May 4, 2015

Agriculture Crisis in India, as I see it.

On April 22, 2015, Ravish Kumar of NDTV India invited me for a walk the talk at a farm in Karnal. We dwelled upon various aspects of Indian agriculture, what ails the farming sector and what could be the possible solutions. I hope you find this useful.

The same day, I also did an hour-long interview with journalist S P Singh for his show Daleel on the popular Punjabi TV channel -- PTC News. Please look at both the shows and let me have your feedback.


Private Sector alone cannot be expected to create jobs.

 The long queue of job seekers - AFP photo

Despite racing ahead in economic growth, surpassing China’s slowing economy; India is unable to keep pace when it comes to creating jobs. A survey by Labour Bureau shows that job growth has declined in the third quarter of 2014-15.

During the quarter October-December 2014, only 1.17 lakh jobs were created in eight key sectors of the economy. A careful perusal shows that job growth has been steadily on the decline in the first three quarters of the year. From 1.82 lakh jobs created in April-June, it came down to 1.58 lakh jobs in July-September; and further slid to 1.17 lakh jobs in October-December 2014.

Total jobs created in the first three quarters of 2014-15 therefore add to 4.57 lakh. At this rate, even if take the highest figure of job creation in 2014 for the first quarter of 2014 as the likely jobs to be created in the fourth quarter January-March 2015, the total jobs created would be somewhere around 5.40 lakh. India needs to create about 1.2 crore jobs every year to cater to the needs of the aspiring workforce waiting to enter the job market every year.

The dismally low job growth is being witnessed at a time when economic growth has been revised upwards for 2014-15 fiscal. The government has pegged economic growth for 2014-15 fiscal at 7.4 per cent.

The declining rate of job creation at a time when the economic growth has been on an upswing defies the academic assumption that the higher the growth more will be the employment generation. Recall the period when Dr Manmohan Singh became the Prime Minister in 2004. Between 2004 and 2009, India’s GDP grew at a stupendous rate of over 8 per cent, and clocked 9.3 per cent at its best. Going by the general economic prescription, the high growth rate should have created a large number of jobs.

It didn’t happen. On the contrary, India witnessed a jobless growth when its GDP was galloping ahead. A Planning Commission study shows that 140 million people left agriculture in the period 2005-09. Those quitting agriculture are generally believed to be entering the manufacturing sector. But even in the manufacturing sector, 53 million jobs were lost.

The question that crops up is where the 140 million who quit agriculture, and the 53 million who were shunted out of the manufacturing sector, finally go to? The only plausible answer is they joined the ever-growing army of daily wage workers in the cities or became landless farm workers. 

More recently, CRISIL, a global analytical company has shown in a study that since 2007 over 37 million Indian farmers had abandoned agriculture and migrated into the cities. But in the last two years – between 2012 and 2014 – when economic growth had remained sluggish, an estimated 15 million have returned back to the villages in the absence of job opportunities. This establishes the argument that more and more people are joining the daily wage worker class, whether on the farm or in the cities.

If providing more and more workforce with jobs that are akin to daily wagers (dehari mazdoor); what becomes obvious is that the fruits of economic growth are simply not benefitting the common man. It is time to rethink and revisit the economic growth model to see where an economically-secure employment environment can be created. When I look around I am baffled to find that millions of jobs in the formal sector are lying vacant, and in fact such vacancies are growing every month. Government as well as public sector institutions are being starved to death in the process. Appointments in place of those who are retiring are not being filled.

Almost all universities and government colleges have anything between 40 to 60 per cent of the jobs lying vacant. In schools, both primary and secondary, over 5 lakh jobs as per a conservative estimate are lying vacant. Add to this the jobs required in hospitals, police, postal services, and other government institutions, several million employment vacancies exist.

Filling these jobs will also raise GDP besides making these dying institutes functional. I fail to understand why are government bodies/institutes as well as public sector undertakings deliberately and systematically being killed. This cannot continue like this anymore. Job creation cannot be left to private sector alone. 

Where are the jobs? May 3, 2015.

