Indian agricultural policy in a nutshell - DTE-2

Section I Agriculture

Introduction to Section I

Indian agricultural policy in a nutshell

                     A large number of researchers and scholars who wish to study agriculture in India are intrigued by the extreme penury of the farmers and the low levels of productivity. It surprises them that the peasantry of a country so well endowed in water resources and sunlight should be so miserably placed.

                     It was only as late as in 1990 that the documentation of the World Trade Organization (WTO) clearly established that the government of India imposed a negative subsidy on Indian farmers. In the WTO parlance, the term ‘negative subsidy’ has a specific meaning. It refers to cases where the income received by the farmer by the sale of his proceeds is less than the income he would have received in a hypothetically free market where the government does not intervene in any manner.

                      On the other hand, ‘positive subsidy’ refers to cases where the farmers receive an income that is higher than what they would have received in a hypothetically free market, thanks to the intervention of the government.

                      The central and the most essential fact about Indian agriculture is that it suffers from either the caprices of nature or, when the nature is benign, by the tyranny of governmental interventions.

                  It is astonishing that most learned reports and books on Indian agriculture skillfully avoid referring to this central fact.

                      For years, all economists and agronomists have held that the poverty of the farmers and the low productivity of agriculture in India are interconnected and are both caused by the illiteracy, wasteful expenditure and large incidence of alcohol and other vices amongst the farmers. It is strange that this calumny persisted for long decades of the British Rule as also the first five decades after independence.

                      The farmers and the agriculture are the source of all wealth and multiplication thereof, at least in the physiocratic sense. In the peasant idiom, ‘if a farmer sows one seed the crop is hundred- or even a thousand-fold.’

                      How come the one industry where there is an actual physical multiplication suffers from the most serious deprivations?

                      Practically every regional language in India has a proverb that maintains that agriculture is the best of all vocations; the trade comes only second and the service is the least honorable of all. The proverb persists even though the reality has turned upside down, particularly after the independence. Now a job, particularly the government service is the most prestigious and agriculture almost passage to poverty, indebtedness and suicide.

                      Even though the learned economists and the erudite scholars refuse to recognize the fact of the negative subsidy in agriculture, there was abundant evidence of the social recognition that agriculture was the most arduous of all vocations.

                   Children of farmers, who had the good fortune of getting higher education, systematically preferred jobs and turned their backs on the parental lands. Daughters of non-agrarians have, for decades, clearly expressed their reluctance to be married into agricultural families. The life of a farmer housewife is a continuous misery comparable to life imprisonment. Now, even the farmers’ daughters indicate a clear preference for grooms in non-agricultural vocations, be they even menial.

                      The instruments of intervention that the government of India used were simple but lethal.

                      Until as late as 1960s, government imposed a compulsory levy on the food grains produced by the farmers. If a farmer had produced less quantity than was required to be given as ‘levy’ he was required to make up the difference by purchasing the food grains in the open market at higher prices and delivering them to the government at lower levy prices. If he failed to discharge his ‘levy’ obligations he risked being handcuffed and paraded in public places in great ignominy.

                      All transport, storage, trade, processing and export of agricultural produce were severely restricted if not totally banned. This was done by raising the boggy of consumers’ interest and the obligation on the part of the government to ensure food security.

                      The government did put up a show of ensuring remunerative prices by introducing a system of Minimum Support Prices (MSPs); but manipulating to make them work not as minimum prices the farmers should ever receive but as the signal of the maximum prices the traders need to pay for the agricultural produce.

                      The government did not need to depress the prices of each of the hundreds of agricultural commodities. It could depress the agricultural economy in general and keep the farmers permanently ‘needy’ by depressing artificially prices of just about a dozen commodities.

These anti-farmer policies were sought to be justified by various arguments:

1. The desirability of low-cost economy;

2. The need to promote industry by keeping prices of wage goods and raw material low;

3. Need for comprehensive consumer protection; etc

                      This is a brief summary of the essentials of the State policy on agriculture. And, all that I have written in last 30 years was essentially a commentary on the various methods used by the government to exploit the ‘Bharat’ to the benefit of the ‘India’.

24.11.2009                                                                                                    - Sharad Joshi
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