Keeping the devious politicisation of the landmark farm laws by the Opposition aside, the moot question is: Will the path-breaking farm laws ushered in by the Narendra Modi government help farmers? The answer is a resounding ‘yes’!
How has public procurement fared under the Modi government? There has been a solid increase of 59.2% in the procurement of paddy in 2019, when compared to the numbers of 2013-14. The procurement of wheat from farmers by the Modi government for rabi 2020 also touched an all-time high of 382 lakh metric tonnes (LMT). During the same period, 119 lakh MT paddy was also procured by government agencies through 13,606 purchase centres. Meanwhile, all over India, 42 lakh farmers were paid over Rs 73,500 crore towards minimum support price (MSP) for wheat alone in the current rabi season.
This year, Madhya Pradesh became the largest contributor to the central pool with 129 LMT of wheat, surpassing Punjab, which procured 127 LMT. Haryana, Uttar Pradesh and Rajasthan also made significant contributions to the national procurement of wheat. The heartening thing to note here is that there was also an increase in procurement from the eastern and northeastern regions this year. In the kharif season this year, procurement from these regions has been to the tune of 89.5 LMT, benefitting more than 18 lakh farmers.
Given the hue and cry over MSP, it is only apt to ask: what has been the track record of the Modi government on MSP? Without an iota of doubt, it has been exemplary. MSP is a form of market intervention by the Central government to insure agricultural producers against any sharp fall in farm prices. It is a price fixed by the Government of India to protect the farmers against excessive fall in prices during bumper production years. The MSP is usually announced at the beginning of the sowing season for certain crops on the basis of the recommendations made by the Commission for Agricultural Costs and Prices (CACP).
Coming back to the Modi government’s track record, the numbers speak for themselves. MSP payment to farmers for paddy rose by 2.4 times to Rs 4.95 lakh crore between 2014 and 2019 under the Modi government, as against only Rs 2.06 lakh crore under the previous Congress-led regime between 2009-2014. MSP to farmers for wheat increased by 1.77 times during 2014-2019, to Rs 2.97 lakh crore, as compared to Rs 1.68 lakh crore in the 2009-2014 period. Meanwhile, MSP payment for pulses surged by a whopping 75 times under the Modi government, to reach Rs 49,000 crores, as compared to a measly Rs 645 crore under an inept Congress-led UPA-2. The payment to farmers for oilseeds and copra also surged 10 times under the Modi government, to Rs 25,000 crore, during the last five years, in comparison to the MSP payment of just Rs 2,460 crore under the UPA government in 2009 to 2014.
In July 2018, in a landmark decision, the Modi government announced MSP at 1.5 times the cost of production for 14 kharif crops. The cost considered by CACP is as per the A2+FL formula, which includes expenses on farm inputs, including seeds, fertilisers, fuel and irrigation and, of course, the imputed value of family labour (FL).
The total value of all agricultural output was around Rs 40 lakh crore in FY20, while the total value of MSP operations was around Rs 2.5 lakh crore, corroborating the argument by Shanta Kumar that, if only 6.25% of the agri produce is MSP-driven, why is there such a hue and cry about MSP? Clearly, the entire MSP controversy is a needless one and a manufactured controversy by an electorally debilitated opposition that is running out of issues to fret and fume about. Prime Minister Narendra Modi has categorically assured farmers that his government will continue with the MSP. Hence, any apprehensions on this front are not required.
Now, has the Modi government been fair to farmers in Punjab? The straight answer to that is also a loud and clear “yes”. Punjab’s agriculture department’s records show that 22.91 lakh hectares were under paddy cultivation in 2019-20, 25.94 lakh hectares in 2018-19 and 25.19 lakh hectares in 2017-18. The average yield of paddy in Punjab was recorded at 6,635 kg (6.6 tonnes) per hectare in 2019-20, 6,532 kg (6.5 tonnes) in 2018-19 and 6,516 kg (6.5 tonnes) in 2017-18. What should be the total production of paddy in Punjab in this period, as per above data? As per yield and “cultivation area”, the total production should be 152 lakh tonnes (15.2 million tonnes) in 2019-20, 169.44 LTs (16.9 million tonnes) in 2018-19 and 164.14 LTs (16.4 million tonnes) in 2017-18. Thus, in all three years, government agencies purchased more paddy than Punjab’s total production, as per the average yield. In 2019-20, 11.82 lakh tonnes (1.2 million tonnes) more was sold in Punjab’s mandis than produced in the state. In 2018-19, the figure stood around 1.02 lakh tonnes and in 2017-18, it was nearly 15.42 lakh tonnes (1.5 million tonnes).
So, do the farm laws dismantle the existing “APMC-Anaj Mandi” structure? No, they do not. Going forward, farmers will have the choice and freedom to sell their produce either at APMC designated wholesale mandis or in “Trade Areas”. There will be no taxes or levies of either state or central government on the trade conducted in these “Trade Areas”, thereby, reducing the cost of transaction in the entire food chain, from farm to fork. Hence, the whole narrative about “Trade Areas” being anti-farmer is false.
What has the Modi government done for uplifting the well-being of India’s farming community? The Modi government has been transferring cash directly to farmers, as is evident from the Rs 6,000 that is paid to over 14 crore farmers per year, under the PM Kisan scheme. Over Rs 94,000 crore have been paid via PM-KISAN since its inception two years ago, with over Rs 22,000 crore paid during the last six months of the pandemic alone.
