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Don’t Believe the Budget Hype, Farmers Have Been Short-Changed Again

Agriculture has become unviable not because it is unproductive or does not pay enough but because it has deliberately been kept impoverished for many years

A farmer at a dry paddy field at Gour in Malda district of West Bengal. Credit: PTIA farmer at a dry paddy field at Gour in Malda district of West Bengal. Credit: PTI

The average income a farmer earns from farming activities, including what he keeps for his family’s consumption, is 20,000 rupees a year in 17 states across the country. This means the monthly income of a farmer in these states is a paltry 1,666 rupees.

Now, put yourself in this situation. If you were a farmer and made only 1,666 rupees a month, what would you like to do?

When Finance Minister Arun Jaitley said, “We need to think beyond food security and give back to farmers a sense of income security,” while presenting the Budget in parliament yesterday, I was hopeful. But when all he promised was to double farmers’ income by 2022 — five years away — all my hopes came tumbling down.

Jaitley wants the farmers to wait five years for their income to rise to 3,332 rupees a month, if the promise is realised. I can imagine the Economic Survey presented in 2022 proudly stating the success. Certainly economists will praise the ‘achievement’. But the reality is, by 2022, adjusting for inflation, the doubled income would be equivalent to what a farmer makes now.

This is the income security the government has promised.

Challenge of income security

At a time when the agriculture sector is in deep crisis, having faced great distress over the past several years, a fact detailed in the Economic Survey 2016, I was expecting the government to perform an immediate surgical operation. Considering that the number of farmer suicides nationwide rose to an average of 52 a day in 2015, the farming sector requires urgent attention. But simply mentioning agriculture numerous times in the budget speech provides no succour to a sector that is languishing in neglect and apathy.

The current crisis is not an outcome of low agricultural productivity. Farmers are aware of how to increase crop productivity, but if this is not backed by remunerative prices, they will continue to suffer. Take for instance Punjab, India’s frontline agricultural state. Punjab’s farmers produce 4,500 kg/hectare of wheat and 6,000 kg/hectare of paddy — a very high crop productivity indeed — in an area that has 99% assured irrigation. All development indices projected by the government in this year’s budget, including expanding irrigation, already exist in Punjab. Yet, according to calculations by the Commission for Agricultural Costs and Prices, the net income from a hectare of cultivating wheat and paddy (the usual cropping pattern followed in a year) is about 36,000 rupees, which is a monthly income of only Rs 3,000. Compare this to the basic monthly salary of Rs 18,000 a peon will get after the Seventh Pay Commission is implemented.

The Economic Survey is therefore wrong when it says the central challenge to Indian agriculture is low productivity. The primary challenge is what Jaitley spelled out but failed to address – income security.

Penalising farmers to check inflation

I was appalled to see how panelists in budget discussions on several TV channels were visibly disappointed at the emphasis on the word ‘agriculture’ in Jaitley’s budget speech. What many fail to understand is that agriculture has become unviable not because it is unproductive or does not pay enough but because it has deliberately been kept impoverished for many years.

In 1970, the minimum support price (MSP) for wheat given to farmers was Rs 76 per quintal. By 2015, the MSP for wheat had increased a mere 19 times, to Rs 1,450 per quintal. In the same period, the basic salary (plus dearness allowance) of government employees has increased by as much as 150 times, for college teachers and university professors by as much as 170 times, for school teachers by up to 320 times and for top corporate executives by a whopping 1,000 times.

While the salaries of employees rose phenomenally over the past 45 years, farmers were starved of their legitimate dues. If only the wheat price had been raised by the same yardstick, perhaps by 100 times, the MSP for wheat would have been at least 7,600 rupees per quintal.

A common argument is that if wheat prices go up, food inflation will skyrocket. Thus farmers have been penalised merely to keep food inflation in check. This is the reason why the government has backtracked on its promise to provide farmers a 50% profit over the cost of production.

To make up for its ‘anti-farmer’ image, perhaps the government should have announced an economic bailout package for the farming community and set up a commission to ensure that farmers get a guaranteed monthly income. Were this done, the wheels of economic growth would have spiraled. More income into the hands of the nearly 60 crore farmers would have not only provided them with income security but would have also created a huge domestic demand, thereby leading to the revival of industrial growth.

This in reality is the only prescription for Sabka Saath, Sabka Vikas.

Devinder Sharma is a food and trade policy analyst, and an award-winning Indian journalist, writer, thinker and researcher.

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