Budgeting for Agriculture: How About Smart Villages, Mr Modi?

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For over two decades now, agriculture has suffered neglect, as successive governments, led by World Bank-prescribed growth models, have issued disproportionate doles to industry.While current allocations do not spell much hope, Devinder Sharma suggests what the Modi government can still do to reverse the trend.

I have never understood why Indian farmers are ignored. Even with a meagre outlay every year, they produce bountiful harvests. If only they were given a much-needed economic stimulus package, I’m sure they would flood the country with food, fruits and vegetables and India would certainly emerge as one of the biggest exporters of agricultural commodities.

During 2013-14, farmers produced a record harvest of 264.4 million tonnes of foodgrains. Production of oilseeds reached the record high of 34.5 million tonnes, with a jump of 4.8 percent. Maize production increased by 8.52 percent, to reach 24.2 million tonnes. Pulse production also reached an all-time high – 19.6 million tones – an increase of 7.10 percent over the previous year. Cotton production, too, touched a record high.

However, in the same year, when farm production recorded a quantum jump, agriculture received Rs 19,307 crore of the annual budget – less than 1 percent of the total budgetary outlay! This year – which promised to be the harbinger of “achche din” – saw Finance Minister Arun Jaitley allocating only Rs 22,652 crore to the agriculture and cooperation departments! Clearly, the apathy towards agriculture continues.

Agriculture in India employs 60 crore people, nearly 82.2 percent of whom are small and marginal farmers. Despite meagre land holdings and virtually no financial support, this majority segment has somehow managed to survive. Studies have shown that nearly 60 percent of farmers go to bed hungry. With agriculture deliberately being made economically unviable, more than 42 percent farmers would quit farming, given a choice.

Mainstream economists appear keen to push the farming population to the urban centres. With the World Bank viewing rural-to-urban migration as the ultimate indicator of economic growth, Indian economists have been parroting the same prescription. The Economic Survey 2013-14 points in the same direction. Raghuram Rajan, the governor of the Reserve Bank of India also echoes the same argument.

Rising food inflation comes in handy to up the ante against the minimum support price (MSP) being paid to farmers. The government is recommending that Agricultural Produce Market Committee (APMC) mandis be dismantled. Farmers are being pushed to accept the market doctrine, which means that distress sale will now become a norm.

In Bihar, which has had no APMC since 2007, markets have failed to infuse any confidence by way of economic prosperity among food growers. But that’s what the markets like. They want to source farm commodities ever more cheaply and further increase their profits. What happens to farmers, as a result, has never been their concern, nor will it ever be.

The neglect of agriculture has become more pronounced since economic liberalisation was introduced in 1991. I recall the famous budget speech of then Finance Minister Manmohan Singh, when he showered all the bounties on industry and, in his very next paragraph, said that agriculture remained the mainstay of the economy! Since agriculture is a state subject, he left it to the state governments to provide the crucial impetus to farming.

What he forgot was that, by the same logic, industry too, being a state subject, should have been left to the state governments. The bias was clearly visible.

Although agriculture grew at an impressive rate of 4.1 percent, in the 11th Plan period (2007-08 to 2011-12), itreceived the dismal financial support of Rs 1 lakh crore. For a sector which directly and indirectly employs 60 crore people, an outlay of Rs 1 lakh crore for five years was peanuts.

In the 12th Plan period (2012-13 to 2017-18), agriculture is projected to receive Rs 1.5 lakh crore. Compare this with the Rs 5.73 lakh crore tax exemptions showered on the industry in 2014-15 alone. This clearly reflects the state’s priorities and, in fact, as I have been saying for long, farmers have disappeared from the economic radar altogether.

Along with such low budgetary allocations for agriculture and the fact that public sector investments have been drastically falling in rural areas, there is no visible intention of the government resurrecting the farm sector, reeling as it is under terrible economic distress. As if this were not enough, all the noise in TV studios is over demands to cut down on subsidies meant for the poor – food, fertiliser, diesel, gas and the Mahatma Gandhi National Rural Employment Guarantee (MNREGA). But there is not even a whisper in favour of the removal of tax exemptions for Indian industry.

Since 2004-05, Corporate India has been showered with tax exemptions to the tune of Rs 31 lakh crore. This was expected to boost industrial output and create jobs. But while only 1.5 crore jobs were added in the past 10 years, industrial production has not shown any significant jump.

To add to it, Corporate India is sitting on a cash surplus exceeding Rs 10 lakh crores and has also defaulted on bank payments (these are called “non-performing assets,” or NPAs, for short) by another Rs 10 lakh crores or so. This clearly shows how the poor are being denied legitimate economic support, while resources are very conveniently diverted for the rich and elite.

However, I still expect Prime Minister Narendra Modi to reverse the trend and make historic corrections. During his election campaign, Mr Modi had repeatedly emphasised the dire need to make farming economically viable. He has also been talking about providing modern amenities in the villages. A beginning can be made by revitalising agriculture in a manner that brings back the smile on the faceof farmers. In addition to creating 100 smart cities, Mr Modi should also focus on creating smart villages.

A smart village will automatically link local production with local procurement and distribution. A smart village will not only bring Internet connectivity to the rural hinterland, but also support sustainable agricultural practices. A network of small-scale industries linked to agriculture and a strong network of rail and road corridors with civic amenities such as education and health for all, including farmers, will transform the face of real India.

That’s the kind of change India expects. That’s the big-ticket reform the country has been waiting for 67 years. Smart villages will not only reduce the growing inequality but also bring acche din to the last person in each and every corner of the country. It will, at the same time, reduce the burden of influx to the cities and helptackle environmental challenges.