Nov 9, 2015

A failure to invest in farmers n agriculture has costed the ruling NDA dearly in Bihar elections.

Some years back, the founder editor of the UN Human Development Report and a distinguished Pakistani economist, the late Mahbub-ul-Haq, was talking to me about growth economics. I vividly recall what he had told me about how elections are fought in India (and as well in Pakistan). Knowing the social, caste and religious dimensions that play to the hit during elections, it is the economics that plays the triumph card. Whatever be the social and political reasons, people do tend to vote for the party in whose tenure their economics has improved.

Even when he was the Finance Minister of Pakistan (and that was quite some time ago) the country's GDP was growing at a phenomenal 7 per cent. He was therefore very sure that his party would spring back into power. But he said he got a rude shock when his party was routed in the elections. "I then learnt that GDP is not a touchstone to development. Launch a direct assault on poverty/hunger and GDP grows." 

It is in that light I think the Bihar results are also a referendum on the economic policies. If in a State where 90 per cent population lives in villages, the spate of economic reforms – first in the 10 year rule of UPA between 2004-2014 and followed aggressively by the ruling NDA in the past 17 months – have failed to get an electoral backing then there is something drastically missing. What is quite clearly evident is that the kind of economic policies being perpetuated have somehow failed to touch the lives of the poor.

Perhaps sensing this glaring lack of inclusiveness in economic growth projections, the Prime Minister Narendra Modi reiterated rather belatedly at the recently concluded Delhi Economic Conclave that the focus of the NDA government would remain on poor. He talked of taking economic reforms to villages without which growth will be meaningless – something that has been widely accepted but invariably ignored in policy planning. If only the Prime Minister had overcome his government’s obsession with growth figures and focused from the very beginning on sabka saath sabka vikas the electoral verdict today in Bihar would have probably been different.

In Bihar, a majority of the population – nearly 82 per cent as per the State Economic Survey 2015 – remains engaged in agriculture. With agriculture disappearing from the economic radar screen of the government, the negative impact is being borne not only in Bihar but throughout the country. The renewed spates of farmer suicides that are being witnessed since the beginning of this year perhaps remain unparalleled. Karnataka has witnessed over 700 suicides in the past few months. Marathwada and Vidharbha in Maharashtra, Telengana, Andhra Pradesh, Punjab, Uttar Pradesh, Madhya Pradesh and even in Orissa, the suicide figures are rattling. I am not blaming the Modi government for these suicides but to ignore the terrible agrarian crisis that continues to prevail has certainly posed a question mark as to for whom are these economic policies being formulated? Why can’t economic advisors think beyond the parameters laid out by the international credit rating agencies?

That the farmers – comprising 52 per cent of the entire population -- are becoming a victim of growth economics was loudly questioned by leaders of 60 major farmer organizations/unions who met at the 2nd National Convention of Farmers Organisations at Bangalore from Nov 2-4. Outraged at the continuous neglect of the farming sector, these farmer leaders have demanded the implementation of the 7th Pay Commission to be put on hold till farmers are paid 50 per cent profit along with the Minimum Support Price (MSP). This is what Narendra Modi had promised at the time of elections but later in an affidavit filed before the Supreme Court the government has made it clear that 50 per cent profit cannot be paid as it would distort the market prices.

Soil health card and neem-coated urea fertilizer are certainly a positive input in farming but to expect farmer’s incomes to boom as a result is simply unthinkable. The tragedy on the farm is actually compounded by falling incomes over the past few decades. The continuing neglect is aggravated by the massive disparity that prevails when farming is compared with other sections of the society. In 2015 alone, employees have got 13 per cent DA, in addition to the annual increments. Compare this with agriculture where farmers have received a hike of only 3.25 per cent in the MSP for rice and now a 5.2 per cent raise in the wheat price. While industry gets a bailout package at every given opportunity, farmers have been deprived of a legitimate economic bailout package after having faced two successive years of drought.

Public sector investment in agriculture is also being deliberately reduced over the years. This year, while the pulses import bill itself has touched Rs 16,000-crores, India Spends estimates that the import bill exceeds the total outlay under agricultural policy. What miracle can be expected from agriculture when hardly any significant investments are being made? In the 12th Plan period, a total of Rs 1.5-lakh-crore was made available for agriculture. This is even less than the subsidy of Rs 1.62 lakh crore that the New Delhi airport had received and rightly questioned by the CAG. Add to this the massive cut in social sector spending in agriculture, health, education and panchayati raj in the 2015 Budget, the neglect of rural India is complete. 

Let’s be clear. The trickle-down theory of development has failed all over the globe. Propping up the rich class, including corporate, and then thinking the benefits will trickle down to the poor has failed. The answer lies in what Narendra Modi rightly said the other day to make an effort to benefit directly the bottom of the pyramid. This will require a substantial change in economic thinking to turn it pro-people, pro-environment and pro-women. Bihar election results will hopefully help make the requisite corrections in economic reforms. The sooner it is done the better it would be. # 

Economic fallout of the Bihar elections. Nov 8, 2015.