Elections to the Parliament may be a year away in India, but the BJP government under Narendra Modi is already gearing up for it. The Gujarat state election results may have been on the party’s mind as it announced a budget that wasn’t well-received by the middle class—the Bombay Stock Exchange dropped nearly 800 points the next day as a long-term capital gains tax was introduced. But the budget had a decidedly rural and agricultural focus, two points on which the BJP found itself on the back foot during the Gujarat elections, despite its overall victory.
The Indian Budget this time was the last full budget for the Modi government before the next elections in 2019. There was a clear eye on the rural vote, as the Modi government introduced several programmes intended for the voter from rural areas. First, there was the National Health Protection Scheme, which intends to cover INR100 million ‘poor and vulnerable’ families ‘providing coverage up to INR500,000 per family per year’. However, the operations of this massive health coverage programme, which is expected to cost the exchequer nearly INR100 billion initially, are yet to be finalised, thus the grounds for criticism that it remains a promise, and not much more. In any case, the decision to introduce ‘the world’s largest healthcare programme’, as finance minister Arun Jaitley described it, is definitive of the Modi government’s approach: expansive in vision, but with little focus on the delivery mechanisms. There’s also an upswing towards the commitment to building rural infrastructure; the target for the 2019 elections is to connect every rural settlement ‘with a minimum population of 500 in the plains and 250 in hilly, tribal and desert areas’ by an all-weather road, apart from increased investments in housing, electrification and irrigation programmes.
Trouble in agriculture
But nothing explained Modi’s eye on next year’s elections more than the announcement that minimum support prices (MSP) for crops would be fixed so as to ‘guarantee farmers a 50 percent return over their production costs’, one of the key demands of several farmer protests over the last year. Despite the impressive growth of the Indian economy, 34 farmers commit suicide every day. Agricultural growth slowed down to 2.1 percent in 2017-18, compared with 4.9 percent the previous year. And this is despite what was supposedly the ‘agricultural recovery phase’ between 2004-14, during which the sector grew at its highest-ever, at around 4 percent per annum.
Despite a normal monsoon after two years of low rainfall—which led to a bumper crop and a glut in agricultural produce—there have been several protests by farmers across India. In Madhya Pradesh, six farmers were killed in a police firing last June. In November, thousands of farmers from several states such as Tamil Nadu, Madhya Pradesh, Maharashtra, Uttar Pradesh and Punjab protested in the heart of Delhi. And in Gujarat, prevailing agricultural distress led to the BJP’s worst-ever electoral performance in the state in two decades. Then, there was the November 2016 demonetisation, which reduced trade in agricultural products by nearly 18 percent over a 90-day period since the announcement due to a lowering of prices. A whole year later, wholesale prices for crops remained significantly lower than pre-demonetisation prices. ‘Farmers across the country sold their bumper harvests at 30-50 per cent less than the MSP for all their produces during 2015-17,’ read a report from Down to Earth magazine.
In the Indian context, MSP is the price at which the government offers to buy farmers’ crops. Currently covering 25 crops, such as rice, wheat, cotton, raw jute, several types of daal, soya bean, rapeseed and mustard, farmers resort to selling to the government when market prices are below the MSP. Initiated in 1964, it has remained a cornerstone of the Indian agricultural policy, but even then, less than 5.8 percent of farming households across India are able to sell their produce to the government.
In recent years, Indian agriculture has witnessed droughts, demonetisation and an unprecedented price crash, resulting in a drastic fall in farm income. As a report concluded, even during the 2004-14 ‘boom’ period, ‘a member of an agricultural household earned around Rs 214 per month. But his/her expenditure was about Rs 207. In simple terms, a member had a disposal income of just Rs 7 per month.’ This is estimated to have fallen further since then. Further, in a bid to control inflation, food imports have soared, touching INR1.5 trillion in 2015/16, while the Indian farmer loses nearly INR6.3 trillion per annum because they aren’t able to sell their produce due to a lack of cold-chain infrastructural support.
Then there’s the massive elephant in the room: the annual Economic Survey of India report, which outlines the trajectory of the Indian economy in the coming years, had a section on the impact of climate change on Indian agriculture. Temperatures in India are predicted to rise by 3 to 4 degrees by the end of the 21st century, with an increase in the erratic nature of rainfall—we’ll see more dry days as well as days with very high rainfall in coming years. As a result, the report concluded, ‘farmer income losses from climate change could be between 15 percent and 18 percent on average, rising to anywhere between 20 percent and 25 percent in unirrigated areas.’
A real period of crisis
This is a significant drop in fortunes in an already distressed agricultural sector. A recent survey showed respondents thought the current agricultural crisis is perhaps the ‘worst’ in the last 15 years, with as many as 64 percent of farmers saying they ‘would like to leave agriculture and move to a city if they were offered a job there’. More worryingly for Narendra Modi, 53 percent of farmers said his government had done ‘a poor job in addressing their concerns’—a nightmare for a ruling party facing elections in a year.
Combining these realities with the forecasted climate change impact, it becomes clear that Indian agriculture is undergoing a period of crisis, compounded by crop failures and debts, the reasons behind 58 percent of all farmer suicides in the country. And while raising the MSP may be a short-term solution that offsets temporary price shocks, it will certainly not be a long-term measure that will enable Indian agriculture to stand on its feet.
The farmlands of Old India are a fair distance away from the steel and chrome offices of New India in Gurgaon, Bangalore and Mumbai, hence the often-divergent views that emerge about the Indian economy. The distress in Indian agriculture is camouflaged by the strong growth figures of the overall Indian economy, due to a robust services sector that is projected to grow at 7 to 7.5 percent during 2018/19. And looking around, in Delhi at least, the farmer’s woes are not evident at all. Food prices have mostly remained stable, with a few shocks in the form of tomato or onion prices in recent months. There is none of the doom-and-gloom that agricultural experts, economists and journalists have been writing about. And yet, the reality is stark. If Indian agriculture needs to be sustainable, it needs to look at not just short-term alleviative measures, but a longer-term thought process that takes into account the inevitable decline in crop productivity and farm incomes because of climate change.
Mulmi is a Nepali writer based in New Delhi.Published: 2018-02-09 08:13:25