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Gujarat elections outcome -- farmers will be holier than cow

The year 2017 was particularly bad for the farming community. Parts of the country were affected by poor monsoon while other parts saw the downside of good rains which saw a bumper crop resulting in prices falling below the cost in many regions.

December 19, 2017 / 04:36 PM IST
Agriculture Sector | Technological advancements are reshaping Africa’s agricultural sector in helping to pioneer a new agro-business strategy. Automation is replacing many jobs traditionally done by farm labourers such as harvesting and crop sorting. (Image Source: )

Agriculture Sector | Technological advancements are reshaping Africa’s agricultural sector in helping to pioneer a new agro-business strategy. Automation is replacing many jobs traditionally done by farm labourers such as harvesting and crop sorting. (Image Source: )


Shishir Asthana

Moneycontrol Research

The good part about elections is that the opposition party exploits and exposes the weakness of the ruling party which comes out in the open in front of the voters. It is left up to the voters to decide if the government can resolve the issue or amplify it.

The recent state election exhibited the weakness of the government in power. In Himachal Pradesh, the Congress government was routed on corruption charges. In Gujarat, the BJP government was saved by the skin of its teeth despite widespread anger among farmers. The votes that the BJP government lost were in rural Gujarat.

Various ministers in the BJP central government were quoted in the press accepting the fact that the setback in Gujarat was because the farmers were neglected. The Finance Minister has been quoted as saying that the results in a handful of Gujarat districts highlighted farmers' issues that the government will analyze and address.

With four important agrarian states going in for elections in 2018, BJP has reasons to worry and too little time to address the issue. Out of the four states, three states -- Rajasthan, Madhya Pradesh, and Chattisgarh are being governed by BJP while Karnataka is under Congress.

Various governments, since independence, have been trying to break the rural or the agrarian issue. However, the approach has always been in providing subsidy and reducing the impact of a crop failure on the farmers. In case of crops of mass consumption minimum support price (MSP) has been introduced but here too it is for cases where the purchases are made by the government.

When all these measures do not work for the government, as a final resort they announce loan waivers for the farmers. This seems to be the latest trend in various states government's policies. In almost all recent state elections over the past few years loan waiver was an electoral promise. It was announced in UP and Punjab.  In Gujarat, Congress had announced loan waivers for farmers in its manifesto but the BJP did not and paid a price for it by losing rural Gujarat.

Maharashtra, Madhya Pradesh, and Rajasthan government are already facing farmer fury. Agitations were taken out by farmers from these states to Delhi which resulted in the state governments announcing loan waivers among other sops over the last one year.

The year 2017 was particularly bad for the farming community. Parts of the country were affected by poor monsoon while other parts saw the downside of good rains which saw a bumper crop resulting in prices falling below the cost in many regions.

A number of steps announced by the Prime Minister Narendra Modi government has caused disruption in the entire farm-to-fork logistic chain. Various measures were taken to circumvent the middlemen and allow farmers to sell their goods directly to the customers. While the move has been successful in pockets like those near big cities it has failed to pick up across the country. Same is the case with the electronic marketplace.

The government has spoken of doubling farmers' income but there are no visible success stories to talk about. Soil cards have been issued to a large section of the farming community but again the follow-up steps are slow or completely missing.

To be fair it is still early days to derive benefits of Jan Dhan Accounts, Aadhar, and mobility -- the JAM strategy which the government is banking on to improve agri-economy. It will take years for the government machinery to adopt the structural changes proposed by the government for the agriculture sector.

Till then it is very likely that the government will continue to incentivise the rural economy. Jaitley hinted in an interview that he is open to higher spending in agriculture. He is quoted as saying that higher spending on rural India and agriculture isn't populism. Spending more is a necessity as far as rural India is concerned, he said.

On the other hand, agriculture minister Radha Mohan Singh said the government will intensify farmer welfare schemes and ensure their effective implementation as well as the payment of MSP. He added that initiatives to double farmer income and increase production will gain more speed.

What these statements highlight is that the agriculture ministry is where the action will be in 2018. The government will have to work on improving the efficiency of its machinery so that farmers get their dues in time and state government, at least in the BJP ruled states buy produce from farmers at minimum support price.

In order to promote rural employment, the government may increase the budget for MNERGS (Mahatma Gandhi National Rural Employment Scheme). The Finance Minister was criticised for not increasing the MNREGS budget despite visible signs of stress in rural India. Gujarat election results show the cost of not doing so is electorally very high.

The government may have their long-term plan in place but what seems to work to get rural work is loan waiver. Various banks and the central bank have warned against using loan waivers, but of late Gujarat elections have shown that they will now be the norm rather than the exception.

For more research articles, visit our Moneycontrol Research Page.
Shishir Asthana
first published: Dec 19, 2017 04:36 pm