Feb 16, 2009

Farmers need direct income support

On a TV Channel today, I was asked as to what I consider the most important step that needs to be taken to bail-out Indian farmers. I replied: Indian farmers need to be given direct income support, need to be paid a fixed monthly income. The anchor was visibly baffled, and asked me later whether it was possible.

For a couple of years now, I have been asking for a direct income support for farmers. It has taken some years for the people to grasp the implications, understand what I meant, and now I find that I am not the only one asking for a fixed monthly income for farmers. My colleagues from Thanal in Kerala were the first ones to realise its importance and necessity. They made a lot of effort to take this to farmer groups and consumer organisations in the region. The National Commission for Farmers too raised this but in a slightly different way. And now, some NGOs in Andhra Pradesh, led by my friend Dr G V Ramanjaneyulu of the Centre for Sustainable Agriculture, have lately been building a political consensus on farmers income issue just before the ensuing elections in the State.

But let us first see why there is an urgent need for a direct income support to farmers. This is what I wrote a couple of years back.


Amidst reports of a terrible agrarian crisis sweeping across the country, Indian government has formally announced the setting-up of the sixth pay commission. At a time when thousands of farmers have taken the fatal route to escape the unbearable loan burden, India has instead opened up the state exchequer for its employees.

Citing the reasons of “price rise” and “globalisation and liberalisation”, the terms of references for the sixth pay commission have been spelt out. Nearly 4.2 million central government employees, and 20 million state government employees, will receive a salary bonanza that will cost the state exchequer more than Indian Rs 1,00,000 crore a year. For the 110 million farming families all that is being promised is more credit -- doubling farm credit in the next three years.

The dubious fiscal policy is clear: loans for farmers and assured income for employees.

No wonder, the suicide death dance continues. Suicide rate in Vidharba has actually doubled ever after the Prime Minister’s Rs 3,750-crore relief package was announced on July 1, 2006. In other parts of the country, the rural landscape remains equally depressing -- mounting rural indebtedness, unmanageable glut at the time of harvest, swelling rural to urban migration. With agriculture turning into a highly losing proposition, more than 40 per cent of the farming population has expressed the desire to quit and migrate to the urban centres.

Such is the apathy towards agriculture that the government has announced a mere Rs 16,978- crore ‘rehabilitation package’ for millions of farmers in the predominantly-suicide-prone districts of Andhra Pradesh, Karnataka, Kerala and Maharashtra. While more than Rs 10,000-crore of this will go towards rescheduling bank loans and interests, the remaining amount is for the agribusiness sector to provide more external inputs to farmers. Interestingly, at the same time the government has in principle agreed to provide almost an equal amount of Rs 17,200-crore to set up three more campuses of the Indian Institute of Management (IIM).

A majority of the cotton farmers who died in Andhra Pradesh and Karnataka have left behind a family of five and an unpaid debt averaging Rs 60,000 to Rs 80,000. Except in Punjab and Haryana, where the level of indebtedness is a little higher at Rs 1,20,000 or so, farmers in other parts of the country too have had outstanding dues not exceeding Rs 80,000 on an average. In Vidharva region of Maharashtra, nearly 60 per cent of those who committed suicide in 2004 had an outstanding debt of a mere Rs 8,000. That no employee of the government or the private sector will ever consider ending his/her life at such a “meagre” level of indebtedness is a pointer towards the stark realities that exists in the countryside.

The unpaid debt that has been left behind by the unlucky farmers has actually accumulated over the years. Initially, all they may have required by way of farm credit may not have been more than a few thousand rupees. What also remains hidden from the public glare is the rampant corruption in the banking system that denies the farmers access to easily available credit. At the same time, the bank loans are tied with ‘improved’ technology, which means the real beneficiary is the agribusiness company. Promotion of such irrelevant technologies, including farm machinery, is the bane of the farming system thereby compounding the crisis in growing indebtedness.

Let us take a look at the latest report of the National Sample Survey Organisation (NSSO). The average monthly income of a farm household (comprising five members) in 2003 stood at a paltry Rs 2,115. In other words, all farmers by and large are below the poverty line. Compare that with the monthly salary of a peon in government service, the average monthly packet is at least five times more than what a farmer gets. While government employees look forward to a fixed monthly income packet every month and gets the benefit of an annual increment as an adjustment for general price rise, the farmer is left high and dry and at the mercy of the moneylender or the banker.

