By
Manish Kumar
The incumbent Bharatiya Janata Party (BJP), backed by the right wing ideology has been elected for the second consecutive term in India. The Modi-led BJP government has been endorsed with 303 seats in Lok Sabha out of 543 with the largest vote share (44%), 5% more than their vote share in 2014. This enormous mandate is received by BJP at a juncture when the country is facing one of the worst phases of the economy in the recent past. Industrial manufacturing growth is low[i], the unemployment rate is highest in the last 45 years[ii], and the rate of growth of investment, export and consumption demands are going down.[iii] Needless to mention that the mandate is reflective of their ground work strategies to pull votes on communal lines, despite serious economic and policy failures. The workers and peasant movements have been significant in the past few years.
It is worth noticing that agriculture, which employs 42 per cent of the workforce in India, remained neglected for the last five years. The Government’s expenditure on agriculture remained less than 2.5 per cent of the total Union budget and 0.3 per cent of GDP of India in the last regime. The numbers are not much different from the Congress-led Government during 2009-2014. However, for the election campaign during the 2014 election BJP had promised to provide a higher price for agricultural products. But after coming to power, agriculture could not get the attention of the ruling party.
Agrarian crisis is the result of output and price insecurities that has affected farmers across all agro-ecological regions in India. Against the output insecurity, ‘PM Crop Insurance Scheme’ of the BJP-led Government became a huge scam. According to observations made by P. Sainath, a renowned journalist, the farmers paid an insurance premium of Rs 192 million in one district of Maharashtra state of India, the state government and the central governments paid Rs 770 million each, amounting to a total of Rs 1732 million, which was paid to Reliance Insurance. The entire crop failed, and Reliance Insurance paid Rs 300 million in one district out of the total claims, giving it a total net profit of Rs 1432 million.[iv] This is the classic case to indicate how the crisis of farmers can be used to make profit by the private companies. However, the number of beneficiaries of PM Crop Insurance is minuscule; as per latest available numbers, only 15 per cent of the total farmers in India had benefited from an insurance cover for Kharif Crops (Monsoon Crops) and 4 per cent for Rabi Crops (Winter Crops).[v]
If farmers somehow manage to harvest crops, still they will face price insecurity that results in either negative return or very low return over the cost. The Minimum Support Price (MSP) mechanism was devised to deal with such price insecurities, but, in the new liberal era, this too faced manipulation. Under the Congress party-led United Progressive Alliance (UPA) regime, between 2009 and 2014, the MSP of Paddy, fixed by Government of India, was on an average, between 24 and 27 per cent higher than the national average of Cost of Production (CoP) of paddy. However, the figure decreased to 6-9 per cent under the four years of the BJP-led regime between 2014 and 2018. It should be noted that the Government of India declares MSP at the national level, but, the CoP is different for different states, and that is why there are some states where MSP is less than the CoP.
Figure 1: MSP to CoP Ratio for Paddy in India between 2009-10 and 2017-18
Source: Rajya Sabha Unstarred Question No. 2971, dated on 07.09.2012, Lok Sabha Unstarred Question No. 2199, dated on 10.03.2015, Question No. 2506, dated on 04.08.2015, Question No. 349, dated on 01.12.2015. & Question No. 2924, dated on 13.03.2018.
From figure 1, it is also clear that in the five years of the UPA regime, the percentage height of MSP over CoP of paddy declined. However, there was no attempt made for revival by the NDA Government. The average annual growth rate of MSP of paddy under UPA was 7.5 per cent, whereas it decreased to 6 per cent under five years of BJP-led regime.
It should also be noted that the MSP is effective only in the case of progressive public procurement. It has been observed in many studies that price received by the farmers in the absence of public procurement is generally less than the MSP. The decline of procurement-production ratio began under UPA regime; in 2009-10, the public procurement agencies procured 36 per cent of rice and 31 per cent of wheat produced in the country, the numbers decreased to 30 per cent and 26 per cent respectively in 2013-14. Like previously mentioned indicators, the BJP-led Government did nothing to increase the procurement; in fact, the procurement production ratio has become worse. In the five years of the UPA Government, public agencies procured 33 per cent of rice and 31 per cent of wheat. In the four years of the BJP-led Government, the number decreased to 32 per cent and 29 per cent respectively.
Figure 2. Procurement Production Ratio of Paddy and Wheat between 2009-10 and 2017-18
Source: Calculated by author, data from Reserve Bank of India.
So, the combination of output insecurity, decreasing MSP and shrinking public procurement of crops have deepened the crisis in a manner that farmers are finally pushed into a debt trap. In the last decade, on a couple of occasions, the Government agencies surveyed the debt situation of agricultural households in India. The Situation Assessment Survey of Agricultural Households conducted during 2012-13 by National Sample Survey Office of the Government of India reported that out of the total loan taken by farmers, 39.4 per cent are from informal sources that charge a huge interest rate.[vi] Another agency, National Bank for Agriculture and Rural Development, reported on the basis of All India Rural Financial Inclusion Survey, during 2016-17 that agricultural households borrowed 39.8 per cent of the total loan from informal sources.[vii] The debt situation of farmers did not improve under the BJP-led Government; in fact, there is a marginal increase in coverages of informal lending sources.
The debt remained one of the major reasons behind farmers’ suicide in India. According to National Crime Record Bureau data, between 1995 and 2015, nearly 322 thousand farmers committed suicide in India, which means nearly 45 farmers, on an average, committed suicide every day.[viii] In the last three decades, several Governments came, including Congress and BJP, but the farmers’ situation remained almost the same. On the issue of farmers’ suicide, the Modi-led Government did nothing except one thing; the Government stopped publishing the Suicide Data.[ix]
Unfortunately, amid jingoism and loud election campaign, none of the above-mentioned factors could capture space in political debates. The corporate media had also played a significant role in wiping out the issue of agrarian distress from the political arena. In front of the communal speeches and biased media coverage of political rallies, left parties were almost ignored, and other major political parties could not mainstream the issues of workers and peasants. So, the support for second inning of Modi-Government certainly does not mean the improvement of agrarian community in the first inning of his rule. Hopefully, the suppression of the reality by the Government will give strength to the oppressed agrarian community and very soon, they will stand together to change the scenario.
Manish Kumar[x]
Twitter: @JNUManish
Senior Research Fellow
Centre for Economic Studies and Planning
Jawaharlal Nehru University
[i] https://economictimes.indiatimes.com/news/economy/indicators/weak-manufacturing-drags-industrial-production-to-23-month-low-of-0-1/articleshow/69269732.cms?from=mdr
[ii] https://www.thehindu.com/business/Economy/unemployment-rate-at-45-year-high-confirms-labour-ministry-data/article27379174.ece
[iii] https://thewire.in/economy/explained-the-slowdown-in-indias-consumption-growth-story
[iv] https://www.business-standard.com/article/news-ians/nda-s-crop-insurance-scheme-bigger-scam-than-rafale-p-sainath-118110300875_1.html
[v] https://pmfby.gov.in/stateWiseDataPage
[vi] http://mospi.nic.in/sites/default/files/publication_reports/KI_70_33_19dec14.pdf
[vii] https://www.nabard.org/auth/writereaddata/tender/1608180417NABARD-Repo-16_Web_P.pdf
[viii] https://www.downtoearth.org.in/news/45-farmers-commit-suicide-each-day-in-india–34387
[ix] https://scroll.in/article/881265/india-has-not-published-data-on-farmer-suicides-for-the-last-two-years
[x] Author is a PhD Scholar at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi.