What has the Modi government done for agrarian infrastructure? The Modi government, in August this year, launched a new Agriculture Infrastructure Fund worth Rs 1 lakh crores, which is meant for setting up storage and processing facilities which will help farmers get higher prices for their crops. In September this year, the government also launched the “Pradhan Mantri Matsya Sampada Yojana”, a flagship scheme for focused development of the fisheries sector in the country, with an estimated investment of Rs 20,050 crore over the next five years. In June this year, the Modi government announced a Rs 15,000 crore Animal Husbandry Infrastructure Development Fund with an interest subsidy scheme to promote investment by private players and MSMEs in dairy, meat processing and animal feed plants, which is a move expected to create 35 lakh jobs. These measures, along with the new farm laws, will boost productivity of the agrarian sector to areas beyond the growing of traditional crops like paddy or wheat.
Prime Minister Narendra Modi, in 2018, promised to double farmers’ income, while speaking at the inauguration of a Rs 300 crore chocolate plant by Amul in Anand, the milk capital of India. He said the cooperative movement has shown that an alternative to economic prosperity other than socialism and capitalism exists. This is precisely where the farm laws come in. The new farm legislation seeks to protect farmers, with the central government stepping in when needed, via MSP, crop subvention schemes and related measures. When the market price of a crop falls, the Modi government intervenes via the market intervention scheme and price support scheme (MIS-PSS). Similarly, the new farm laws encourage modernisation and freedom from exploitative practices by giving farmers the liberty to profit from their produce as they deem fit, and without being told when to sell, where to sell, or whom to sell to.
But, how will contract farming help? The farm laws also allow for contract farming, whereby farmers can enter into contracts, at a predetermined price, even before the crop has been harvested, with private companies, aggregators, food processors and exporters. This is an unprecedented reform as it allows farmers to lock in a good price for their harvest and insulates them from any post-harvest product-related or price volatility.
Who will pay for the insurance, cold storage, machinery and farm equipment, when farmers enter into contracts with private players? The farm laws clearly state that these will be paid for by the counterparty and not the farmer. This will be a big relief for small and marginal farmers who can access superior farm technology and become ‘agripreneurs’ without having to go out of their pockets. Also, there will be an able-bodied resolution mechanism, whereby any dispute between the farmers and counterparties will be resolved in a time bound manner by a Conciliatory Board (CB), formed under the aegis of the Sub Divisional Magistrate (SDM). The CB will have representatives from both sides. Moreover, the sale, lease or mortgage of farmers’ land is prohibited.
How will farmers negotiate with private entities which are supposedly equipped with more business acumen? In the Budget 2020, the Modi government announced the formation of 10,000 Farmer Producer Organisations (FPOs), which are largely clusters of farmers who are brought together so that credit and other assistance can be extended to them. As a group, FPOs have demonstrated superior bargaining skills, when compared to standalone farmers operating as individuals. There are already about 5000 FPOs in India, of which, only a handful are private. More than 3900 FPOs are affiliated with NABARD or small farmers’ agri-business consortium (SFAC). Hence, allegations of the corporatisation and blanket privatisation of Indian agriculture are baseless. Moreover, the Modi government also plans to extend marketing support to states that implement the ‘one district, one product’ scheme with the help of FPOs.
Has the Modi government strengthened MSP? Of course. The numbers speak for themselves. The Congress-led UPA, between 2009 and 2014, purchased a measly 1.52 lakh metric tonnes (LMT) of pulses at MSP, while the BJP-led NDA, between 2014 and 2019, purchased 76.85 LMT of pulses at MSP. For oilseeds, the numbers are 3.65 LMT under the UPA and 30.17 LMT under the Modi government. It needs to be mentioned here that while MSP is applicable to 23 crops (7 cereals, 6 pulses, 7 oilseeds and 4 commercial crops), in most states in India, over 50% of the MSP is cornered by just two crops, namely, paddy and wheat. MSP was started in the 1960s when India was a food-deficit nation. But today, India is a food-surplus economy, with agricultural production hitting a record high of 277.49 million tonnes, 284.83 million tonnes and 291.95 million tonnes in FY18, FY19 and FY20, respectively. Despite this, the Modi government has been provided hand-holding to the nation’s farmers as Narendra Modi has always cared for India’s annadata.
It also needs to be mentioned that Prime Minister Narendra Modi’s agrarian reforms have been far-reaching and inclusive. Over 6 crore farmers are taking the benefit of the Pradhan Mantri Fasal Bima Yojana (PMFBY), paying a meagre premium of just between 1.5% and 5%.
Prime Minister Narendra Modi has famously said, “Mind is never a problem; mindset is”. Well, it is time for India’s hapless Opposition and pressure groups to wake up, smell the coffee and change their mindset, because the agri-reforms by the Modi government are pro-farmers and the farm laws are indeed India’s “Glasnost” moment, as these reforms will usher in greater transparency in India’s farm economy. For the Modi government, “Jai Jawan, Jai Kisan”, is not a mere slogan. The journey of the “Bharatiya Kisan” from being the “Annadata” to becoming the “Urjadata” is at the core of Modinomics in more ways than one.
The author is an economist, national spokesperson for the BJP and the bestselling author of ‘Truth & Dare: The Modi Dynamic’. The views expressed are personal.