How an empowered rural economy forms the bedrock of the Modi govt's long-term strategies for 2022
5 July, 2018 will go down in India's economic landscape as the day when the Narendra Modi-led dispensation not only came good on its electoral promise made in 2014, but also as that eventful day when the Modi government decided to reward farmers with a bonanza by virtue of Minimum Support Price (MSP) hike, at 1.5x over the cost of production.
Farmers of paddy and 14 other Kharif crops have been the biggest beneficiaries of this historic move, with MSP on paddy up by Rs 200 per quintal or 13% over the preceding year, whereas the MSP for jowar, bajra and raagi went up by a solid 30% versus the earlier year. In October 2018, the Modi government gave more relief to farmers by announcing a hike of 6.1% or Rs 105 per quintal for wheat, to Rs 1840 per quintal, that would benefit farmers to the tune of Rs 62,635 crore. Along with wheat, other Rabi crops like rapeseed, mustard, barley, safflower, etc., saw a hike in MSP to the tune of anywhere between 50-112%, over and above the cost of production.
To further enable the farming community to benefit from remunerative pricing, three initiatives — namely Price Support Scheme (PSS), Price Deficiency Procurement Scheme (PDPS) and Private Procurement Stockist Scheme (PPSS) — were commissioned under the Rs 45,500 crore PM-AASHA scheme in 2018.
Again, the fact that the microfinance sector that lends in a big way to the rural sector and marginal farmers saw a 50% growth in its aggregate loan portfolio in the first half of 2018-19, after a 72%, 29% and 27% growth in 2015-16, 2016-17 and 2017-18, shows that access to credit to farmers at competitive rates has been an enabling factor in more ways than one.
No less than the father of India's Green Revolution and India's most eminent agriculture scientist, MS Swaminathan, has applauded the Modi government for bringing in sweeping agrarian reforms to strike a balance between short term gains, arising out of loan waivers, and long term gains, arising from higher crop yields, newer technologies, better insurance, effective procurement, storage, distribution and, of course, remunerative prices for farm produce.
Speaking of MSP, the A2+FL formula adopted by the Modi government takes into account the actual cost plus imputed value of family labour in the production of a crop. The more ambitious A2+FL+C2 factors in other costs, including imputed rent on land and interest on capital deployed.
The A2+FL formula will cost the government anywhere between Rs 80,000-1,00,000 crore annually, by even conservative estimates — and it is a great start.
Critics of the Modi government, who therefore claim that the A2+FL formula is inadequate and that the government should have adopted the A2+FL+C2 formula, need to understand that C2 would have added unduly to inflationary pressures. Also, unreasonably high inflation would adversely impact the farming class because the farmer is also a consumer, in the final analysis.
More importantly, abnormally high domestic farm product prices could also disincentivise the level of overall farm exports from the current $30bn plus levels to $100bn plus levels, which the government seeks to achieve over the next few years — hence, the Modi government's decision to limit MSP hike to A2+FL has indeed been a very pragmatic and economically prudent one, as it would limit the rise in retail inflation on this count to barely 10-30 basis points, which is par for the course.
Crop diversification and land usage that is in sync with the climatic patterns and rainfall in a given region are the best ways to ensure that farmers become self-reliant and do not depend solely on the MSP as an incentive. This will also lower the burden on the government exchequer.
It is precisely with this purpose of ensuring higher fiscal rectitude, and to do away with procurement related inequalities that have existed across India's diverse states for decades, thanks to a horribly negligent agri-outlook by the erstwhile Congress-led UPA dispensation, that the Modi government, committed to doubling the income of farmers by 2022, undertook a plethora of measures.
The government, for instance, organised more than 2.21 lakh demonstrations in farms through its Krishi Vigyan Kendras (KVKs) to impart training to farmers to use modern technology to increase pulses and oilseeds' yield. Besides KVKs, the ‘Mera Gaon Mera Gaurav’ scheme, started in 2015-16 to enhance the ‘scientist-farmer’ interface via modern farming techniques, is now spread across more than 13,500 villages and is growing rapidly.
Also, 52 new technologies, including soil testing and organic farming packages, have been developed for agricultural advancement by the Central Government.
The Electronic National Agriculture Market or eNAM, a key initiative of the Modi Government to improve farm incomes, has been on course to connect 585 mandis, with more than 17 states having already fully or partially amended their agricultural marketing acts to allow for electronic trading. By December 2018, over 1.35 crore farmers, more than 47000 traders and over 26,000 commission agents had been registered in 250 plus mandis across more than a dozen states that joined eNAM. Currently, over 69 commodities are traded on eNAM.
Minimum Support Price, in decades of Congress rule, was both a sham and a scam — middlemen pilfered away the benefits, leaving hapless farmers with nothing.
The Direct Benefit Transfer scheme, along with Jan Dhan, has empowered rural India and thanks to the Modi Government, funds meant for farmers are not pocketed by disingenuous intermediaries.
A moot point worth noting is this — India is home to 17% of the world’s human population and 11.3% of the livestock population — but has just 4% of the world’s water resources! Speaking of water brings to mind the revolutionary Pradhan Mantri Krishi Sinchai Yojana (PMKSY), kickstarted in 2015 with an allocation of Rs 50,000 crore to be spent over five years, to develop an irrigation supply chain, water resources, distribution network and farm-level application solutions to achieve the target of water for every farm and the idea of ‘Per Drop More Crop’.
