11 Jun


To redeem rural India in lament, destroy the elitist mindset of pro-corporate politics

Centre has decided to double farmers’ income by 2022 by improving technology, increasing milk production, use of solar light, honey production.
PM Narendra Modi, April 16
There comes a watershed moment in history where insight and intention walk hand in hand to change the tenor of the times. Two months had barely passed after Modi declared his intention before six farmers fell to police bullets in Mandsaur, an obscure town in Madhya Pradesh. They were victims of a modern class war that forsook the promise of a bright future by creating a tortuous present, which presaged agricultural doom.

Their crime—fighting to survive. Their tragedy—tilling a piece of land means inviting slow death.
The insight was chilling; Bharat has become a metaphor for disempowerment. The farmers of MP, like their brethren in other states, had hit the road demanding loan waivers.

They were only demanding their right: remunerative prices for agriculture produce. For these children of Bharat, India is now the metaphor of a promise betrayed—victims of plenty. Excessive growth in MP encouraged a record agriculture growth of 20 per cent as against barely four per cent nationally. Despite the difference in agricultural products across many states, farmers’ demands were the same—both the states and the Centre must waive farm loans, which remain unpaid due to the massive fall in the prices of food grains, vegetables and fruits.

Modi had anticipated this agrarian crisis. Hence, the Finance Ministry allocated Rs 1.87 lakh crore for the sector in its last budget. Plus an additional Rs 10 lakh crore for agriculture credit. Farmers would get a loan of Rs 3 lakh at a concessional rate of seven per cent. But these measures couldn’t lift the marginal and middle class farmers out of the debt trap. Terms of trade have always been against them. For the past few decades, farming input costs have been climbing faster than the price of the final product. Loan interest rates for luxury automobiles were lowered, but not for farmers’ loans. By the time some state and central agencies intervened, plummeting prices had thrown farmers into a tailspin of anger and loss.

Ever since India embarked on the path of economic reform, the farmer has been reduced to a slogan. Agriculturists no longer influence fiscal and monetary policy. With rich farmers entering other businesses, there were only farmers with tiny land holdings and landless labourers left on the field. When India gained Independence, most parliamentarians had agricultural backgrounds and they realised the farmer was the economic backbone of holistic growth. But now, addressing rural India’s woes doesn’t make good politics and remunerative economics.

Agriculture once contributed every second rupee to the national income. Now it’s just one rupee out of six. Yet, every second Indian’s livelihood is dependent on it, leaving him alarmingly less prosperous than his urban counterpart. In 2012, India’s rural per capita income was Rs 41,000—less than half the yearly urban per capita income of over Rs 1 lakh at constant prices.
It’s an economist’s nightmare that while agricultural production has been consistently rising for the past few decades, its share in the national GDP has dived steeply because enough wealth hasn’t been created outside urban clusters.

Even the booming food-processing industry and other agri-businesses haven’t made villages their base of operations. Many important government functionaries and leading foreign-educated economists have been pleading for taxing agricultural income, which ironically is dwindling faster than you can say ‘Panagariya’. India’s economic high flyers—Finance Minister, RBI Governor, Chief Economic Advisor and the high profile hyperactive NITI Aayog members—have been encouraging public debate on bringing agro-income under the tax net. However, rarely do they speak about raising more money from the Services sector, which contributes almost 60 per cent of the GDP and can afford to pay more to boost India’s agrarian economy.

Since the Services sector includes stock market trading, it has been the greatest beneficiary of the government’s fiscal policies, which include maximum tax exemption from paying long-term capital gains. Chief Economic Advisor Arvind Subramanian, speaking at an American think-tank recently, warned: “We’ve had a spate of announcements recently about agricultural loans being waived off. You know these could cost, if it were to spread, these could cost something like two per cent of GDP, adding to the deficit.” He omitted to mention the Rs 6 lakh crore NPAs of Indian banks.

Going by the contradictory fiscal scenario, farmers have a strong case for loan waivers, loan restructuring and tax concessions on produce on the same lines as the corporates. Those championing the cause of farmers argue that if successive governments can forego over Rs 60 lakh crore in tax concessions to various non-farming sectors, why can’t the states and the Centre write off less than Rs 2 lakh crore of agricultural loans? In 2008, the UPA waived Rs 60,000 crore in farm loans because elections were due in 2009 and they wanted the farmers’ vote.

Indian agriculture has been grappling with loss-making propositions like fragmented land holdings, depleting water table levels, deteriorating soil quality, skyrocketing input costs and low yields. Haunted by debt, small and marginal farmers are committing suicide: without credible collateral for loans from public sector lending institutions, they are forced to borrow money at exorbitant rates from moneylenders. Tragically, as India rises to the top slot among global economies, the number of farmers killing themselves every year is rising. In 2015, over 13,000 farmers took their lives. Maharashtra topped the list with 433 deaths, followed by Karnataka (1,569), Madhya Pradesh (13,000), Tamil Nadu (606) and Rajasthan (373).

The Indian farmer, once a rallying election symbol for many political parties, has lost his clout and voice with the political establishment. He is the orphan of growth in an elitist mindset. His voice is drowned in the coveting cacophony of pro-market lobbyists who have captured all levers of the establishment. Ministers, top civil servants and opinion makers rub shoulders at seminars organised by CII, FICCI, ASSOCHAM and foreign-funded economic think tanks, where they wax eloquent about corporate concessions while recommending withdrawal of subsidies for the poor.

The NITI Aayog, expected to draw up the road map for inclusive growth, is more concerned about the PSUs’ privatisation instead of reviving the moribund rural sector. Its deprivation is not due to the vagaries of the political leadership alone. India’s socio-economic nature is changing in a lopsided manner. The Mahatma said that India lives in its villages. The contradiction is that Bharat has become a victim of India. Modi must ensure that the identity Bharat is not mauled by an attractive idea of India. Only a rich Bharat can redeem the nationalist legacy. He should be aware that the anger of a dispossessed farmer may be more of a threat in the long run than an opportunist dream seller’s wares.