A decade of flip-flops on key farm issues

The Modi government could choose to ignore the farmers’ demands or bring them to the negotiating table ahead of polls. But its track record shows that progress on addressing farmers’ issues has been sketchy.

In 2016, Prime Minister Narendra Modi envisioned the doubling of farmers’ incomes by 2022 and set up a committee, which laid down the road map to achieve the goal. The target is now in cold storage, and protests by farmers have kept the government on the back foot.

The ongoing protests come at an uneasy time, with elections looming. The previous protest in 2020–2021 didn’t hurt the Bharatiya Janata Party’s electoral chances in key states, but led to the repeal of the three agricultural laws that had caused furore. The rare retreat means that despite widespread support, the ruling party could not ignore farmers’ issues then—and can’t do so now.

Farmers have renewed their protests as some promises they were given after the last protest remain unfulfilled. (In response, the Centre floated a proposal to buy at least five crops over the next five years at minimum support price, or MSP, but the farmers rejected this on Monday.) Experts are divided on the feasibility and need for a legal mandate for MSP, which the farmers want. Some warn it will drain government coffers; others have proposed less burdensome ways to solve farmers’ issues.

DREAM VS REALITY

Although the MSP mechanism has been in place for decades, it has done little to address the plight of farmers. The average annual income of farmers (from both farm and non-farm sources) was estimated at just ₹96,703 in 2015-16, which the committee formed in m

2016 proposed to raise to ₹2.71 lakh by 2022-23—implying a compound annual growth rate of 14.1%.

While there is no official data to know if the aim was fulfilled, the report of a National Sample Survey held midway in that period threw some light. It estimated that farmers’ income in the agricultural year 2018-19 averaged just ₹1.23 lakh. Slow growth in the early years of the time frame meant that the required run rate for the following period had risen to 18.6% per year by then,

Mint calculations show. This necessitated a big push for reforms and policies.

In February 2019, despite the interim nature of the pre-election Budget, the government found a way to introduce the Pradhan Mantri Kisan Samman Nidhi (PMKISAN), which guaranteed income support of ₹6,000 per year for all land-holding farmer families. The scheme has helped, but its allocation has not seen any increase over the years despite high inflation eating into purchasing power, especially in rural areas.

The Centre also tried to help farmers by sharply raising the MSP for key crops in 2018-19, but the hikes have been low since then. Worse, less than half the farmers are aware of the MSP promise and even fewer sell their produce to the procurement agencies that buy at MSP.

Besides, the demand for a legal mandate for MSPs, or even the opposition to the farm laws, may have emerged from distrust in the government due to its “ad hoc” responses to instances of price rise, when farmers could potentially make profits.

“The issue is, the government, even when the (farm laws) ordinance was in effect, imposed export ban on onions and a couple of other commodities, just because there was an expectation that prices would rise,” said Avinash Kishore, senior research fellow at the International Food Policy Research Institute. “Farmers know from experience that the government would not hold on to its promises, even if it is written into the law. One of the things that the government can do is make market policy and trade policy more predictable.”

Kishore said the legal mandate for MSPs for all crops would put a lot of fiscal pressure and would be difficult to implement.

MEETING IN THE MIDDLE

On top of the structural woes, India’s farmers are not immune to new challenges, including the effects of climate change. Low production takes prices upwards, but when the government steps in, it puts consumers’ interest over farmers’. When abundant supply leads to price crashes, farmers end up dumping crops. The farmers want protection from such price crashes.

Some experts argue against forcing private players to buy the produce at government-set rates. They say the government should step in only when market prices slip below MSP. It would amount to cash support at such times, and also give farmers the freedom to sow crops of their choice based on local conditions, a report by Crisil Market Intelligence & Analytics said.

While this would need massive working capital, the real fiscal cost would be less—the difference between the mandi prices and the MSP works out to be about ₹21,000 crore in the marketing year 2023, the report added.

Hereon, the Modi government could choose to ignore the farmers’ demands or bring them to the negotiating table for some doable adjustments ahead of polls. But the track record shows that progress on addressing farmers’ issues so far remains sketchy.

This is the third part of a series about top poll issues and the government’s 10-year report card. Part 1 (https:// bit.ly/3QOyRRi) covered welfare measures, and Part 2 (https://bit.ly/3OQEyNj) explained the jobs conundrum. pragya.s@livemint.com