Offer farmers a new deal

Representative photo from iStock

For the new government, the focus must shift to the crisis under which rural India, or Bharat, is reeling. This will ensure India as a whole is viksit or developed. Reviving the rural economy should be the top priority, as Bharat has the largest number of consumers that contribute significantly to the national GDP (gross domestic product), mostly driven by consumption. Rural India is the biggest workforce and its primary vocation, agriculture, is also the biggest employer and accounts for over a sixth of the national GDP.

India is undergoing a deep economic crisis, caused by near stagnation in the rural economy. Farmers currently earn more from wages than cultivation. Farming does not even support sustenance. Moreover, various assessments show those who took up distress earning activities like migrating to urban areas to work in construction and other daily-wage jobs, are returning to villages and have by default joined agriculture. This means an already stagnating sector has more people to support, which leads to lesser earning, negatively impacting consumption. This explains the sluggish rural consumption expenditure that critically impacts overall national private consumption expenditure. It also explains the rising unemployment and underemployment.

In the just concluded general elections, unemployment, price rise and farm distress emerged as key issues. Some notable electoral reversals can be attributed to these issues. In the past five years, farmer protests have been much discussed. While farmers continue to produce record amounts of crops ensuring the country’s food self-sufficiency, their own economic status has effectively dipped. Their grievances include the declining return from farming and the added crisis of erratic weather events damaging crops. Protesting farmers mostly demand two forms of support: policies ensuring fair price for produce and insurance against crop losses, primarily due to weather incidents. The market is not in favour of farmers but it can be through government policies that aim to support them. Instead, to protect consumers against a price rise, the government allows large-scale import of agricultural produce.

The government has a plethora of schemes and strategies to ensure that farmers are protected from market vagaries. From setting up a price stabilisation fund to maintaining prices of certain products to insuring crops against weather uncertainties, the Union and state governments have implemented over 200 schemes that cover the complete agricultural cycle. But none of them cater to even 15 per cent of India’s farmers. So, the first item on the agenda of the new government should be to repurpose “farmer-friendly” schemes to farmer-enabling support, as seen in sectors like manufacturing.

Agriculture as an economic sector has never received the kind of strategic nurturing it deserves. Since the Green Revolution, India has witnessed many changes in its economic profile. New economic sectors have emerged in the last five decades, and the way India adopted them to evolve as an emerging economy is an example of the support agriculture needs. Take the case of information technology (IT). Within two decades of its arrival as the new-age economic sector, India put all its governance might to emerge as an IT leader. On the other hand, the government’s approach towards farmers and farming has never been of consistent support, except for politically-correct schemes and budgets.

It is clear that the shift to the non-farm sector is not that fast or remunerative. This policy has been India’s official pathway to ensure employment and livelihood to the booming workforce. Now that this is not effective, the new government must adopt a new approach: make agriculture profitable again. This has the co-benefits of ensuring gainful employment as well as a boom in the rural economy. But this needs a new deal for the farmers who, like those in the new economic sectors, should be enabled to prosper.

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