs – a 10% increase on the current agriculture outlay of 2.1
lakh crs. Please do not believe in other exaggerated expenditure figures
ranging from 4 lakh crs to 11 lakh crs – they are not differentiating between
working capital requirement and net expenditure needs. Many experts suggest
that instead of getting into a new loop of constitutional guarantees of MSP, it
would be prudent to provide a minimum income support to farmers through direct
account transfers. The ideal end-game has to be to subsume various subsidies
around fertilizers, electricity, purchase support into an MSP for the farmer,
so that twin wins of market prices playing out and farmers not suffering due to
the volatility of agro-climatic forces, are achieved.
2.
Comprehensive loan /debt waiver scheme to free all farm households from
indebtedness (both farmers and farm laborer)
The 2017 farmer
demands were over forgiving farm loans for small and medium sized farmers.
These demands have now slowly expanded into including farmers of all sizes. It
will not be a prudent decision to waive off loans wholesale. That is
counter-intuitive to making farming a more stable vocation – the focus should
be more on preventing the farmers from getting into a local money-lender
enabled debt trap. More on how to make that happen in the points below.
3.
Comprehensive public sector crop insurance scheme for all crops, and government
should pay the premium for the same
This is a valid and
much-needed demand. And as our prior experiences with crop insurance have
shown, it has not succeeded for various reasons. So, instead of implementing
crop insurance as it is, we need a structurally reformed version of Crop
Insurance to be first created. We need to utilize the framing effect - Rebate
frame insurance might work better, where a farmer pays the premium during
harvest and not sowing, as it allows the farmer to assess the season's outcome
while signing up for paying the premium – this has been implemented in other
countries with success. The most challenging aspect of weather insurance is
basis risk. Weather-Index Based Crop Insurance Scheme (WBCIS) needs to be
implemented - WBCIS has been successful in India because it is linked to
farmers’ credit and is obligatory and forcibly coupled with agriculture loans
and farmers must acquire credit to obtain crop insurance under WBCIS. On the
other hand, non-loanee farmers are also eligible to obtain the WBCIS. Making
“opt-in” a default option for farmers, buying and selling via the mandis/APMC
market yards, can also be a good behavioral solve to increase crop insurance
adoption. Extensive research studies are available online, which can help us
re-create a reformed crop insurance that is much needed for the farmers.
4&5.
No rise in electricity tariff and no to smart meters mandated in the new
electricity bill and Free 300 electricity units for farming, domestic use, and
shops.
At a a time when
phasing out subsidies on water, electricity, and fertilizer has been suggested
as the more agriculture economics-prudent move, keeping them intact will
prevent any possibility of crop diversification, which multiple policy-makers
have been taking for decades to be the larger structural solution to the
agro-climatic crisis facing us. Multiple studies across domains of agriculture,
industry, services and geography of countries across the world, now show us how
income support at a general level is a much better option than
market-distorting subsidies for each input elements for agriculture.
6. Agriculture
sector to be excluded from the pollution act as promised
The issue of
stubble burning is at the heart of this demand. The ask would have come in
because the government has passed stringent rules which also calls for fining
farmers, without enabling the region with the right infrastructure and
logistical support to ensure that the available schemes can be better utilized.
This has led to an almost rebellious streak with the farmers, who see this rule
against stubble burning without addressing their core concerns of crop sowing
and harvesting patterns between the Rabi and Kharif season, as shooting the
farmers in the hinterland for a problem of the cities. An in-depth IIT-Kanpur
study has shown how how the types of seed that government has regulated and
made available in the open market for crops like cotton, wheat and paddy has
led to this reduction in time in harvesting of the first season and sowing of
the second season – which leads to emergency stubble burning to clear and
prepare the land for the new crop. The despearate ask of the farmers is
understandable, but the solutions lie elsewhere. The push should be on cropping
patterns correction, and not exclusion of farmers from the pollution act.
