<p>The launch of the PM – Kisan Samman Nidhi Yojna (PM-Kisan) scheme just before the Electoral Code of Conduct came into force, providing for a direct transfer for Rs. 6,000 per year into the bank accounts of small farmers, even though meagre, was in a way an obvious admission of the severity of the agrarian crisis.</p>.<p>Five years into power, and despite the promise of doubling farmers’ income by the year 2022, farm incomes have in reality plummeted to its lowest in 15 years, necessitating a dramatic policy measure to provide farmers with some semblance of hope.</p>.<p>Niti Aayog has admitted that rise in farm incomes in the past two years (post 2016) remained almost at near-zero and prior to that, in the five year period from 2011-12 to 2015-16, real farm income rose by less than half per cent every year (0.44 per cent to be exact). At such a time, introduction of PM-Kisan is the outcome of a realisation that agriculture is in dire crisis and is crying for direct income support.</p>.<p>For the first time, the government signalled willingness to move from ‘price policy’ to ‘income policy’, and this, in my understanding, is a tectonic shift in economic thinking.</p>.<p>The launch of PM-Kisan, under which the transfer of the first instalment of Rs 2,000 was swiftly made in to the accounts of the beneficiary small farmers that the government could immediately identify, was soon followed with an electoral promise of Nyuntam Aay Yojna (NYAY) by Congress President Rahul Gandhi.</p>.<p>Promising a payment Rs 6,000 per month into the bank accounts of 20 per cent of the poorest if voted to power, the Congress too has finally admitted that direct income support is what is urgently required to pull out the poorest of the poor from abject poverty. In this case, it would include a large proportion of small and marginal farmers.</p>.<p>Let’s not forget, as per the 2016 Economic Survey, the average income of a farming family in 17 states of India, which means roughly half the country, is a paltry Rs 20,000 a year, or in other words less than Rs 1,700 per month.</p>.<p>Agriculture has remained at the bottom of the spectrum. For almost four decades, farm incomes have practically remained static, if adjusted against inflation. Farmers have been denied their rightful price, and, in fact, market prices have prevailed much below administered prices for most crops, for most harvesting seasons.</p>.<p>According to a joint study by OECD-ICRIER, between 2000 and 2017, farmers have suffered a cumulative loss of Rs 45 lakh crore on account of low prices. And still, the farmers have demonstrated immense resilience and somehow survived against all odds. Any other sector of the economy would have collapsed by now. No wonder, rural distress is at its peak, which is quite evident from the spate of farm suicides that shows no signs of ending. To avoid any more embarrassment, the government has refrained from making public farm suicide data for the past two years.</p>.<p>Although the political narrative of muscular nationalism after the attack in Pulwama has overshadowed the issue of agrarian distress, the biggest challenge for the incumbent government would be to first address the complex issue of continuing rural distress.</p>.<p>Considering the massive increase in the number of farm protests across the country over the past few years, the new Prime Minister will find it difficult to postpone the problem any more. Continuing with the promise of direct income support, a series of initiatives both short term and for the long run will be required to pull agriculture out of crisis. In my understanding, here are a series of steps that the Prime Minister must focus on:</p>.<p>Set up a commission for farmers income and welfare: This commission should work out farm prices, provide an assured farm income package and spell out other welfare measures. This commission should subsume the existing Commission for Agricultural Costs and Prices (CACP) and ensure a minimum monthly income package of Rs 18,000 per farmer family.</p>.<p>The income package should be arrived as a top-up over the monthly average income a farming family is getting in a district. This data is available and it should not be difficult to work out from the prevailing average farm income per district.</p>.<p>Farm loan waiver: A one-time loan waiver for farmers should be immediately done. Already some states have waived farm loans totalling Rs 1.9 lakh crore since 2017. It is expected that the total quantum of bad loans in agriculture should be around Rs 3.5 lakh crores, which needs to be waived. Farmers cannot be expected to become economically productive without first offloading the past burden.</p>.<p>The nation needs to stand with farmers at this hour of difficulty. The farm loan waiver should not be a financial burden on the state governments either, but instead be routed through the banks like in the case of corporate loan write-off. Let the Centre recapitalise the banks for the farm loan waivers just as it does for the corporate NPAs.</p>.<p>Public sector investments: Reserve Bank of India data shows that public sector investment in agriculture hovered between 0.3 to 0.4 per cent of the GDP between 2011-12 and 2016-17. Consequently private sector investment in agriculture too has been low. Considering that nearly 50 per cent population is directly or indirectly engaged in farming, it is time to shift the focus on strengthening agriculture by boosting public sector investment. Unless agriculture receives adequate investments it is futile to expect farming becoming a profitable enterprise.</p>.<p>Ease of Doing Farming: Agriculture is stranded because of tremendous bottlenecks that farmers encounter at every stage. It is more a victim of a lack of governance. If industry can be provided with 7,000 steps for ease of doing business I see no reason why agriculture cannot be accorded a similar priority in farming operations. This should be accompanied with the setting up of a task force at the national (as well as state levels) to monitor its implementation at every stage. It should identify the steps that need to be initiated to make farming farmer-friendly.</p>.<p>Price and marketing reforms: There is an urgent need for market reforms, which should essentially begin by expanding the existing network of APMC regulated markets. At present there are about 7,600 APMC mandis against the requirement of 42,000 mandis to be set up in a five kms radius. This must be accompanied by reforms in the APMC set up helping in breaking the cartels that operate. At the same time, APMC reforms must be accompanied by complete procurement of farmers produce at the minimum support price (MSP).</p>.<p><em>(Devinder Sharma is a writer and a food policy analyst)</em></p>
