‘Krishi dhanya, krishi medhya, jantonav jeevanam krishi (Agriculture provides property and intellect and forms the basis of human life)’
According to the Economic Survey 2017-18, agriculture accounts for 16% of the country’s GDP and 49% of the employment. Today, despite the significant place of agriculture in the Indian economy, India is undergoing chronic agrarian distress. My Private Member Bill on this issue, Krishi Utthan Bill, 2019 which was due in the Budget Session of the Parliament aims at assuring basic income to farmers. This article is an attempt to weigh in and analyze the need, merits, scheme, and framework of the Bill.
Agrarian Distress – The Satus Quo
Today, Indian agriculture faces twofold problems – ecological and economical. The conservation of our basic agricultural assets and how to make agriculture sustainable as well as profitable is the challenge. Increasing productivity in perpetuity without ecological harm is the need of the hour. So, the economics of farming needs to be profitable. In order to appreciate the problems a farmer faces, one needs to interact with them. Policies cannot be framed and implemented in a vacuum. The more we connect with them, the more will we have a better understanding of their problems.
Two major factors that influence the farmers are market and monsoon. The market fluctuates due to the uncertainty of monsoon thereby putting the farming sector in crisis. Today, the distress is multi-dimensional involving social, economic, technological, gender and ecological aspects and therefore, policy changes need to be incorporated and agriculture progress can take place only by the synergy between policy and technology.
As detailed in the Statement of Objects and Reasons of the Bill, the state of farmers in India is in a dismal state. National Crime Records Bureau numbers present an even more bleak picture: in 2015 alone, a total of 12602 persons involved in the farming sector committed suicide, accounting for 9.4% of total suicide victims in the country. Added to this is the fact that 70% of households own farms less than 1 hectare (marginal farmers). Their monthly average monthly consumption that is more than the total income, thus forcing the farmers to indebtedness.
Having gauged the need of critical interventions in the agricultural sector, governments in the past (and the incumbent one as well) have enacted and enumerated various schemes and a plethora of policy measures to support farmers. However, a majority of these schemes have been trapped in a web of impediments – populist measures, policy paralysis and poor implementation of policies.
The Bill has diagnosed the maladies that farmers in this country are exposed to, which are including but not limited to the high fragmentation of land, heavy dependence on monsoon, fluctuating income, and high indebtedness. Additionally, farmers have historically been subjected to exploitation and the state has failed to improve their conditions for decades together. All of this points out singularly and decisively to the conclusion that the existing support measures are not enough.
The Way Ahead
As Dr. M S Swaminathan rightly puts it “If agriculture goes wrong nothing else goes right.” Historically, the framers have been failed by the state. But the question is, do the farmers of this country, who constitute nearly half of the working population, also not need to eat nutritious food, live a healthy and dignified life. The condition so far has been distressing with marginal farmers and their families forced to survive on bare minimal.
There is a need for a 4-pronged strategy to mitigate and dissolve the agrarian distress that currently haunts the agrarian sector:
- reduce the costs of farming;
- fair price for their crops;
- protection against natural risks; and
- additional income of the farmers by the profit-sharing mechanism.
All the policy decisions, technical decisions and legal decisions of the Government at the State and Central level need to be based on these four levels. This Bill has done a phenomenal job in gauging the actual problems that haunt Indian farmers especially, the marginal farmers.
The Bill is a sincere attempt to undo the historic exploitation that generations of farmers have been subjected to. It paves the way forward with a focus on Co-operative Federalism; remunerative farming; to prevent farmers’ suicide, and focus on upgradation of living standard of farmers. The Bill stands out amongst all of such attempts to promote farmers’ welfare. It has a definite edge from the economical point of view as well as from the policy perspective.
For example, take a populist measure – farm loan waivers, which have faced criticism from most of the fronts. It is certain that such debt waivers negatively discourage debt repayment discipline and harms the credit culture. Furthermore, a large capita of Indian peasantry, who do not access institutional credit, are not entitled to any waiver. Thus, the benefit of the scheme is lost on marginal farmers, who continue to remain mired by informal sector indebtedness.
