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Are Farmers Going to Be Modi’s Biggest Blind Spot ?

Narendra Modi declares his commitment to farmers all the time but his government has steadily acted against them. The political cost is going to be steep. From rail rokos and stone-pelting to urea trucks being looted, farmers across the country are increasingly ranged against the NDA government.

Farmer's walk. By Niranjan Ramesh via Flickr CC BY 2.0Farmer’s walk. By Niranjan Ramesh via Flickr CC BY 2.0

Prime Minister Narendra Modi vehemently declares his commitment to farmers in all public forums, including his signature radio show and the social media. In Twitter terminology, @narendramodi aspires to #pro-poor&farmer-friendly. Is @aamkisan impressed by Narendrabhai’s rhetoric? Given that it has been a bad year for farmers, with no sign that he will deliver on promises made to them over Chai pe Charcha 13 months ago, their scepticism is understandable.

The National Democratic Alliance (NDA) tenure started on an unhappy note, farmer-wise, with Modi’s swearing-in heralding a free-fall in prices of cotton and paddy – two of the principle kharif crops. By November 2014, cotton prices were at their lowest in five years, and paddy prices at their lowest in four years. Arguably, there wasn’t much India could have done to shore up prices in the face of China’s release of reserve stocks of cotton or Iran’s crackdown on rice imports rom India (allegedly after President Hassan Rouhani’s requested meeting with Modi did not materialize). But the Opposition pilloried the government in Parliament for failing to step in with adequate farm support. 

The government could certainly have avoided the shortage of urea which hit farmers before the rabi sowing (September to December) last year. It failed to to ensure timely imports of urea, resulting in a shortfall. From June to October of 2014, imports were negligible. While Minister for Chemicals & Fertilizers Ananth Kumar told Parliament that all was well, comparative figures for the last five years show there was an inexplicable – and drastic – slowdown in imports during that period. Whether it was oversight, or the new dispensation seeking suppliers with whom it was comfortable, is anybody’s guess.

Bharat Krishak Samaj chairman Ajay Vir Jakhar – an urbane, soft-spoken, practicing farmer – says: “Farmers had to pay 40 percent extra for a bag of urea, either in cash or in terms of compulsorily buying a bag of weedicide/pesticide with it.” He says there hasn’t been black marketeering of fertilizers on this scale across the country in over a decade. Farmers protests escalated into agitations from December 2014 to February 2015: shortage had hit at the time of sowing, but continued thereafter. To prevent rioting among urea-hungry farmers, bags of fertilizer were distributed through police stations in Haryana. From Jhajjar in Haryana, Madhepura in Bihar and Guna in Madhya Pradesh came reports of farmers looting trucks carrying urea. There were rail rokos and stone-pelting, a sort of farmers’ intifada that went largely unreported. A surge in urea imports in November-December of 2014 did not ameliorate matters in time for the rabi season, because of the time taken to move supplies. 

By then, the impact of the central government’s “no bonus on MSP” policy was already being felt in the rice-growing state of Chhattisgarh and setting off alarm bells elsewhere. In recent years, state governments like those in Madhya Pradesh and Chhattisgarh have boosted agricultural production by offering incentives to farmers in the form of a “bonus” over the central government’s minimum support price (MSP). The MSP, intended to protect farmers from market fluctuations and exploitation by middlemen, is decided by the Committee on Agricultural Costs and Prices (CACP). But most farmers feel it does not cover the actual cost of inputs. The state governments then steps in with a bonus which offers farmers assured returns for their produce. 

Madhya Pradesh used the bonus-on-MSP policy to spectacular effect, resulting in a recording-breaking agricultural growth of 25 percent in 2013-14, up from around 20 percent the preceding year, and 20 percent the year before that as well. It’s small wonder that when the Center informed states in June last year that it would no longer fund purchase of produce from farmers at the “bonus” price, chief ministers were upset. Chhattisgarh Chief Minister Raman Singh shot off a letter to the Prime Minister, asking him to reconsider the policy on the grounds that it would lead to a “significant reduction in cultivation of paddy” and impact the overall food security of the country.