For a country, which has 650 million people dependent upon agriculture (including the families of the farmers) and another 200 million agricultural workers, the cost of faulty economic liberalization has just begun to show. Withdrawing the State support to agriculture and farming, and increasingly leaving farmers at the mercy of the monsoon and the markets, the national policies were in reality being drawn to shift the national resources for the benefit of only the business and industrial houses. Successive governments have only exacerbated the crisis by moving the scarce resources to bolster the industry. While agriculture continued to be neglected, industry continued to receive tax-holidays, cheaper credit, highly subsidized land, and excise duty relief. The recent shift towards Special Economic Zones (SEZ) is a pointer.

For farmers, as much as 85 per cent of its earnings come from crop cultivation and wages earned by family members from employment generation programmes. In fact, what is more startling is that over the years the farm earnings of marginal farmers have dropped to less than that of the daily wage labourers. Imagine an average farm family comprising five people surviving on a monthly income, which is not more than what is paid to household helpers in the metros. Moreover, the sharp decline in farm incomes is happening at a time when urban areas are witnessing an upswing.

Uttar Pradesh farmers had the lowest income – Rs 1630 per month. Farmers in Madhya Pradesh, Rajasthan and Orissa were only a trifle better. The highest farm income was recorded in Jammu & Kashmir - –Rs 5,500 a month, followed closely by Punjab and Kerala. Earlier, studies by the Ministry of Agriculture point to declining farm incomes in the past five years.

To make it still worse, farm income all over the world has remained static between 1980 and 2003. Adjusting for inflation, a recent UNCTAD report states that the prices of all major commodities showed a declining trend. The report stated that between 1997 and 2001, the combined price index for all commodities fell by 53 per cent in real terms, thereby “commodities lost more than half their purchasing power in terms of manufactured goods.” Knowing this, the developed countries compensated its farming community with direct subsidies. Farmers in India were left at the mercy of the monsoon gods. The resulting impact therefore has been much more severe. Recurring farmer suicides is a reflection of that.

Let us accept that like everyone else, farmer too needs an adequate monthly take-home package that takes care of his family needs and leaves him with a little surplus to sow the next crop. What also remains unexplained is why a farmer is expected to live on credit while the rest of the society is provided with a fixed income? While the government clerk and for that matter all employees continue to get the benefit of unwarranted pay hikes, annual increments, medical allowances, paid holidays and of course financial loans at the drop of a hat, the farmer remains out of bound for all these bounties.

In an era of “globalisation and liberalisation”, farmers are being further penalised. Mainline economists are suggesting that the government needs to withdraw the minimum support prices for crops and also divest from food procurement. The underlying objective being to let the market forces decide as to who is an efficient producer. Only those farmers who can ‘compete’ in such a global environment will survive. Surprisingly, such an advice is coming from those economists whose job remains secure. No economist anywhere in the world is working without a fixed salary and pension benefits. If market can work for farmers why shouldn’t it work for economists and academicians? Why shouldn’t the markets decide who is an efficient economist or an academician?

Surviving against all odds, and despite the low earnings, farmers have worked hard to ensure national food self-sufficiency. A healthy and vibrant farm sector is to the benefit of the national economy. Probably the only way to ensure the economic viability of the farm sector is to either enlarge the scope of the 6th pay commission to include farmers or to set up a separate pay commission for the farmers. Based on the minimum land-holdings, and de-coupled from production, there is an immediate need to ensure that farmers get an assured income.

Like the minimum support price, which was applicable in reality to a few crops, the
Commission for Costs and Prices (CACP) should be entrusted with the task to work out a minimum farm income for the farmers. Irrespective of productivity, and depending upon the agro-climatic conditions in which a farm is situated, a formula that entails a ‘minimum take-home’ income for a farmer has to be worked out. Based on that, the government should ensure that each farmer receives a monthly remunerative packet, with the agricultural workers getting the minimum income that the peon in the government receives.

No farmer will then like to be divested of his land, his only economic security. #

2 comments:

Sue London said...

Excellent work. I've cited your average income for farmers in my blog post and linked back to you. http://cmdrsue.blogspot.com/2009/08/agent-simmons-says-ooh-nokias-are-real.html

Ramesh Dubey said...

किसानों की गरीबी-बदहाली का सकारण विवरण दिया है आपने। समस्‍या यह है कि विकास दर के मोहपाश में बंधी सरकारें खेती-किसानी की सुध नहीं ले रही हैं। उनके लिए तो ऊंची विकास दर ही सब कुछ है। वे यह नहीं देखती हैं कि उदारीकरण का रथ करोड़ों भारतीयों को बायपास करके आगे बढ़ रहा है। इसी का नतीजा है कि सबसे ज्‍यादा किसान आत्‍महत्‍याएं उसी दौर में हुईं जब विकास दर उफान मार रही थी।