The FAS blog team had a discussion with Vijoo Krishnan, Joint Secretary of the All India Kisan Sabha, on the current agricultural policy environment and implications of policy changes for the peasantry on August 9, 2019 in Bengaluru.

The five years of the NDA government, from 2014 to 2019, witnessed unprecedented protests by farmers on several issues including remunerative prices, loan waivers, land acquisition, and implementation of the Forest Rights Act.  The NDA Government not only failed to act on many of its promises, but also reneged on the promises it made during the election campaign of 2014 (see Mollah and Krishnan, 2016). The disillusionment of the peasantry with the NDA government and, in many cases, a direct assault on the peasantry, such as in respect of land rights, was the reason for the large peasant mobilisations during this period. In fact, the defeat of the BJP in the Assembly elections in Rajasthan, Chhattisgarh, and Madhya Pradesh in 2018 forced the BJP government at the centre and several other State governments to take note of the demands of the peasantry and provide some relief.

The ‘relief,’ however, came in the form of direct cash transfers through the Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan) in the interim budget of 2019. The PM-Kisan is a direct annual cash transfer of Rs 6,000 for each farmer owning less than two hectares of land. The Krushak Assistance for Livelihood and Income Augmentation (KALIA) cash transfer scheme of Odisha and the Rythu Bandhu Scheme of Telengana are similar cash transfer schemes that preceded the PM-Kisan. There were other State government schemes, such as the Jharkhand government’s Mukhya Mantri Krishi Ashirwad Yojana and the West Bengal government’s cash transfer and crop insurance scheme that were announced in December 2018, and the Annadata Sukhibhava Scheme in Andhra Pradesh that immediately followed PM-Kisan.

“The victory of the incumbent BJP in the Parliamentary elections of 2019, in spite of dwindling employment, decline in GDP, intensification of the agrarian crisis and protests by farmers, can be broadly attributed to two factors,” according to Vijoo Krishnan. “These were, undoubtedly, the ultra-nationalist anti-Pakistan rhetoric that followed the Pulwama attacks, and the propaganda built around different Government schemes, which included Pradhan Mantri Kisan Samman Nidhi Yojana (PM-Kisan).”

Weaknesses of PM-Kisan

Though the announcement and immediate implementation of PM-Kisan significantly tilted electoral opinions in favour of the BJP, it is unlikely to address the agrarian crisis. There are three weaknesses of PM-Kisan — problems of implementation, exclusion of the deserving population, and magnitude of the transfer.

On the question of implementation, identification of ‘farmer families’ owning less than two hectares of land is problematic given the limitations of India’s land records system. Land records are not updated unless owners register the changes in ownership; and integration and digitisation of land records are not uniform across States. The definition of a ‘small and marginal farmer family’ (SMF) adopted by PM-Kisan is ‘a family comprising husband, wife and minor children who collectively own cultivable land up to two hectares as per land records of the concerned State/UT.’ This definition clearly requires identification based on record verification. Further, given the nature of India’s land records, identifying small and marginal farmer families based on land records will underestimate the number of such families (for example, if land is tilled by two sons, while it remains in the records in the name of the parent). The scheme uses the number of holdings estimated by the Agricultural Census for forecasting coverage of PM-Kisan. However, it is not clear if the records of the Agricultural Census collected by village-level officials can be used to identify beneficiaries of PM-Kisan since the definition of operational holding in the Agricultural Census is technically different from the farmer family definition of PM-Kisan. The Agricultural Census, which enumerates all agricultural holdings in India every five years, defines an operational holding as ‘all land which is used wholly or partly for agricultural production and is operated as one technical unit by one person alone or with others without regard to the title, legal form, size or location.’

When land titles are mandatory for claiming benefits to a scheme for farmers, the scheme would certainly exclude a large number of actual farmers. It will exclude tenant farmers, farmers without land titles — particularly but not exclusively Adivasi farmers cultivating forest lands and women farmers. The additional mandatory requirement of Aadhar linkage would only increase exclusion, and bring in additional problems of access among the most vulnerable cultivating families.

The third limitation of the scheme is the sheer inadequacy of the transfer of six thousand rupees for achieving the stated objective ‘to supplement the financial needs of the SMFs in procuring various inputs to ensure proper crop health and appropriate yields, commensurate with the anticipated farm income at the end of the each crop cycle.’ From official estimates of the cost of production, the A2 costs incurred per hectare of kharif paddy in 2015-16 ranged from Rs 10,033 (in Himachal Pradesh) to Rs 54,500 (in Kerala). The C2 costs were much higher, ranging from Rs 37,843 to Rs 78,945 per hectare. In 50 per cent of the paddy-growing States, farmers made a net loss in paddy cultivation, over cost C2. Thus, given the levels of investments that a farmer has to undertake and the prices received by the farmers in the market, six thousand rupees is a meagre amount.