The rationale behind the move – to quote the June 12, 2014 circular from the Ministry of Consumer Affairs, Food & Public Distribution – was that “bonus by the state government distorts the market of the concerned commodity and drives private buyers out of the market in the state.” Food policy expert Naresh C Saxena agrees, saying “Giving bonus to farmers does not increase overall (foodgrains) availability, it only transfers grain from the market to government godowns, besides increasing the burden of food subsidy.” This is in keeping with the suggestions of the Shanta Kumar Committee on reform of the public distribution system, submitted in January this year.

Ideally, farmers should be able to get remunerative prices from private traders (aratiyas) rather than depend on the Food Corporation of India (FCI), whose job it is to procure, store and distribute foodgrains to consumers through the Public Distribution System. Thus, it provides a safety net for farmers when market prices fall below the MSP fixed by the government. But the MSP on foodgrains is higher than the market prices (which do not, for a variety of reasons too complex to be discussed here, cover the farmers’ input costs). As Punjab Finance Minister PS Dhindsa told the media on Budget day, if the FCI cuts back on procurement, farmers will resort to distress selling at below-MSP prices. If there has to be a cutback, he added, it should be gradual so that farmers can shift to other crops. 

Raman Singh’s angst is thus understandable. He spent Rs 2,400 crore on giving farmers a bonus, over the MSP. In 2013-14, for instance, 80 lakh tons of paddy was procured, translating into 54 lakh tons of rice. Under the terms of the new policy, the Center would only pay for the 24 lakh tons needed for the state’s own public distribution system. What is it to do with the remaining 30 lakh tons, if the FCI does not want it?

The Raman Singh regime owes its electoral success to having boosted farm incomes through the bonus system, which figured in its poll promises. He pointed out that the state pays the bonus from its resources and “the only support needed from Government of India is continued procurement of rice in central pool.” Financially hamstrung, the state government limited procurement to 10quintals per acre in the 2014-15 kharif season, but later raised it to 15quintals an acre. Procurement in Chhattisgarh fell by a whopping 23 percent this year, to just 62 lakh tons. 

The Center’s no-bonus move also drew protests from the Bharatiya Kisan Sangh (BKS), an RSS frontal organization. BKS general secretary Prabhakar Kelkar, a dyed-in-the-wool, old school RSS soldier, says the Bharatiya Janata Party-led government not only failed to increase MSP adequately but stopped states from giving a bonus to farmers, thereby going back on its electoral promise. “The bonus on MSP had economically empowered farmers. Madhya Pradesh was a model state in procurement, with 2,300 centers. Ideally, a large number of centers are needed to cut down on the farmers’ transportation costs and encourage procurement at the panchayat level,” he says. But this year, not only is there no bonus, there’s a cutback in procurement. So that’s lesser income support for farmers.

The distorted demand-supply dynamics of India’s food economy make it hard to understand why, at a time when unseasonal rains and hailstorms have destroyed standing crops, farmers are getting less, not more, money than they did last year. And if the reason is that FCI’s godowns are already bulging with foodstocks – the Cabinet decided to lower buffer stocks in January this year – why is 80,000 tons of wheat being imported from Australia? Saxena offers an explanation: “It (import) increases availability, reduces market price, and would discourage hoarding by middlemen. Government has about 37 million tons of foodgrain, out of which about 20 million tons is wheat, so the import of 85,000 tons does not change the overall picture much. Private sector should be allowed to import more. It is the export that needs to be curbed.” Farmers’ organizations do not agree. Jakhar says there is no justification for food imports, as that results in deflation of grain prices, to the detriment of farmers.

The land bogey

A fresh challenge for the BKS came in the shape of the Land Ordinance of Dec 31, 2014 which undid the provisions of the Right to Fair Compensation and Transparency in Land Acquisition, Resettlement and Rehabilitation Act which had come into effect exactly 365 days earlier. In effect, the government asserted its right of eminent domain by depriving farmers of their right to say “no” to land acquisition. The consent clause, which had mandated that 80 percent of landowners agree to the proposed acquisition, was set aside. As was the provision for conducting a social impact assessment, intended to allow the farming community a say in the kind of development projects proposed to be set up on their land.