The worst legacy of the Congress government is the fact that only 48% of the cultivable land is irrigated — the vagaries of nature apart, as per NCRB data and related reports, an average of over 15,000-odd suicides every single year for ten long years between 2004-2014 under an insensitive Congress-led coalition happened, less due to drought or scarcity of rains but more due to very poor water management. PMKSY, in that sense, aimed to not just rejuvenate irrigation resources but also harness rainwater at micro level through water conservation schemes like ‘Jal Sanchay’ and ‘Jal Sinchan’.
In 2016-17, more than 56,226 water harvesting structures, over 1.14 lakh hectares of irrigation capacity and 675 district irrigation schemes were consummated. Those numbers have only risen exponentially in 2018 due to the Modi government's commitment to improving the lives of farmers on a war footing. During 2014-17, a total of 18.38 lakh hectare area was brought under micro-irrigation, which has been the highest so far, with 8.39 lakh hectares brought under micro-irrigation, in 2016-17 alone.
PMKSY scheme has been implemented on a war footing with the help of Command Area Development, to complete 99 major and medium irrigation projects covering 76.03 lakh hectares in a phased manner till December 2019.
This is a game-changer that is transforming India’s rural economy, to empower India's farmers in a meaningful manner.
Talking of game-changing ideas, Jal Yukt Shivar (JYS), the flagship programme of the Devendra Fadnavis government — which is essentially a micro-irrigation project to rejuvenate depleting water bodies — redefined the very concept of innovative thinking in the field of agriculture. Started in 2015 by Fadnavis, to empower 25,000 villages in Maharashtra by making them water reliant, the JYS scheme in 2018 covered more than 16621 villages in over 34 districts, with over 11,247 villages becoming drought free and that number has only been growing.
Additionally, completion of desilting across 2,900 dams in Maharashtra, creation of over 1.26 lakh wells and over 76,106 ponds and counting, have greatly improved the lives and incomes of farmers, especially those from the Vidarbha, Marathwada and Konkan regions. As of mid-2018, creation of water storage capacity in excess of 92 TMC, which has the ability to irrigate almost 24 lakh hectares, has meaningfully transformed farming in Maharashtra.
Latur, with 948 villages and 10 Tehsils having a population of 24.54 lakh people, used to rely on "Water Trains" in 2016 — but despite receiving only 62% of the normal rainfall in 2018, today Latur does not even need a water tanker, all thanks to JYS, which has given a whole new dimension to the concept of water conservation.
It would be apt to conclude by saying that Modinomics eventually is about better roads, expressways, sanitation, creating world-class entrepreneurs, a liberal FDI regime, a robust services sector and more effective tax compliance — with no room for benaami and ill-gotten wealth. But most importantly, Modinomics is about empowering and enriching scores of farmers who till our soil, so that "Jai Jawaan, Jai Kisan", goes beyond a clarion call, to become a workable farm ethic that transforms rural India, for the better.
It is said the proof of the pudding is in the eating and for an elected government, getting a pat on the back from the electorate is the biggest endorsement of credibility. This was amplified by the stunning result of the Uttar Pradesh assembly polls in 2017, where the strategic genius and political engineering of the invincible BJP President, Amit Shah, helped the BJP to romp home to victory in a defining moment. The fact that more than 16 crore people, who account for more than 18% of India’s rural population, live in Uttar Pradesh alone, and that this state voted virtually en masse for the BJP in assembly elections in 2017, is a telling comment of how a farm-centric approach has been the mainstay of Modinomics.
Again, despite what critics may say, the hard truth is that the BJP’s sixth consecutive victory in assembly polls in a row in Gujarat in 2017, was in no small measure a result of the fact that the average agricultural growth in Gujarat has been 11% in the last decade or so — this, despite a drought once every three years.
Be it the accreditation to 60 state agricultural universities between 2014 and 2017, rise in budgetary allocation for higher agricultural education by over 47%, or the opening of 162 new experiential learning units, during this period, investment in agricultural education and research by the Modi Government, always received top priority.
It is not surprising therefore that food grain procurement in 2016-17 broke all records at 273.38 million tonnes — an 8.67% jump over 2015-16.
What largely went unreported by a left-leaning media is the fact that under the aegis of the Modi government, the National Food Security Mission (NFSM) increased its reach in 2016-17, from 438 to 638 districts in India, a rise of 24.45% over 2015-16. Again, under the Modi dispensation, seven crops (rice, wheat, pulses, coarse cereals, sugarcane, jute and cotton) have been covered under NFSM, National Food Security Mission, from the three crops (rice, wheat and pulses) that were covered during an incompetent Congress-led UPA dispensation between 2011-2013.
So much for empty rhetoric by the Congress that has been screaming from the rooftops about its love for all things agrarian of late!
Committed to doubling the income of farmers by 2022, the Modi government organised over 2.21 lakh demonstrations in farms through its Krishi Vigyan Kendras (KVKs) to impart training to farmers to use modern technology to increase pulses and oilseeds yield. Besides, KVKs, the ‘Mera Gaon Mera Gaurav’ scheme, started in 2015-16 to enhance the ‘scientist-farmer’ interface via modern farming techniques, eventually spread across more than 13,500 villages and has been growing rapidly since then. Also, 52 new technologies — including soil testing and organic farming packages — have been developed for agricultural advancement by the Modi government.
To cut a long story short, targetted measures to empower the rural economy is one of the glowing legacies of Modinomics and forms the bedrock of the larger strategy of doubling of farm incomes by 2022.