Devinder Sharma
AMID the Assembly elections in five states, the competition between the BJP and the Congress to woo farmers with the promise of providing higher prices for their produce will hopefully create a new template for the 2024 General Election, even as farmers of Punjab and Haryana have launched an agitation in support of their demands, including a legal guarantee for the MSP (minimum support price).
Since only 14 per cent of the farmers get the benefit of procurement prices, the need is to provide a legal framework for MSP.
In a way, politics is struggling hard to emerge out of the clutches of the mainstream economic thinking that has kept agriculture in perpetual poverty. For several decades now, the dominant economic thinking has been to keep farm prices low so as to rein in inflation, which is primarily the reason why farmers remain impoverished. A recent study by the Organisation for Economic Cooperation and Development (OECD), the world’s richest trading bloc, has conclusively shown that Indian farmers have been continuously taxed since 2000.
The root cause of the prevailing agrarian distress is clearly before us. The study, which spans 54 countries, also shows that although there are a few countries where farmers are in the ‘negative zone’, it is only in India that no effort has been made to make up for the losses through budgetary support. Simply put, it means that all these years, Indian farmers were left high and dry. For more than 20 years, farmers have been largely harvesting losses.
It suited the mainline economic thinking which believes in sacrificing agriculture to keep economic reforms viable. It was the same dominant thought process that had managed to torpedo the implementation of the MS Swaminathan Commission’s recommendation, which wanted farmers to be paid the MSP by computing the weighted cost plus a profit margin of 50 per cent (‘C2+50 per cent’, as it is technically known as). The plea before the Supreme Court that it would not be feasible to provide farmers a price based on the ‘C2+50 per cent’ formula as it would ‘distort markets’ was an outcome of the same outdated economic thinking.
Irrespective of what the mainline economists would say, political parties are trying to go the extra mile for the sake of the beleaguered farming community. They realise that agriculture needs to be pulled out of the severe crisis, and the key lies in providing a higher assured income. The iconic farmers’ protest at the borders of Delhi in 2020-21 opened their eyes, and it has dawned on them that farmers growing food cannot be penalised any more. It is interesting to see that in Chhattisgarh, for instance, where the paddy procurement price was already high at Rs 2,640 per quintal (against the procurement price of Rs 2,183 for the 2023 marketing season), the Congress first raised it to Rs 3,200, with the promise to procure at least 20 quintals per acre. To match this price, the BJP made a commitment to procure paddy at Rs 3,100 per quintal, pledging that it would buy 21 quintals per acre. Similarly, for wheat in Madhya Pradesh, the price offered is relatively higher: Rs 2,600 per quintal by the Congress and
Rs 2,700 by the BJP. In Rajasthan, the Congress has promised to pay MSP as per the ‘C2+50 per cent’ formula; in Telangana, it has pledged to provide farmers with Rs 15,000 as direct income support if voted to power.
Surprisingly, while both parties had dithered on implementing the Swaminathan panel’s recommendations, which were presented in 2006, the paddy and wheat prices promised in the poll-bound states are equal to or exceed the ‘C2+50 per cent’ formula cost. While many people are wondering whether these poll promises would be fulfilled, the race for announcing higher farm prices at least demonstrates that politicians are beginning to realise the pain, agony and suffering of the farming community.
Already, several mainline economists have begun to question the economic rationale behind announcing higher prices; they are also asking where the additional resources will come from. The chorus will only grow louder in the days to come.
Strangely, the same economic thinking has never questioned the rationale for writing off nearly Rs 15 lakh crore of corporate bad loans in the past 10 years, nor has it found fault with the economics that forces banks to compromise, with over 16,000 wilful defaulters getting a walk-over with an outstanding sum of Rs 3.45 lakh crore. If the markets applaud efficiency and good performance, there is no economic reason to bail out companies that fail to perform.
Farmers are, therefore, right in asking why the same commitment for higher prices is not being extended to them across the country. Since only 14 per cent of the farmers get the benefit of procurement prices, the need is to provide a legal framework for MSP at ‘C2+50 per cent’, thus ensuring that the guaranteed prices reach the remaining 86 per cent of the farming population. This has to be accompanied by an increased PM-Kisan income support directed at landless farmers. More money in the hands of farmers will mean more rural spending, and that will set the GDP on a higher trajectory.
Political parties will have to stay firm and not let outworn arguments of the mainline force them to go back on their promises. Prof James K Galbraith, a distinguished economist at the University of Texas, Austin, says that the mainstream class will fight hard to hold on to the “academic, political and media monopolies” that have been created over the decades and will not allow fresh economic ideas to grow.
We are seeing that happening in India. Most of today’s mainstream economists, trained in the 1970s and early 1980s, come with preconceived ideas and theories, says Galbraith.
According to him, “Mainstream economists should perhaps re-examine their core beliefs, or perhaps we need a new ‘mainstream’ altogether.”