The first part of Modi’s slogan for the farm sector – “Kam zameen, kam samay, zyada upaj” – took on a whole new meaning. The government’s defence of the Ordinance was that provisions for generous compensation were untouched and that ought to satisfy farmers. 

Besides, acquisition of land would lead to development of infrastructure, which would benefit rural communities. Also, it had brought all land acquisitions, including those mandated under 13 separate acts of Parliament for various government agencies, under the Act. Opposition spokespersons pounded their BJP counterparts for failing to address the critical point: ensuring that acquired farmland would be used only for a public purpose (as defined by the landowners themselves) rather than private profiteering.

Ever-optimistic, the government hoped the Opposition could be brought on board, so that the Ordinance could be validated by Parliament within the mandatory six-month period. After all, the Congress chief ministers had seemed quite on board when the matter was discussed in July of 2014. Perhaps it hadn’t factored in the BKS, which opposed the Ordinance tooth and nail, compelling the Opposition to follow suit.

Kelkar expressed his “ghor apatti [strong disapproval]”. The objective, he said, was to grab land for big business. There was enough barren land in the land banks of state governments to satisfy the needs of industry. “We want a Land Utilisation Bill, not a Land Acquisition Bill…in every district, industry has acquired 2,000 acres that it is not using. I want to ask this government why you are standing with industry and not with farmers?”

That was in February. By April, the BKS had fallen silent. The RSS had been persuaded to place its faith in the Modi government’s “niyat” (intentions) rather than its “niti” (policy) and trust that it would not dispossess farmers for the benefit of private players (athough nothing in the new Land Bill prevents it from doing so). The BJP appointed an internal committee to examine the Ordinance. Cosmetic amendments were suggested, a Bill was drafted and pushed through the Lok Sabha. Not unexpectedly, it foundered in the Rajya Sabha, where the NDA is in a hopeless minority. A determined government then persuaded the President to prorogue the Rajya Sabha so that it could repromulgate the Ordinance.

Incoming GM crops, outgoing job schemes

The third challenge for the BKS, and for other RSS frontal organizations like the feisty Swadeshi Jagran Manch (SJM), was the government’s commitment to field trials of genetically modified (GM) food crops – another U-turn from the BJP election manifesto. The RSS is upset with the government’s Make In India website touting the country as a GM destination. Kelkar says, “GM crops are dangerous. They threaten our seed sovereignty.” Suman Sahai, whose NGO Gene Campaign had petitioned the Supreme Court against open field trials, says she cannot understand how, when the matter is sub-judice, the government can allow trials. Particularly when the technical committee appointed by the court advised against trials. 

SJM convenor Ashwini Mahajan said his organization was against open field trials and was lobbying intensively with the government to have them stopped. A meeting of RSS frontal organizations is planned for April 16, followed by an organized protest against the Land Ordinance and GM food crop trials in May.

Asserting their presence in the backdrop of these policy disputes, the weather gods sent Maharashtra a devastating drought and a deluge of rain and hailstones in March to north and central India. A bad kharif season was followed by an even worse rabi. In another bizarre twist, while most farmers mourned crop loss, potato farmers were crushed by a crop glut, which sent prices plummeting. Sugar prices also dropped with surplus production and arrears to cane farmers breached a record Rs 15,000 crore. Bad crop or bumper crop, farmers suffered either way.

The agrarian crisis was exarcerbated by the decline in the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme, averaging less than 34 days of employment over the last year (down by 10 days from the previous year). Food policy analyst Biraj Patnaik attributes the decline to shortage of funds. In Chhattisgarh, he says, unpaid wages amounted to Rs 550 crore. Recent reports from Madhya Pradesh, he adds, indicate refusal to give work unless Aadhaar numbers are given and to start new projects.

“This blatantly illegal denial of work and contempt of SC orders is just the latest effort to derail NREGS [MGNREGA]. For several weeks now, POs [block CEOs], panchayat secretaries and rozgar sahayaks have been telling people that work will only be given to Aadhaar card holders and others need not even apply. Districts in MP have been given instructions since September not to start new works [effectively – don’t give work unless there are old works pending]. We’ve been told by the Principal Secy RD /Addl CS (Ms Aruna Sharma) that this is because Central govt is not giving money,” reads a mail from the Jagrit Adivasi Dalit Sangathan.

