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Posted at: Jan 6, 2019, 7:29 AM; last updated: Jan 6, 2019, 7:29 AM (IST)

Wooing farmers, (not) the BJP way

Vibha Sharma in New Delhi

The Narendra Modi government’s much-hyped “C2+50” minimum support price has failed to impress the farmers. Its other welfare measures for the farmers, for instance the Soil Health Card Scheme that the Prime Minister recounted in his New Year interview and the Pradhan Mantri Fasal Bima Yojana, have not worked the way they should have. The community — a huge cache of votes by all accounts — is disgruntled. And all this does not bode well for Modi, certainly not in the election year.

Ideologically, the BJP stands opposed to the electorally popular wooing formula of a loan waiver. But trapped it has been by Congress chief Rahul Gandhi’s superbly timed political dare. The party finds itself under pressure to announce “some relief”, some targeted scheme that can provide immediate succour to the farmers ahead of the General Election.

Even the most die-hard of government supporters agree “something will have to be done”. In what form, how and when, is what senior functionaries in the PMO, the Finance Ministry, the Agriculture Ministry and the Niti Aayog are currently burning the midnight oil for. Time is running out, and there are just a few more days to go before Finance Minister Arun Jaitley presents his vote on account, and the country gets into an election mode. For the BJP, it is a tough situation. Each idea and model comes with a downside — a cost burden adding to the country’s stressed-out economy. So, the model has to be one that keeps the farming community engaged with the BJP and also does not stress the economy amid falling GST collections, fiscal deficit, etc. The leadership also does not want the sops to be perceived as a sign of weakness or appeasement by another set of unhappy voters, the BJP’s core bank: the middle class.

Speculation has been rife that the announcement of the measures could be made anytime. However, the right time for any such move would have been the last full Budget Jaitley presented in 2018. Whether the party now launches a comprehensive programme by way of substantive intervention or a loan waiver at the central level, it may not make the right impact. Meanwhile, several models are under consideration. The government may tweak the MSP regime to make it more effective; perhaps extend the window of selling throughout the year to reduce stress on farmers. However, the support price on farm produce cannot be raised beyond a point. If it is not supported by demand, it then stands the chance of becoming distorted and unaffordable.

There is speculation that the government may opt for a liberal scheme under which a farmer can get the difference between prevailing market rates and the support price, something on the lines of the Bhavantar Bhugtan Yojana, a scheme initiated by the former chief minister of Madhya Pradesh, Shivraj Singh Chouhan. However, this model has its own issues. There have been cases of incentives being misused by middleman and cartels. A model focusing just on poor farmers and based on the Socio-Economic and Caste Census is another option. Politically, it might be more acceptable than a blanket kind of a farm-loan waiver.

There is also talk of direct money transfer, something on the lines of Telangana’s Rythu Bandhu scheme. However, apart from crunching funds, the absence of clear land records is a major challenge for the scheme. A large section of land is cultivated on what is called the ‘patta system’. A farmer actually in need of help may not get the assistance while a wealthy landowner sitting in Delhi or Mumbai may get the largesse in his account because, on records, he is the owner of the land. This has happened in many states such as Bihar where well-off farmers/landowners have been beneficiaries of the government’s populistic schemes.

Sources say the government is also considering doubling collateral-free loans under Kisan Credit Cards (KCCs) to Rs 2 lakh and tweaking the crop insurance scheme to enhance coverage and ensure faster settlement of claims.

Whatever the government decides on, the help may be “too little and too late”, especially if the government’s immediate aim is the 2019 General Election. It comes at an additional cost, at least Rs 70,000 to Rs 80,000 crore, and the promises will have to be implemented by the next government.

Mulling over

  • The government is considering direct benefit transfer by consolidating all farm-related subsidies.
  • It is also considering adding the cost of land to the calculation of MSP as per the C2+50 per cent formula.
  • The government could offer farm loans at zero per cent interest.

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