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Posted at: Jan 29, 2018, 12:35 AM; last updated: Jan 29, 2018, 12:35 AM (IST)CRYING FOR ATTENTION

Will the Budget stimulate farmers’ income?

The farmer is crying for structural change to make the agriculture sector vibrant so that it serves as a pivot for revival of the rural economy, thereby creating employment opportunities for the youth, says Devinder Sharma
Will the Budget stimulate farmers’ income?
We have a vision of doubling the income of farmers by 2022— Narendra Modi

After two consecutive years of back-to-back bumper harvest in 2016 and 2017, prices for almost all the crops had crashed forcing the farmers to dump their produce onto the streets at many a places. As if this was not enough, demonetisation had further hit rural wages. Farmers across the country were unable to realise even the production cost. As per the National Crime Record Bureau, this had led to an unprecedented spurt in rural anger with recorded incidents of farm protests multiplying by a staggering 670 per cent, up from 628 in 2014 to a record high of 4,837 in 2016. 

The slump in prices had certainly aggravated the farmers' anger. But it is not only low prices that plague agriculture pushing farmers deeper and deeper into a livelihood crisis, it is a whole plethora of structural changes that farming is crying for. In a country where 52 per cent of the population is directly or indirectly engaged in farming, the path to ‘Sabka Saath Sabka Vikas’ passes through agriculture. 

Farm incomes had increased by a mere 3.6 per cent between 2002-03 and 2012-13. Subsequently, Economic Survey 2016 had pointed to an average annual farm income of Rs 20,000 in 17 states or in roughly half of the country. At this rate, doubling the farm income by 2022 seems more of a guffaw. Considering that only 6 per cent farmers receive Minimum Support Price (MSP) and even that is fixed below the cost of production for most crops, it is high time to shift the policy focus from the existing 'price policy' to 'income policy'. The Commission for Agricultural Costs and Prices (CACP) needs to be renamed as the Commission for Farmers Income & Welfare with the mandate to provide a minimum assured living income of Rs 18,000 per month to each farming family. 

A vibrant agriculture will serve as a pivot for revival of rural economy thereby creating employment opportunities for the rural youth.  In Punjab, over the past few decades, worsening agrarian distress coupled with growing unemployment had led to frustration among the rural youth. With not much scope for alternate means of employment or income generation, rural youth took to drugs and alcohol as the means to seek solace. In such a depressing scenario, agriculture alone has the potential to reboot the economy. If only the government was to create gainful employment in agriculture, by providing a higher income into the hands of the farmers, more demand could be created thereby leading a revival of the industrial and manufacturing sectors.

I have two suggestions here. To realise a better price, investment priority should aim at creating more market infrastructure. At present, there are only 7,600 APMC-regulated mandis against the requirement of 42,000 mandis within five km radius. Budget 2018 can easily make adequate financial allocation for setting up 20,000 mandis to begin with. The state should be under an obligation to purchase any farm commodity for which an MSP has been announced and that is brought to the mandis. Unless the entire cost is borne by the Centre, the promise of procuring all crops will remain an empty rhetoric. 

Secondly, taking a cue from Telengana to make up for the crop losses in the past two years, there is a need to provide an economic stimulus package of Rs 4,000/acre per season for farmers. In Telengana, all farmers, irrespective of how much land they own, are eligible to receive an incentive of Rs 8,000 per year. Further, like in Karnataka, dairy farmers too need to be given an incentive of Rs 5 per litre for milk. All trading in e-NAM (National Agricultural Market) platform or under bhavantar schemes should be linked to procurement price and not model price as is the practice. Model price is in reality a distress price, a smokescreen for exploiting farmers.

— The writer is a commentator on agriculture and agro-economics


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