Given that 70 percent of farmers are also part-time agricultural laborers, MGNREGA is essential to keep them afloat, says Patnaik. Although Modi vowed in Parliament to continue the scheme, he did so with a sense of irony, saying he saw it as “a living example of the Congress failures.”

Phantom forest rights

Yet another challenge for the RSS, specifically the Vanvasi Kalyan Ashram which works in tribal areas, is the government’s avowed intention to dilute the Forest Rights and the Panchayat Extension to Scheduled Areas (PESA) Acts. Under these laws, rights over forests vest with forest-dwellers, ensuring that the government cannot hand over forest land to industry, without the consent of the concerned gram sabhas. The Supreme Court endorsed these rights, notably in the Vedanta case in 2013. 

The United Progressive Alliance made consistent efforts to open up forest land to industry by doing away with the veto power of gram sabhas but failed, thanks to opposition from the then Tribal Affairs minister, V Kishore Chandra Deo. The NDA, brushing aside the objections of its own Tribal Affairs minister, Jual Oram, says the mandatory consent of gram sabhas is delaying projects and proposes to do away with it. Already, media reports indicate that amendments have been made to exempt “plantations” less than 75 years old from the purview of the Act. Oram has been exchanging heated letters with his Cabinet colleagues on the subject of forest rights.

Sources in the BJP now say that the RSS, under pressure from the Vanvasi Kalyan Ashram, has told party president Amit Shah that it cannot countenance any dilution of forest rights. He has acquiesced to this demand. Whether or not he can prevail on government remains to be seen.

In these tough times for the farm sector, upping of rural credit by Rs 50,000 crore to Rs 8.5 lakh crore in the Union Budget should have come as a relief. But studies indicate that agricultural credit has little do with farm operations. Agricultural economists Pallavi Chavan and R Ramkumar have famously argued that a huge chunk of the credit actually goes towards commercial entities engaged in supply of irrigation equipment and other inputs and non-banking financial institutions. Almost half of the total agricultural credit from commercial banks in 2008 was provided by metropolitan branches, with Mumbai alone accounting for 42.6 percent of the total credit in Maharashtra in 2008. Rural branches provided only 25.7 per cent of the credit! Even among loans that go directly to farmers, there was an increase in loans with credit limits above Rs 1 crore – indicating a preference for big farmers. Jakhar expects to see loan default by farmers on a large scale this year, given the harrowing time that they have had.

Reports of farmers suicides kept popping up in newspapers like red flags, all through the year. In Telengana, 536. In Marathwada, 200 including 135 in Aurangabad alone. In UP, 240. In West Bengal, 16. In Haryana, six. In the last few months, Patnaik says he’s received reports of a rash of suicides in Bundelkhand.

Ironically, the widespread destruction of crops has forced the government to focus on the farm sector. Compensation – in the form of input subsidy – is being offered to those who have lost one-third of their produce. The lack of crop insurance cover and the absurd norms for crop insurance are now figuring in the discourse on the farm sector. 

In the midst of all this, BJP sources say the government has decided on direct communication with farmers. Ministers, notably Finance Minister Arun Jaitley, are to tour states and interact with farmers’ and workers’ groups. The state units have been specifically instructed to ensure the visiting ministers be exposed to villages, and that meetings with business interests be minimized – all the better to woo farmers.

Given the bewildering and overwhelming array of problems besetting cultivators – agricultural marketing and credit, dependence on input subsidies, ad hoc trade policy, need for land reforms, climate change, crop diversification and lack of infrastructure, to name a few – knee-jerk responses like the no-bonus policy, the welcome mat to genetically engineered seeds, the Land Ordinance, dilution of forest rights and cutback in MGNREGA can only add to rural distress.

Narendrabhai may not be able to keep his pre-election promise to assure farmers 50 percent profit on investment, but it’s time to show them he cares.

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