Is higher MSP a better alternative?

Farmers have been demanding that Minimum Support Price (MSP) be calculated on the basis of C2 plus 50 per cent, C2 being the total cost of production that includes imputed costs of family labour and imputed rent on land. At present, MSP calculation is not based on C2 cost of production. Vijoo Krishnan points out that the government has tried to depress the cost of cultivation estimates that are used to fix MSP at the national-level. “The cost of production C2 of kharif paddy according to the Punjab Agriculture Department is Rs 2,400 per quintal, while the Commission on Agricultural Costs and Prices (CACP) has calculated it to be Rs 1,100 per quintal. Using the weighted average method of aggregation of costs of production across States, the MSP is depressed further.”

However, in the absence of actual procurement by the government, MSP does not serve the purpose of setting a price floor. In most States and for most commodities, there is no procurement. “Procurement is a farce, MSP is notional” said Vijoo. “For example, if MSP of Rs 1750/quintal of paddy was assured and paddy actually procured at that price, a farmer in West Bengal with two hectares of land and producing nine tonnes of paddy would have received Rs 1,57,500 for the produce. In reality, farmers are forced to sell for prices as low as Rs 1000/quintal because of lack of procurement by government and receive only Rs 90,000, or a shortfall of Rs 67,500 per crop. MSP calculations based on C2 plus 50 per cent formula would increase the shortfall.”

“There are other crops that are outside the ambit of MSP. For a crop such as garlic, the official estimate of cost of production is Rs 27 per kg, whereas garlic farmers reported that they spent about Rs 35 per kg but received a market price of only Rs 1 per kg. A hectare produces 5600 Kg on an average implying that even if Rs 27 is the cost of production will be more than Rs 1.5 lakh. The same garlic is sold in Reliance Fresh outlets at Rs 140 per kg.”

“Some crops are facing very high price volatility due to the absence of government procurement and food processing. Turmeric, which used to fetch about Rs 15,000 per quintal now fetches only Rs 3000 per quintal.”

Thus, the demand for remunerative prices for farmers cannot be met with the hollow announcement of MSPs, it would require active government procurement, at a price that guarantees adequate profits to farmers, to have a genuine impact on market prices. The current design and implementation of MSP policy will not benefit farmers much, as the very intent is to keep MSPs low, and there is no assurance on procurement.

In search of an alternative

The policies of both Congress and BJP governments favour a neoliberal agenda and trade liberalisation, according to Vijoo. The Congress election manifesto of 2019 stated in unambiguous terms that the economic philosophy of the Congress is of an open and liberal market economy. “The Congress’ manifesto and campaign had four major elements, furtherance of neo-liberal policies, higher prices for farmers and social security, critique of excessive control and regulation in the Modi regime, and soft Hindutva.” Thus the policies of the Congress are qualitatively no different from that of the BJP. “Along with the policies of low MSP and reduced procurement, the BJP Government is also continuing with trade liberalisation. There have been articles about reduced milk production in Australia in the context of Regional Comprehensive Economic Partnership (RCEP). The literature is being generated to push for further trade liberalisation.”

Charting out an alternate policy discourse would entail moving away from neo-liberal policies. “The Kisan Sabha had warned about the adverse effects of trade liberalisation in its 29th conference (1999).” The Kisan Sabha plans to intensify its struggles to take up the issues of farmers and the agrarian crisis that is the result of neo-liberal policies. “Kisan Sabha in every village and every Kisan in Kisan Sabha” is the slogan and goal that the peasant organisation has set for itself. The organisation is also cognizant of changing class relations in rural India with a large section of the peasantry becoming semi-proletariat, working in urban and semi-rural locations. There is large scale migration of the rural workforce for non-agricultural employment. Policies that affect urban workers, such as the Labour Codes, also affect the Kisan, as the Kisan is no longer a Kisan, in the old sense of the term. “The Kisan Sabha will build united struggles with the working class and all oppressed to fight against neoliberal policies and communal forces.”

Reference

Mollah, Hannan, and Krishnan, Vijoo (2016), “A Betrayal by Governments,” Review of Agrarian Studies, vol. 6, no. 1, available at http://ras.org.in/a_betrayal_by_governments