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Are loan waiving and MSPs solution?

Updated: December 22, 2018 9:41 am

Agriculture is still the backbone of the Indian economy, which provides almost 43 per cent of total employment in the country. It is a fact that farming is a risk-taking business in India because of very less income, due to which farmers are shifting from agriculture to other businesses.  Those who are still in farming have searched an alternate source of income and those who still depend on farming are big farmers. One of the interesting facts about agriculture is–according to the World Bank report in 2017–after 1991, employment in the agriculture sector has gone down in every developing country. In 1991, 55 per cent GDP of China was from agriculture, but after 28 years, it is almost 18 per cent. In Vietnam, 75 per cent country’s GDP was from agriculture in 1991, which has decreased to 40 per cent now. In Brazil, the number has decreased from 28 per cent to 10 per cent. In the US, the number has decreased from 3 per cent to 2 per cent. In Bangladesh, contribution of griculture in country’s GDP has reduced from 70 per cent to 38 per cent.  Having said that, owing to globalisation and rapid economic development, all the governments are focusing on infrastructure development and manufacturing sectors, which create more opportunities and more profits compared to agriculture. However, in the last three decades, employment in agriculture has increased in African countries because of foreign investment from China, the US, and India. One of the reasons behind the agricultural growth in Africa is big farmland and less infrastructure development.

Now coming to the point, the recently concluded five state elections were full of promises. In Madhya Pradesh, the Congress in its poll promises had said that it will waive farmers’ loan within ten days if it comes to power. Telangana Rashtra Samiti (TRS) chief and Telangana Chief Minister K Chandrashekhar Rao had also promised of waiving crop loans up to Rs 1 lakh. Recently Prime Minister Narendra Modi-led NDA government announced to provide Minimum Support Prices (MSPs) of 22 Kharif and Rabi crops. This decision of the government was historic because it provides 50 per cent return over cost of production for the first time for all mandated crops. Modern technologies have wiped out rural jobs of unskilled labors and by the dint of this, they have been forced to migrate from rural to urban areas. Here it is important to mention that migration is not new, but this migration has increased more in the last 20 to 30 years.

In the wake of 2019 general elections, the country has witnessed various farmers’ protests in last six months. But it is also true that most of the protests are politically motivated. In India, 60 per cent are small farmers who own 1-3 acres of land, 19 per cent fall in the category of medium farmers who own 4-9 acres of land, 7 per cent are large farmers who own 10 or more acres of land and almost 14 per cent of farmers are only cultivators who don’t own any land. One of the most important things is that due to the partition of family, the area of farming is shrinking day by day and this the reason why the production cost is increasing.  If the population increases ahead and the family of those people who own small land are divided, the majority of the farmers would have very less land to cultivate with. So it is clear that the real problem is the rural economy and employment, not farming. People in remote areas are becoming ambitious and they are aspiring like those of living in urban areas. They also need opportunity, and due to little agricultural land, they cannot fulfill their aspirations.

Now the fact of the matter is, are loan waiving and MSPs capable to tackle the rural distress? A few days back, a report from the Karnataka government revealed that Rs 44,000 crore loan waiver has helped only 800 farmers so far in Karnataka. Somewhere down the line, it indicates that loan waiving is not a solution unless the source of income increases in rural areas. Loan waving will only reduce the country’s exchequer.  When we talk about Minimum Support Prices (MSPs), it would surely benefit small farmers. However, the production of small farmers is so small that it cannot provide sustainable income to them. Therefore, MSPs is also not a full-time solution to fight  the rural problem.

Speaking on this issue, Ashwani  Mahajan, Co-convener of Swadeshi Jagaran Manch (RSS), says  “MSPs is not a solution, but at least it will help farmers to remain in farming. If farmers stop cultivating, who will do it?” However, along with MSP,  we need to increase employment opportunities by diversifying crops, encouraging nonfarm activities like food processing, fishing, animal husbandry, poultry, mushroom farming etc. apart from floriculture and horticulture, employment opportunities and income generation can be manifold; and the same can change the rural scenario, Mahajan emphasised and further added that the government support in the form of small credit, technology, extension activities can do a lot in this direction. Taking people out of rural areas to burden urban areas does not benefit anyone, he added.

Therefore, it is worth mentioning that only agro-based economy can tackle the rural problem. Food production industries should be set up in small towns, which will not only give the appropriate price of corps, but also generate jobs in rural areas, which will put a stop to migration. Lack of proper information about crops and its market demands are also one of the reasons for rural distress. However it is also true that the NDA government has endeavored to bring innovative ideas like soil health card, Neem coated urea and rainwater harvesting, which can tackle this problem.

By Ravi Mishra

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