Apr 29, 2015

Punjab's procurement muddle

A Punjab farmer takes nap lying over the heaps of wheat bags he has brought to a mandi 

Everything seems to be going wrong for Punjab farmers. After unseasonal rains, hailstorm and strong winds in the past two months had left farmers battered, they didn’t realize that the worst was still to come. Unable to sell the rain-soaked wheat, and waiting endlessly for buyers in the mandis, their patience now seem to be running out.

First they protested in the mandis. Then they moved out to block trains and squat on the highways.  On Monday, seven trains were reportedly cancelled and at least four were terminated at Beas in Amritsar. The blockade affected super fast trains like Amritsar-New Delhi Shatabadi and Shane-e-Punjab trains. At several places, farmers blocked the highways to express their anger against the slow pace of procurement.

While the Chief Minister Prakash Singh Badal once again promised to lift every grain of wheat that farmers bring to the mandis, Congress leaders Amarinder Singh and Pratap Singh Bajwa did the round of mandis to assuage farmers’ anger. Politics apart, what I find intriguing is how could Punjab falter on wheat procurement when it knew what was coming. The fault lines run deeper than the despair that I see on the faces of farmers.

Punjab has been procuring wheat and rice for several years now, and one would expect a well-oiled machinery to be in place. It was in the fag end of March that the State Food and Civil Supplies Minister Adaish Pratap Singh Kairon had announced that despite the rain damage Punjab expected to procure 140 lakh tones of wheat, against 129.35 lakh tones procured last year. Five State agencies – Pungrain, Markfed, Punsup, Punjab State Warehousing Corporation and Punjab Agro Industries – along with Food Corporation of India (FCI) were to start procurement operations beginning April 1 from 1,770 purchase centres.

Although the Centre had imposed quality cuts, considering that the rain-soaked wheat was damaged, shriveled and had lost its luster, the State government had assured to lift the entire stock that farmers would bring to the mandis. In reality, this did not happen because the procurement agencies were reluctant to buy wheat that did not conform to the specifications. Official claims notwithstanding, the fact remains no agency is keen to procure wheat stocks that they would find it difficult to store and dispose off at a later stage. The Centre had made it clear that the inferior quality wheat procured by the State government would have to be consumed in the public distribution system within the State. The State procurement agencies are therefore in a fix.  

At the same time I don’t understand why the State government failed to stock the gunny bags much in advance. While the grain markets were overflowing with wheat, at least 300 rail wagons carrying jute bags were stranded because of labour problems. To compound the problem, transport unions too are reportedly dilly-dallying on moving the wheat bags out of the mandis. As a result, while huge quantity of wheat is flowing into the mandis every day, the grain markets are already choked. According to reports, 7.7 lakh bags of wheat lie in Khanna mandi alone, Asia’s biggest mandi.

Finding no space, farmers are dumping their stocks outside the mandis at many a places and waiting for their turn to sell. Even the small mandis are overflowing with grain.

I recall that during the time Surjit Singh Barnala was the Union Agriculture Minister in Morarji Desai’s government in 1977-78, a similar situation had developed in case of paddy. While Barnala had then relaxed the moisture norms from the existing 14 per cent to 18 per cent, no problems were encountered in procuring the moisture-laden paddy stocks. Since wheat is a lot hardier crop than paddy, I fail to understand why the State procurement agencies are not able to lift the wheat stocks.

Talking to farmers and senior officials, I am told the blame would rest primarily with the State Food and Civil Supplies department as well as the Punjab Mandi board. Food Minister Kairon has to explain why timely availability of jute bags was not ensured, and also his inability to tackle the transport union’s failure to life the stocks. At the same time, there are numerous reports of corrupt dealings with farmers being given kacchi parchi (receipts) and paid a distress price. I have been shown receipts which are blank. Rampant exploitation of farmers can only be witnessed if you visit any of the mandis.  

Despite such a vast network of purchase centres, I don’t find covered sheds erected in most mandis. There can be no excuse given the fact that the Punjab Mandi Board collects a lot of revenue from taxes. The mandi infrastructure is awfully inadequate. Blaming the Centre and the Centre in turn blaming the State government is not the answer. If after five decades of Green Revolution, Punjab is faltering on procurement, the fault lines run deeper than what is visible. #  

Apr 25, 2015

Nehru was wrong. Why only poor, why can't the rich be also asked to sacrifice for the sake of country's development?

