Lack of political will behind India’s agrarian crisis
Mains Paper 3: Economy
Prelims level: MSP
Mains level: Government Budgeting
The agrarian crisis has taken a political turn with
every party trying to portray itself as the saviour of the farming
There is no serious thought from any of them on how to
revive the agrarian economy.
All of them have been parroting the usual prescriptions of
farm loan waiver and a more generous and better implemented minimum support
Most of these are time-tested schemes that have been
offered for decades. The irony is also that most political activists and
farmers’ organizations have also bought these ideas as the only ways of saving
the farmer and agriculture.
Identifying the problem
It is now well known that farm loan waivers are no
solution to the problem of credit defaults in agriculture.
The cycle continues because it is always accompanied by a
decline in investment in agriculture.
The agricultural investments have declined in real terms
by 3.5% per annum, the sharpest decline in last three decades.
Such a scheme is also anti-farmer with a majority of small
and marginal farmers out of institutional credit.
These farmers who are also the most vulnerable, farm loan
waivers actually increase the cost of cultivation with declining investment.
Finding the solution
In the case of MSP announcements, which have remained
paper tigers except in the case of rice and wheat.
But even for these two crops, the regional variation in
the beneficiaries has always been skewed in favour of richer states of Punjab,
Haryana and Andhra Pradesh and, within them, it has always been the rich surplus
farmers who have benefited out of it.
For the remaining 23 crops, for which MSP is announced,
there has neither been a stable policy regime of procurement and disposal, nor
has there been any substantial effort in ensuring availability of marketing
The announcement of MSP for kharif crops this year with an
eye on the election has not managed to raise prices for a majority of crops,
whose prices have declined in recent years.
Limitations for other corps
For a majority of these crops, including pulses and
garlic, the market prices continue to remain below the MSP in the absence of
market intervention by the government.
It is not that the state and central governments are
unaware of the deficiency of these measures.
State governments have tried innovative ideas and methods
to address these concerns. Madhya Pradesh tried the ‘bhavantar’ scheme, which
was meant to provide income support by providing the price differential to
Within two years, the scheme is not only on the verge of
closing down with many farmers yet to get the promised money, but also because
the cost has been too much for the government with no impact on market prices.
The problem really is not a dearth of ideas and the
willingness to experiment.
The real problem is lack of acknowledgement that the
crisis in agriculture is not about incomes alone.
Those who are focussing on doubling farmer incomes and
providing income support to farmers are only looking at the short-term
The real problem is an understanding of the changing
nature of agriculture.
Indian agriculture is now much more diversified with
highly intensive agriculture.
Increasing monetization and mechanization of agriculture
has also increased the cost of cultivation.
The long-term solution requires investment in agriculture
to make it viable, along with a price support mechanism which takes care of the
Such a policy will require large scale investments in
building infrastructure, market access, storage, technology and revival of
non-farm sector to absorb the excess labour from agriculture.
While none of the stakeholders are willing to talk about
these, the central and state governments have actually reduced the real
The problem really is the lack of political will to solve
the agrarian crisis.
Until then, farmers’ distress is a hot political currency
that everybody wants to encash during the elections without doing anything.
Q.1 The term Price Deficiency Payment, often seen in news, refers to
(a) payments provided on targeted produce if the price falls below the minimum
(b) subsidy provided to manufacturers of generic medicine.
(c) cash incentives to promote institutional delivery among poor pregnant women.
(d) None of the above
Q.1 The real problem is an understanding of the changing nature of agriculture.
Critically analyse the statement.