If, despite strong resentment among farmers – an important constituency that decides a party’s prospects in elections – Modi got a resounding mandate to rule for another term, it showed their faith in the ability of this prime minister to deliver on his promises – most important being doubling their income. Of course, one can’t rule out the role of PM – KISAN [announced in the interim budget for 2019-20, under it, the centre gives cash support of Rs 6000/- to all small and marginal farmers every year] in bolstering its prospects. But, this is not an amount big enough to bring about a lasting transformation in their living. In order to achieve that, the most crucial requirement is assurance...
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Category: Pricing Policies & Subsidies
India’s sugar imbroglio
The Government’s irresistible desire to control sugar prices is doing much harm to the industry. Upholding market dynamics should be the way forward In the run-up to the Assembly elections in Uttar Pradesh in 2017, the BJP had promised immediate payment of all sugarcane arrears (money that sugar mills owe to the Government for cane supplies). For future purposes, too, it had assured to release all dues by the 14th day, counting from the day the sugarcane is delivered to the mill. The BJP Government has been in office in Uttar Pradesh for over two years now and has since ensured payments of a whopping Rs 50,000 crore, which includes Rs 10,500 crore for the marketing year October 1, 2016-September 30, 2017;...
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Sugar imbroglio – robbing Peter to pay Paul
In the run up to assembly elections in Uttar Pradesh [UP] in early 2017, BJP had promised immediate payment of all sugarcane arrears [money that sugar mills owe to them for their cane supplies]. For the future also, it had promised to release of all dues by the 14th day counting from the day the sugarcane is delivered to the sugar mill. The UP government has been in office for over two years now and has since ensured payments of a whopping Rs 50,000 crore which includes Rs 10,500 crore for the sugarcane marketing year October 1, 2016 – September 30, 2017 and Rs 34,000 crore for the year October 1, 2017 – September 30, 2018 and Rs 5500 crore...
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Doubling farmers’ income – FPOs could be game changer
During the last five years, Modi – government has implemented measures such as increase in irrigation, issue of soil health cards [SHCs], neem coating of urea, crop insurance [at minimal premium], building rural roads, e-NAM [electronic national agriculture market], increase in credit availability and implementation of Dr Swaminathan committee recommendation to give minimum support price [MSP] equal to 150% of the production cost. These measures aim at increasing crop output, enhance efficiency of input use, fetch higher price from sale of agricultural produce and do on-farm value addition with the overarching objective of doubling farmers’ income by 2022. Further, to augment the income of small and marginal farmers [land holding < 2 hectare]. in the interim budget for 2019-20, it...
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Want UBI, shun subsidies
Reportedly, the union government is contemplating to give universal basic income [UBI] of Rs 4000 per acre to each land owning farmer to soothe the nerves of farming community who gave a befitting blow to the Modi – dispensation in assembly elections held in three Hindi heartland states for ignoring their interest. Whether, this will help BJP [the party that Modi leads] during the upcoming general elections remains to be seen. Meanwhile, it is important to understand its full ramifications, in particular, how it stacks up vis-à-vis existing support mechanisms for the farmers. With a view to make fertilizers, irrigation, power, credit etc affordable to farmers, the government gives subsidy on these inputs and is routed through their manufacturers/suppliers. The...
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Modi dismisses loan waiver, empowers farmers
The ‘chowkidar chor hai’ [a euphemism to describe prime minister, Modi as thief in the context of allegations against him on the controversial Rafale deal] jibe hurled by Rahul Gandhi during his election campaign in three Hindi heartland states ad infinitum – a charge that caught the imagination of the electorate – was a major factor contributing to BJP defeat [Supreme Court judgement exonerating Modi from the charge came after voting was over]. The other reason for the grand old party staging a come-back was a promise by its President for waiving farm loans. This was too much of a temptation for the farmers. Even those farmers who were in a position to repay decided not to pay in the...
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Farmers’ distress, rising sops, depleting treasury
After its defeat in three Hindi heartland states Madhya Pradesh [MP], Rajasthan and Chattisgarh, Modi – dispensation has gone into introspection mode. The top brass has recognized that a major factor behind the set-back was growing resentment among the farmers over its policies and schemes which they felt are responsible for their stagnating/declining income. Sensing that this could seriously affect party’s fortunes in upcoming general elections, it is brainstorming over alternate policies which could address their concerns. Taking cue from Telengana’s Rythu Bandhu under which the state gives Rs 4000 per acre to each farmer – as crop neutral investment support – before the start of the season Kharif [April-September] and Rabi [October-March], an idea is to give farmers assured...
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A policy on MSP will be fiscally suicidal
In all probability, the Government must not tread the path of giving legal backing to MSP. Already, it is struggling to find resources for food subsidy under NFSA. An alternative path is to find platforms where farmers can sell their produce On November 30, 2018, tens of thousands of farmers congregated in the national capital to protest against their financial distress arising out of non-remunerative price for their agricultural output and ever-increasing farm debt burden. They wanted a special session of Parliament to discuss their problems and demanded the passage of two laws (i) to guarantee Minimum Support Price (MSP) for all crops based on the recommendations of the National Commission on Agriculture under MS Swaminathan (2006) and (ii) ‘one-time’...
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A law on MSP – fiscally suicidal
On November 30, 2018, tens of thousands farmers – coming from all parts of the country – congregated on the national capital to register protest over their financial distress arising from un-remunerative price realization from sale of their output and ever increasing burden of indebtedness. Quite unlike protests in the past when their demands were restricted to specific areas such as timely payment of sugarcane arrears, reduction in power tariff, lowering GST etc, this time around, they have raised the pitch. They want a special session of the parliament to be convened to discuss their problems and pass two legislations [a private members’ bill has already been submitted to the chair]. These are: (i) a law to guarantee minimum support...
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Farm loan waivers – the road to disaster
The waiver of farm loans worth Rs 70,000 crore about a decade back by the then UPA – dispensation with an eye on the impending general elections in 2009, had a debilitating effect on the finances of the union government [the fiscal deficit during 2008-09 was in excess of 6%] While, this should have raised an alarm bell but, political parties of all hues do not seem to have learnt any lesson. Early last year, the BJP ruled government in Uttar Pradesh [UP] granted a mammoth loan waiver for small and marginal farmers costing the exchequer Rs 36,000 crores. This was followed by the by JD [Secular] led coalition in Karnataka granting an equally massive about Rs 40,000 crore waiver...
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