Crocodile tears over farmers
The just-concluded session of the Indian Parliament was dominated by the issue of agriculture, particularly the controversies surrounded by the proposed changes sought by the Modi government in the laws regulating land acquisitions from farmers. As a former cabinet minister under Manmohan Singh says, the amendments sought by the Modi government have given â€œsanjeevaniâ€ to the dying Congress party. Congress Vice President Rahul Gandhi (and he has got now support of almost all the opposition parties) has emerged as the leading news-maker in the country for his virtual political war against the Modi government over the issue of the farmers. On the other hand, Modi also claims he has done what he could do in the interests of Indian farmers, not otherwise.
Nobody disputes the fact that nearly 70 per cent of the population of India is engaged in agricultural and allied activities. Those holding less than one hectare of land constitute 62 per cent of the population while others with 1-2 hectares make up another 19 per cent. Then there are the landless farmers. Actually, the truth is even harsher given the fact that most of those depending on agriculture or farmers are often underemployed since fulltime farming is dependent on a number of variables. Farmers have not enough land to cultivate on a big scale with their small, often tiny, holdings; majority of them are still dependent on erratic monsoonal rainfall for agriculture; the yield of the crops in the country is low in comparison to the international level; faulty strategy of irrigation and agricultural development is degrading land resources in the forms of alkalinity, salinity and water-logging, thus badly affecting the fertility of the soil.
In a sense, poverty in India has become intrinsically linked with the overdependence of the majority of Indians on agriculture. But then, this linkage between overdependence on agriculture and poverty is something that has been true of every country, including those that are among the worldâ€™s richest and highly indutstrialised today. Take for instance, the case of the United States. In the year 1800, as many as 74 per cent of the Americans depended on agriculture, but today about 2.5 per cent Americans are engaged in agricultural work. If we apply this fundamental principle to India, then it becomes obvious that we continue to be a poor country essentially because agriculture is still the largest source of employment in India, with more than half of the countryâ€™s population being dependent on agriculture for livelihood. And the irony here is the fact that despite so many people engaged in agriculture and allied activities, the economic contribution of agriculture to the overall GDP (Gross Domestic Product) of the Indian economy has been declining over years; it was 42 per cent in 1951, but only 12 per cent now.
The universal law is that the lesser the contribution of the agriculture to a nationâ€™s GDP, the more advanced it is. But then, as we have seen in Indiaâ€™s case, if we are still poor despite the declining contribution of agriculture to our GDP, it is essentially due to the dependence of half of Indiaâ€™s workforce on agriculture. Therefore, in my considered view, the real problem with Indian agriculture is not its negligence, but overdependence on it. But, the Indian politicians do not think so. For them, what matters more is votes and how to buy them. The result is that with each passing year, we hear more demands to subisdise the farmers. And it is in the name of the farmers that the Government of India reneges on its international commitments such as World Trade Organisation (WTO) obligations.
I am not an agricultural economist, but my little knowledge of subsidy-politics tells me that in India agricultural income is not taxed. Fertilisers and seeds are given at highly concessional rates to the farmers. So also the diesel supply to them for their water pumps and tractors. Electricity in many states is virtually free to the farmers. The government then determines the minimum prices that one has to buy products from the farmers. In case of natural calamities, such as rains and cyclones and droughts, the government distributes millions of rupees free, all in the name of helping the farmers. Banks are under governmental directives to provide loans with absolutely low or no interests to the farmers; but more often than not, the governments, whether at the centre or in the states, waive such loans.
But does this freebie-politics help the Indian farmers? It does not help the real needy among the farmers, who constitute, as we have noticed, more than 80 per cent. It only helps the better ones among the farmersâ€™ community. Let me quote a Bloomberg news item of December 2014:
â€œVattikuti Prasad grows rice, bananas and sugar cane on his farm as big as 27 football fields in a part of southeastern India where most farmers own plots the size of just one. He has two homes, including a four-bedroom house he rents out in a nearby town.
â€œThis year Prasad took out at least 120,000 rupees ($1,940) in cheap farm loans from State Bank of India and said he planned to use them to open a third branch of his pesticide and seed business in the state of Andhra Pradesh. And for the second time since 2008, he wonâ€™t be paying the money back: The government has offered to forgive 350 billion rupees in agricultural loans, according to a report seen by Bloomberg News. â€˜It is easily available, so Iâ€™m taking it,â€™ Prasad, 37, said while counting a wad of 1,000-rupee notes from his shopâ€™s cash drawer under a noisy ceiling fan in the punishing heat. As many as 80 per cent of fellow businessmen in his town of Tanuku, a 400-kilometer (250-mile) drive from Hyderabad toward the Bay of Bengal, have spent their farm loans on all kinds of things, especially buying more land, he said, with the confidence the money is free. â€˜Why should we repay now?â€™
â€œAs part of campaign promises to win re-election earlier this year, officials in Andhra Pradesh as well as neighboring Telangana state promised farmers debt relief. Andhra Pradesh offered to waive as much as 150,000 rupees per farmer, Telangana 100,000 rupees. Both states are following a 2008 precedent, when the central government forgave 710 billion rupees in loans to 40 million farmers nationwide, partly in response to a wave of suicides linked to indebtedness.â€
The point is that governmental benefits have been cornered by well-to- do, rich farmers with political connections. Overwhelming majority of the farmers remains poor and indebted to the local money-lenders. Because, they do not have enough guarantees to procure loans from the banks. But, and this may sound strange, these really poor farmers do not commit suicides that our politicians point out from time to time. Suicides are often committed by farmers who are relatively well to do and had invested quite a lot in what is called cash-crops that failed or in bore wells that dried because of excessive use. In any case, there are now enough literatures to suggest that farmersâ€™ suicides are not different (neither more nor less) from suicides in general in the country.
Of course, it is a fact that farmers in the rich and industrialised countries also get huge subsidies. But the essential difference there and the farmers here in India lies in the productivity. The United States and European countries are way ahead in overall agricultural production. They produce much more than what their residents consume. No wonder why worldâ€™s top 10 agriculture exporters are the United States, France, Netherlands, Germany, the United Kingdom, Canada, Australia, Italy, Belgium and Spain. Each of them is highly industrialised, thus negating the myth that industrial development is the enemy of agricultural development. As a matter of fact, enhancing the agricultural output has nothing to do with the number of farmers. Important is quality, not quantity. Even China, which has less cultivable land than India, has outstripped India in agriculture, even though the two countries were more or less on a par on most parameters 25 years ago.
Our politicians have never bothered to go to the depth of the agricultural problem. For them, the solution lies in providing more and more subsidies and free distribution of rupees. But the real solution, as has been proved in China, is through spending more on agricultural research, applying modern and scientific methods of cultivation, increasing the rate of irrigation growth, improving the water management style, and shifting emphasis from rice and wheat cultivation towards horticulture, livestock and fisheries. We have also not encouraged much the private sector to invest in agriculture.
Finally, the real problem with the Indian farmers is that there is not enough cultivable land in India to sustain the livelihood of half of the countryâ€™s population. The best way of helping the landless, unemployed, underemployed and poverty-stricken farmers of India is not to keep them captive of the agricultural sector but to empower them in such a way that they have options to choose non-agricultural careers, something my father realised and worked for me and my brothers. The moral of the story, thus, is that if you want to emancipate the farmers from their poverty then help them acquire adequate abilities or skills to look for a vocation outside agriculture. And help those who have got adequate land, and more important, the will to stay with their land, with new techniques, styles and expanded infrastructures so that agriculture becomes a profitable proposition.
By Prakash Nanda