Nov 21, 2015

If 100 million farming families were to also to get an income hike of 23.55 per cent, Indian economy will gallop.

The discrimination is blatant. While accepting the report of the 7th Pay Commission, which is anticipated to increase the salaries of the central government employees by 23.55 per cent on an average, Finance Minister Arun Jaitley termed it as a ‘slight’ burden on the state’s expenditure. Pay panel bonanza is expected to fuel demand for automobiles, real estate and consumer durables. In other worlds, the industry is more excited with demand getting a boost and so is the Finance Ministry with the expected rise in GDP numbers. 

Imagine if 600 million farmers (which means roughly 100 million farming families) were to also get a 23.55 per cent raise in their farm incomes, the boost in demand will be unprecedented, which means the entire economy will gallop at a pace the country has never visualised. But then, why are successive governments only keen to fill the pockets of those who are already well-to-do and ignore the masses? That's a question no economist or policy maker is willing to address.  

Only a few months back, in an affidavit filed before the Supreme Court, the additional solicitor general Maninder Singh had expressed government’s inability to provide 50 per cent profit over the cost of production to the farmers as recommended by the Swaminathan Committee. He had said that “prescribing an increase of at least 50 per cent on cost may distort the market. A mechanical linkage between MSP and cost of production may be counter-productive in some cases.”

Soon after coming to power, Narendra Modi government had enhanced the MSP for paddy and wheat by a paltry Rs 50 per quintal, which translates into an increase of 3.6 per cent, not enough to offset the additional burden of inflation at that time. This year, 2015-16, the price of wheat has been raised by Rs 75 per quintal.

The 7th Pay Commission report is expected to benefit 47-lakh central government employees and another 52-lakh pensioner. Although the hike comes with an additional annual financial burden of Rs 1.02- lakh- crore, in reality it will be several times more, not less than Rs 3-lakh core by a conservative estimate, when similar pay hikes have to be also given to state government employees, autonomous bodies, universities and public sector units.

The income disparity is glaring. While the minimum wage for an employee has now been enhanced to Rs 18,000 per month, what an average farmer family earns in a month as per the NSSO 2014 report is a paltry Rs 6,000, of which Rs 3,078 comes from farming. Nearly 58 per cent farmers have to rely on non-farming activities like MNREGA to supplement their monthly incomes. The farm incomes is low because successive governments have deliberately kept farming starved of resources and denied economic price to farmers.

Maharashtra farmer leader Vijay Jawandhia says: “Minimum wage for government employees have been raised by roughly 30 per cent every ten years. In 1986, the minimum wage was Rs 750. In January 2016 when the 7th Pay Commission is implemented, it will rise to Rs 18,000 per month.” If the same yardstick was applied to minimum support price (MSP) for agricultural commodities, the MSP for wheat which was Rs 315 per quintal in 1985-86 should have risen to Rs 7,505 per quintal this year. In reality, what the wheat farmer has been promised for the 2015-16 harvesting season is Rs 1,525 per quintal.

Procurement price (or the market price) is the only mechanism through which a farmer is able to earn. His net return depends on the market price that he is able to fetch for his produce. There is no other source of income, including DA and emoluments that he can count on. Compare this with the government employees. Every six months they get DA, which is increasingly being merged with the basic salary. At the same time, if the 7th Pay Commission is to be believed, of the 198 total allowances they used to get, 108 allowances have been retained and enhanced. While the jump in basic salary is to the tune of 16 per cent, employees will received an increase of 63 per cent in allowances.

In simple terms, while the economic wealth of a small section of the society is being continuously multiplied, the majority population is being deliberately ignored. Farmers constitute 52 per cent of the population, in absolute terms their numbers exceed 600 million, and still they have been deliberately relegated to the bottom of the pyramid. It is primarily for this reason that the 2nd national Convention of Farmers Organisations, which concluded at Bangalore in the first week of November, has asked withholding the implementation of the 7th Pay Commission report till income parity between employees and farmers is assured.

The basic norms for computing the minimum wage under the 7th Pay Commission includes criteria like: needs of a worker family; food requirement for ensuring minimum calorie intake, protein and fats the adult body requires; clothing requirement based on per capita consumption of 18 yards per annum for the average workers family; 7.5 per cent of the minimum wage as house rent and 20 per cent for fuel, lighting and other expenditures. All these criteria should also be applied when the cost of cultivation is worked out for the sake of computing the MSP.

An economic security to the farming population is the crying need of the times. My suggestion therefore is to set up a National Farmers Income Commission that is mandated to ensure parity in incomes between the farming sector and the organized sector. At the same time, the Farmers Income Commission should be able to indicate an assured monthly package that a farming family should receive every month. Till then, the recommendation of the 7th Pay Commission should be held in abeyance. #


Sanjeev Sandal said...

The formulation of National Farmers Income Commission not only will target on fixation of minimum assured income from existing farm based activities but also should focus on the implementing the scientifically developed farm based activities including agriculture, horticulture and animal husbandry. In other words, the financial assistance should be linked directly with degree of adoption of the improved technology by farmers. Also, the Commission should deal separately the rainfed and irrigated agriculture, cereal crops and vegetable production, horticulture and vegetable production, fishery and animal husbandry, organic and inorganic agriculture etc since the target groups will be entirely different. The commission should also focus of identifying the economically potential area w.r.t. a particular farm activity. Also, the promotion of farm machinery where only family labours are available is one the important consideration for small and marginal farmers. The constraints for cereal crop production and vegetable crop production are entirely different, hence should be addressed separately. If 52 % of total population of our country is feeding whole of the nation, there is a need to classify the 52 % based agri based population doing profitable and subsistence agriculture. The results will be alarming since more than 60 % of the population will be dependent on rains.

Harry said...

very true.
but there is no one to raise this issue. most farmers are illiterate and naive and not able to raise their voice on social media.