7. India
should come out the agreements of the World Trade Organization (WTO) – the
import duties on agri, milk, fruits, vegetables, meat etc should increased and
not reduced.
India’s problem are
less with having an open market, but, more with how the policies on export bans
does not let the farmers get the maximum benefits from internationally rising
prices – from oilseeds to rice and wheat, the same issue persists. Whenever the
international market opens up, the domestic farmers cannot benefit from it, as
the authorities in the quest to control consumer inflation prices, bring out a
new export ban. This leads to a double-trouble situation for the farmers, where
they can neither get the returns domestically nor internationally. Hence, yet
again, an ask like this seems understandable. But the solution being suggested
to “come out of WTO”, appears to be more a knee-jerk reaction to the ills they
suffer because of the state’s arbitrary interventions, rather than a structural
problem of international trade.
8. Pension
scheme of Rs 10,000 per month for farm and farm laborers above 58 years of age
Moving beyond how
this pension scheme amount demand is multiple times higher than the current
prevailing pension scheme for other pensioners, the larger question to be asked
here is how this can be funded intelligently. Although taxing agriculture
income overall has been a strict no-no. An important way to bring about
equitable agriculture income availability across land-holding sizes, would be
to tax the biggest and commercial sized farmers, and use that entire amount
into a central corpus that can then be used to fund pension for the larger
small & marginal farmers. This will be not just a fiscally prudent move,
but also one with political capital. Who will bite the dust on raising
agriculture taxation questions though?
9.
Land Acquisition Act of 2013 should be implemented, and any new amendments or
directions from the center to the state to be cancelled.
The expenditure on
land acquisition increased steeply when the new act came into force. If we look
at the NHAI data as a guidance for this, land value which was an average 0.9
crs per hectare in 2013-14, has gone up to 3.6 crs per hectare (4 times increase!)
in a span of half a decade. If there are any Punjab-specific concerns, that
could be addressed separately. But, most states across the country have seen
anywhere between a 3-5 times rise in land valuation, after the Land Acquisition
Act guidelines were implemented.
10.
For the farm labour - Expansion of MGNREGS (to 200 days per year and to a
minimum wage of Rs 600 per day – another source cites this to be Rs 700 per day)
Currently MNREGA
work guarantee is of 100 days. The MNREGA wages currently in out-migration
states like Bihar, UP and Odisha is under Rs 200 per day. This would hit the
migrating workers itself, and by default affecting the work on the farm-lands
of Punjab and Haryana, as the migrating labour would then have little incentive
to migrate. This is a six time increase in the MNREGA demanded, and would take
the 86,000 crs of the MNREGA outlay to INR 5 lakh crs atleast. Let’s not even
discount the heavily un-productive nature of MNREGA-linked infrastructure
construction, and how to be an efficient capital allocating and infrastructure
creating economy of the future, we will have to think beyond such welfare
schemes which do not value-add to the society, but merely provide a band-aid on
a larger surgical intervention.
11.
Programs to improve the quality of cotton seeds and all crops to be made.
Companies found guilty of manufacturing artificial pesticides and other
products, should be punished with heavy fine and license cancellation.
Cotton is a
resource-guzzler, and instead of asking for specific seed improvement on Cotton
(which might lead us down another resource guzzling BT-Cotton path), it would
be best to look at the diversified crops like lentils (which adds the
much-required nutrients to both the soil and the human body), oil-seeds (India
currently imports 33% of its domestic requirement of oil-seeds) and other
horticulture crops (which can give the farmers much more return for their
investments). This crisis should be the golden opportunity to come out of the
Green Revolution-linked mess of our past.
There
are a few other demands ranging from ensuring the 5th schedule of the
constitution should be implemented and the attacks on the rights of the tribals
should be stopped, to those specific to the 2020-21 farmer protests –
compensation, rehabilitation, withdrawal of pending cases along with a memorial
at Singhu; which are honestly the easier solves of this more extensive debate.
Originally posted in Feb'24, during the 2024 famers agitation in North India
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