<p>The launch of the PM – Kisan Samman Nidhi Yojna (PM-Kisan) scheme just before the Electoral Code of Conduct came into force, providing for a direct transfer for Rs. 6,000 per year into the bank accounts of small farmers, even though meagre, was in a way an obvious admission of the severity of the agrarian crisis.</p>.<p>Five years into power, and despite the promise of doubling farmers’ income by the year 2022, farm incomes have in reality plummeted to its lowest in 15 years, necessitating a dramatic policy measure to provide farmers with some semblance of hope.</p>.<p>Niti Aayog has admitted that rise in farm incomes in the past two years (post 2016) remained almost at near-zero and prior to that, in the five year period from 2011-12 to 2015-16, real farm income rose by less than half per cent every year (0.44 per cent to be exact). At such a time, introduction of PM-Kisan is the outcome of a realisation that agriculture is in dire crisis and is crying for direct income support.</p>.<p>For the first time, the government signalled willingness to move from ‘price policy’ to ‘income policy’, and this, in my understanding, is a tectonic shift in economic thinking.</p>.<p>The launch of PM-Kisan, under which the transfer of the first instalment of Rs 2,000 was swiftly made in to the accounts of the beneficiary small farmers that the government could immediately identify, was soon followed with an electoral promise of Nyuntam Aay Yojna (NYAY) by Congress President Rahul Gandhi.</p>.<p>Promising a payment Rs 6,000 per month into the bank accounts of 20 per cent of the poorest if voted to power, the Congress too has finally admitted that direct income support is what is urgently required to pull out the poorest of the poor from abject poverty. In this case, it would include a large proportion of small and marginal farmers.</p>.<p>Let’s not forget, as per the 2016 Economic Survey, the average income of a farming family in 17 states of India, which means roughly half the country, is a paltry Rs 20,000 a year, or in other words less than Rs 1,700 per month.</p>.<p>Agriculture has remained at the bottom of the spectrum. For almost four decades, farm incomes have practically remained static, if adjusted against inflation. Farmers have been denied their rightful price, and, in fact, market prices have prevailed much below administered prices for most crops, for most harvesting seasons.</p>.<p>According to a joint study by OECD-ICRIER, between 2000 and 2017, farmers have suffered a cumulative loss of Rs 45 lakh crore on account of low prices. And still, the farmers have demonstrated immense resilience and somehow survived against all odds. Any other sector of the economy would have collapsed by now. No wonder, rural distress is at its peak, which is quite evident from the spate of farm suicides that shows no signs of ending. To avoid any more embarrassment, the government has refrained from making public farm suicide data for the past two years.</p>.<p>Although the political narrative of muscular nationalism after the attack in Pulwama has overshadowed the issue of agrarian distress, the biggest challenge for the incumbent government would be to first address the complex issue of continuing rural distress.</p>.<p>Considering the massive increase in the number of farm protests across the country over the past few years, the new Prime Minister will find it difficult to postpone the problem any more. Continuing with the promise of direct income support, a series of initiatives both short term and for the long run will be required to pull agriculture out of crisis. In my understanding, here are a series of steps that the Prime Minister must focus on:</p>.<p>Set up a commission for farmers income and welfare: This commission should work out farm prices, provide an assured farm income package and spell out other welfare measures. This commission should subsume the existing Commission for Agricultural Costs and Prices (CACP) and ensure a minimum monthly income package of Rs 18,000 per farmer family.</p>.<p>The income package should be arrived as a top-up over the monthly average income a farming family is getting in a district. This data is available and it should not be difficult to work out from the prevailing average farm income per district.</p>.<p>Farm loan waiver: A one-time loan waiver for farmers should be immediately done. Already some states have waived farm loans totalling Rs 1.9 lakh crore since 2017. It is expected that the total quantum of bad loans in agriculture should be around Rs 3.5 lakh crores, which needs to be waived. Farmers cannot be expected to become economically productive without first offloading the past burden.</p>.<p>The nation needs to stand with farmers at this hour of difficulty. The farm loan waiver should not be a financial burden on the state governments either, but instead be routed through the banks like in the case of corporate loan write-off. Let the Centre recapitalise the banks for the farm loan waivers just as it does for the corporate NPAs.</p>.<p>Public sector investments: Reserve Bank of India data shows that public sector investment in agriculture hovered between 0.3 to 0.4 per cent of the GDP between 2011-12 and 2016-17. Consequently private sector investment in agriculture too has been low. Considering that nearly 50 per cent population is directly or indirectly engaged in farming, it is time to shift the focus on strengthening agriculture by boosting public sector investment. Unless agriculture receives adequate investments it is futile to expect farming becoming a profitable enterprise.</p>.<p>Ease of Doing Farming: Agriculture is stranded because of tremendous bottlenecks that farmers encounter at every stage. It is more a victim of a lack of governance. If industry can be provided with 7,000 steps for ease of doing business I see no reason why agriculture cannot be accorded a similar priority in farming operations. This should be accompanied with the setting up of a task force at the national (as well as state levels) to monitor its implementation at every stage. It should identify the steps that need to be initiated to make farming farmer-friendly.</p>.<p>Price and marketing reforms: There is an urgent need for market reforms, which should essentially begin by expanding the existing network of APMC regulated markets. At present there are about 7,600 APMC mandis against the requirement of 42,000 mandis to be set up in a five kms radius. This must be accompanied by reforms in the APMC set up helping in breaking the cartels that operate. At the same time, APMC reforms must be accompanied by complete procurement of farmers produce at the minimum support price (MSP).</p>.<p><em>(Devinder Sharma is a writer and a food policy analyst)</em></p>