Similarly, the Minimum Support Price (MSP) doles assured to farmers by the government has also failed to work in the desired direction. The benefit of MSP mostly accrues to larger farmers and excludes a major chunk of marginal farmers. Added to it is the menace of market distortions and unsustainability by influencing crop choices of farmers.
Unique in its approach, the Bill has proposed a multi-pronged approach to resolve the crisis. It has proposed ‘Basic Income’ for the farmers as the way forward. Basic Income is a measure aimed at providing financial security by cash transfer to farmers, thereby ensuring them a minimum level if income which is guaranteed by the State. Such Cash transfers have repeatedly and consistently been hailed by experts to be a more economically viable solution to agrarian distress.
With a robust and viable legislative framework, as proposed by the Bill, the objective of alleviation of farmers’ woes shall be effectively addressed. This framework comes with a feature of permanency ensuring the consistency of sustained action and implementation as established by the policy over successive governments.
PROMINENT PROVISIONS OF THE BILL & THEIR IMPLICATIONS
The broad framework proposed by the Bill can be summarized as under:
- Setting up ‘National Agriculture Council’ to deliberate on the determination of necessary provisions of this Bill.
- Levying of ‘profit sharing’ cess at first PoS during an inter-state/intra-state sale for further value addition.
- Distribution of cess collected in ‘agriculture risk fund’ to the distressed farmers.
- Compensation by the center and states to farmers who have sold their produce below the MSP or any such price determined by the ‘National Agriculture Council’.
Definition of agricultural produce is quite broad and expansive. It exhaustively deals with almost every section of people involved in agriculture and allied activities.
National Agricultural Council: The proposed National Agricultural Council is enshrined as a modern tool of cooperative federalism. Modeled along the lines of the GST Council, the National Agricultural Council in its constitution, structure as well as the weight of votes have put further emphasis on the spirit of center-state relations and shared responsibility. States have been given an equal say and share in the scheme as laid out by the Act. All of this gives more scope for coordination in implementation and uniformity in application across the country. Additionally, the power and authority vested in the Council are appropriate, considering the range of activities it has to perform, by the mandate of the Bill.
Profit Sharing Cess: The main rationale behind levying ‘profit sharing cess’, as mentioned in Bill’s Statement of Objects and Reasons, is that farmers tend to sell their produce at minimal prices even below the input costs. Value addition has become very important today. The same potato selling at a minimal rate has multiplied sale prices when it is converted to wafers or chips. The enormous price margins enjoyed by the MNCs and large producers are seldom passed on to the deserving farmers who toil in for days together in harsh weather to produce the agricultural product.
Agriculture Risk Fund: The Bill provides that the proceeds from the cess shall be credited to a non-lapsable Agriculture Risk Fund, therefrom distributions would be made towards the basic income of farmers. One obvious advantage of the Fund will be the bearing of the immense financial burden that would otherwise have fallen on the exchequer.
The Bill further provides for pro-rata distribution of funds to farmers recording an income lesser than a specified sum. This will ensure that the deserving small and marginal farmers, and those in dire need shall receive the benefit. The Agriculture Risk Fund can also be used for paying compensation on account of agricultural losses due to natural disasters and for the development of agricultural infrastructure.
Price Deficit Compensation: In the incumbent MSP regime, a plethora of reports on the abuse of process and less than MSP price realization exist. Having considered the need to make good the ‘price deficit’, the Bill has proposed a framework for providing compensation to farmers who have sold their produce below MSP. This has been done so as to ensure that farmers receive the fair-assured-minimum prices for their produce.
These salient features are outcome-oriented and shall go a long way in serving the purpose behind the Bill.
Conclusion
The Krishi Utthan Bill, 2019 provides for basic income and envisions equitable sharing of profits with the anna-data(farmers). In light of the looming condition of Indian agriculture, the Bill is the need of the hour. To sum up, it provides for a self-financing and self-sustaining framework to alleviate farmers’ woes by assuring a basic income and guaranteed distress relief.
Seeds are being sown for a new era in Indian agriculture where the farmers are empowered, self-sufficient, prosperous and enjoy a better standard of living. All of this has a painted a rosy picture for farmers who, in the past, have consistently been failed by the Indian state. May this vision materialize!
(With inputs from Abhishek Ranjan, and research interns Aditya Kashyap and Amit Pandey)