Political leaders only expect the poor tribals to make a sacrifice for the sake of country's development. The rich are allowed to enjoy the fruits of development. They should not make any sacrifice !

In the midst of a highly polarized and surcharged political debate on the controversial land bill, the NDA government is reportedly planning to use quotes from Jawaharlal Nehru and Indira Gandhi speeches to justify the need to displace farmers, tribals and poor for the sake of development. That underlying argument is: the poor must sacrifice for the sake of the country’s progress.

Soon after India attained Independence, Nehru had laid the foundation stone for the Hirakud dam over the Mahanadi river in 1948. Speaking on the occasion, Nehru had said: “If you have to suffer, you should do so in the interest of the country.”

I don’t agree. After all, why should it be always the poor who have to make a sacrifice for the sake of development? When was the last time you heard of any sacrifice being made by the middle class or for that matter the rich for the sake of country’s economic development? Does it not mean that the burden of development is solely borne by the poor while the rich eat the fruits and that without any remorse or guilt about the destruction wrought on the livelihood security of millions of underprivileged? Many generations have been lost in the continuing struggle by the displaced for getting their legitimate dues.

What probably Nehru did not visualize was that many of those who were displaced in 1948 by the Hirakud dam have still not been rehabilitated 68 years later. According to a study, some of those displaced were uprooted twice again to make way for some other development activities. Even a large number of those ousted from Bhakra dam, Tehri dam and Pong dam – the ‘modern temples’ as Nehru would call them -- have not been rehabilitated so far. I am not against the big dams or similar industrial projects, but how can the State and the society remain a mute spectator to the plight and suffering of those who were forcibly displaced? Why should they not be compensated and rehabilitated on a priority?

A 2011 study by the Indian Institute of Technology, Roorkee, had pegged the number of displaced by dams, mines, industrial projects, wildlife sanctuaries/national parks at 50 million over the past 50 years. Several other estimates show that only a third of those displaced have been adequately rehabilitated so far.

Not only big dams and industrial corridors, land for railway tracks, roads, highways and electricity lines too have displaced farmers. Such is the callous attitude that the District Session Judge in Una in Himachal Pradesh recently had to order attachment of the Jan Shatabadi train to force Indian Railway to cough up the compensation amount to farmers whose land was acquired way back in 1998. All across the country, there are umpteen such examples where an indifferent State continues to harangue and harass the poor for their legitimate dues.

While the popular narrative conveniently blames farmers for coming in the way of country’s economic growth process, the government will never dare to acquire even a portion of the vast stretches of a golf course. You will see how the rich will force the government to retreat. Ask the government employees to forgo even one single installment of the Dearness Allowance in a year to help the government in balancing its fiscal act and you will see the employees resort to mass protest. At a time when the country needs investments, and is scouting for FDI, will it ever be possible to appeal to the government employees to forgo the 7th Pay Commission Award? And why not? 

Corporate India has been given a mammoth subsidy – categorized as tax concessions – to the tune of Rs 42-lakh crore since 2004-05. I sometimes wonder why can’t India Inc be asked to pay taxes (and not seek exemptions) to help the government in putting that money into the hands of farmers, and for rural development activities. Isn’t it the duty of the rich and the well-to-do to also make a sacrifice for the sake of country’s development? At least, India Inc can be asked to pay Rs 5.9-lakh crore in exempted taxes this financial year so as to wipe out the country’s worrying fiscal deficit of Rs 5.25 lakh crore. This money can be then used for country’s development. 

Nehru was wrong. It’s not only farmers and tribals who must sacrifice for the sake of development. April 25, 2015

Apr 24, 2015

How farmers have been deliberately kept impoverished. They carry the burden of providing cheaper food to you and me.

New Delhi is in a state of shock. A 41-year-old farmer Gajendra Singh from Dausa in Rajasthan has brought farmer suicides right to its doorsteps. What was earlier a distant problem, far away from the seat of political power, is now staring at them in a discomforting close-up. So much so that even Prime Minister Narendra Modi was forced to acknowledge that he is shattered and disappointed, and in a subsequent tweet wrote: “At no point must the hardworking farmer think he is alone. We are all together in creating a better tomorrow for the farmers of India.”

