March 08, 2020

Budget belies hopes of Farmers

Vijoo Krishnan

IF one combines allocations for agriculture and allied activities, fertiliser subsidies, irrigation, rural development and land resources, one finds that the revised estimates(RE) for the current year is almost 25 thousand crore rupees  less than what was originally budgeted for this year. In fact, the budget documents show that the REs for almost every scheme of the ministry of agriculture and farmers' welfare has been reduced in the current year, and that these cuts are maintained for the coming year. This being the case it also talks of a 16-point agenda to double farmers’ incomes by 2022, though neither the government has placed on record the progress in this regard in the last four years that they have been pompously claiming so, nor have they followed it up with commensurate allocation. The Economic Survey nailed the lie as its data shows that the growth rate of gross value added (GVA) in agriculture had drastically fallen from 6.3 per cent to 2.8 per cent in the intervening period.

BJP and Narendra Modi’s most attractive promise of 2014 elections for farmers was that the minimum support prices would be fixed at one and a half times the comprehensive cost of production (C2+50 per cent, where C2 implies comprehensive cost including all actual paid out costs plus imputed value of family labour, rental value of own land, interest on value of own fixed capital assets excluding land). It has been repeatedly asserted that the Commission on Agricultural Costs and Prices (CACP) cost calculations are far below the actual costs and do not reflect ground realities. The dismal state of procurement also makes even these low prices inaccessible to the farmers and it remains only notional. The Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA) was launched amidst massive protests by the peasantry claiming that no farmer would be denied MSP. However, under this scheme in the first year, 2018-19 the expenditure was merely Rs 4,100 crores. The allocation was drastically cut in 2019-20 to Rs 1,500 crores and merely Rs 321 crores were spent. If the scheme had to effectively bail out farmers and ensure that the MSP would be guaranteed, the allocation should have been over 1 lakh crore rupees. When PM-AASHA was launched it was claimed that it would include three components namely a price support scheme, price deficiency payment scheme as well as a “robust’ procurement mechanism through a private procurement and stockist scheme, most of which have remained only on paper. The budget allocation in 2020-21 is only Rs 500 crores, a substantial part of which would be spent on advertisement and propaganda. Assured procurement of farm produce remains a far cry and nothing has been done to address the problem.
The promise of reducing costs of production by subsidising inputs has been long discarded in favour of deregulation of inputs to facilitate corporate profits. This budget has seen drastic cut in fertiliser subsidies. Even in nominal terms, the allocation towards fertiliser subsidies for the coming year is 11 per cent less than the allocations for the current financial year.

Grameen Agricultural Markets (GRAM) was also announced in 2018-19 for better marketing facilities and upgradation of 22,000 rural haats. After two years, the implementation has not begun and only 0.5 per cent of the allocated Rs 2,000 crores have been spent. The much-hyped “Dairy Infrastructure Development Fund” of Rs 10,881 crores announced three years back and just Rs 440 crores was spent out of it. This budget has only Rs 60 crores allocated under this head, clearly pointing to the callous attitude to the dairy sector. Allocation for rainfed area development and climate change was also reduced in the budget.

For the year 2019-20, Rs 75,000 crores was allocated for PM-KISAN and it was claimed that 14.5 crore farmers would benefit from the scheme. On the eve of the last parliament elections and even on voting day many farmers got the first instalment of Rs 2,000. However, after one full year of its implementation the figures coming out point to the fact that not even one-third of the intended beneficiaries received Rs 6,000. According to data provided by agriculture ministry in response to an RTI query, till November 30th, 2019 only 26 per cent received all three instalments. The sense of urgency that was displayed before the Lok Sabha elections did not last after the BJP victory. Of the intended 14.5 crore beneficiaries 7.6 crore farmers or a little over 52 per cent of the intended beneficiaries received only one instalment of Rs 2,000. The government claims that more than Rs 48,937 crore has been released under the scheme though Rs 75,000 crores were allotted in the first year. However, if 14.5 crore farmers were to be given Rs 6,000 the amount required would have been around Rs 87,000 crores.

Another important component of rural income is that of the agricultural labour. We have also noted high unemployment and an increase in suicides by agricultural workers. While the MGNREGA should have been expanded to provide at least 200 days of employment per year with increased wages, the allocation has been slashed from Rs 71,001 crores (RE 2019-20) to Rs 61,500 crores in 2020-21, a cut of Rs 9,500 crores when the total demand from states amounts to nearly Rs 1 lakh crores. Alarmingly, in times of increasing hunger and malnutrition, the budget has drastically cut food subsidies from 1.84 lakh crore  rupees in budget estimate of 2019-20 to merely Rs 1.16 lakh crores in 2020-21. The revised estimates for food subsidies show a decline of about 41 per cent over the budgetary allocations. The budgetary allocation for this year is Rs 18,650 crore less than the allocation for last year. Allocations to Food Corporation of India (FCI) for lifting the grain for distribution under National Food Security Act(NFSA) are being cut down. FCI is forced to borrow to meet the shortfall, with the aim of window-dressing fiscal deficit numbers. This has led to a massive debt burden of over 2 lakh crore rupees on FCI, which plays a critical role in implementing the NFSA and maintaining food sovereignty of the country.