In the past 6 weeks, in the aftermath of unseasonal rains, a little over 150 farmers have taken to gallows in Uttar Pradesh, Haryana, Rajasthan, Punjab, Madhya Pradesh and in Maharashtra. While all these suicides were tragic and should have shaken up the administration, but I didn’t see the kind of shock and awe that we see now for any of those farmer suicides that happened outside New Delhi. In fact, all out efforts by State Governments are to deny that these farmers had even committed suicide because of a lingering crisis on the farming front.

While the politicians are battling it out in and outside parliament, blaming the other party for ignoring the farmers, the fact remains that both the major political parties have blood on their hands. Farmer suicides are not a recent phenomenon. In the past 20 years, almost 3 lakh farmers have committed suicide. On an average about 14 to 15,000 farmers are taking their own lives in a year, with two farmers dying every hour. Those who were committing suicide, and it does require tremendous courage to take your own life, were actually trying to make a political statement with their death. They failed to shake up the callous and insensitive system even by their death.

Soon after Gajendra Singh hanged himself at Jantar Mantar I find the TV channels have swung into action re-enacting scenes from the film Peepli Live. They are in Gajendra Singh’s village in Rajasthan, talking to each and sundry and telling us why he preferred to wear a particular kind of colourful pagri and so on. Every channel is now holding panel discussions calling spokespersons from different political parties who simply are using the media platform to say how white his shirt is by listing the number of steps taken to help farmers. There is hardly an effort to make a serious attempt to track down the fundamental reasons behind this serial death dance.  I am getting calls from newspapers who are asking me which areas their reporters should go to. A new face, a new name but the story will remain the same.

If I were to point to the primary and the most significant reason behind the continuing farmer suicides over the past two decades, I would narrow it down to the declining farm incomes. The 2014 report of the National Sample Survey Organisation (NSSO) tells us that the average monthly income that a farm family derives from farming activities is a paltry Rs 3,078. To make the ends meet, a farm family has to work in some other non-agricultural activities, including MNREGA. That makes for an average of Rs 6,000 per family per month. No wonder, 58 per cent farmers go to bed hungry, and 76 per cent want to quit agriculture if given a choice.

To look deeper, a colleague has meticulously done a comparative analysis. In 1970, the minimum support price for wheat was Rs 76 per quintal. Forty five years later, in 2015, wheat procurement price is Rs 1450 per quintal. In other words, in 45 years, wheat price has been raised by approximately 19 times. Let’s compare this increase in wheat prices for farmers with the increase in salaries for different sections. The average salary of central government employees has risen by 110 to 120 times; of school teachers by 280 to 320 times; of college/university teachers by 150 to 170 times; and of mid to high class corporate sector employees by 350 to 1000 times. In the same period, school fees have increased by 200 to 300 times; medical treatment cost has gone up again by 200 to 300 per cent; and average house rent in cities has risen by 350 times.

Farmer therefore is being made to pay the penalty for keeping food prices low. This year also, the wheat price has been raised by Rs 50 per quintal only so as to keep food inflation under control. Similarly, rice price for farmer has been raised also by Rs 50 per quintal. This increase comes to a paltry 3.2 per cent. Meanwhile the government employees have got a second installment of DA, a jump of 6 per cent. The employees will soon get the 7th Pay Commission where the salary of the lowest employee – a chaprasi – is being demanded at Rs 26,000 per month.

If I were to go by the lowest rate of salary increase seen in the past 45 years, the wheat price for a farmer should have been raised by 100 times. This means, against Rs 1450 per quintal now, what farmers should have legitimately been paid should be 100 times of Rs 76 per quintal that he was given in 1970. This comes to Rs 7,600 per quintal. That is his due whether we like it or not. Now don’t get panicky. I do not want food inflation to go through the roof. All I am suggesting is that instead of putting the entire burden on the poor farmer, the way out should be to pay farmer a higher price and then subsidise the produce for the consumers. It is done in Japan, and it’s also done in other rich countries.

Unless the farm incomes are raised significantly, I don’t see anything working in favour of a farmer. To say that farmers need to raise crop productivity and utilize every drop of water is simply a way to sell newer technologies. Neither will loading farmers with more credit help them to be out of the debt trap. A farmer does not need credit, he needs income. We have deliberately deprived him of a reasonably good income over the years. Successive governments have deliberately kept him poor. #