Farmers woes: Relevance of Swaminathan Commission Report

National Commission on Farmers (NCF)’s Swaminathan Commission Report is aimed at working out a system for food and nutrition security, sustainability in farming system, enhancing quality and cost competitiveness of farm commodities and also to recommend measures for credit and other marketing related steps. 

• The government of India constituted the NCF on November 18, 2004. The NCF was chaired by Professor M.S. Swaminathan. It submitted its fifth and final report on October 4, 2006. 
• The reports had suggestions for “faster and more inclusive growth” for farmers and agriculture sector .
• M.S. Swaminathan had requested the government to implement the recommendations given in the report so that it could provide minimum support price for grains, safeguard the interest of small farmers and addressing the issue of increasing risk overtaking agriculture as a profession.
• The Commission observed that farmers needed to have an assured access to and control over rightful basic resources that includes land, water, bio resources, credit and insurance, technology and knowledge management, and markets.
• Agriculture must be implemented in the concurrent list from the state list — hence putting it as a matter of concern for both the Union and the states.
• The commission said that the inequality in landholdings in shown starkly in land ownership. It said that in 1991-92, the share of the bottom 50 per cent of the rural households in the country’s total land ownership was only 3%. The top 10% owned as much as 54% of land.  
• One of the key reforms was land reforms. It was aimed to address the issue of access to and for both crops and livestock.
• Land Reforms: Distribution of ceiling-surplus and waste lands; prevention of diversion of prime agricultural land and forest to corporate sector for non-agricultural use; to ensure grazing rights are provided and seasonal access is allowed in forests to tribals and pastoralists. It recommended access to common property resources. One main case was establishing a National Land Use Advisory Service. The purpose of this service would be to connect land usage decisions with ecological meteorological and marketing factors.
• Irrigation Reforms: It recommended framing a set of reforms to provide farmers with sustained and equitable access to water for irrigation. Ensuring boost in water supply by rainwater harvesting, water level recharging by mandatory aquifers; Million Wells Recharge programme to be initiated targeted at private wells. To target increase in investment in irrigation sector under 11th five year plan.
• Productivity Growth: NCF said that with the objective of achieving higher productivity growth, it recommended substantial increase in public investment in agriculture-related infrastructure particularly in irrigation, drainage, land development, water conservation, research development and road connectivity etc. It also recommended a national network of advanced soil testing labs with an aim to test areas for apt micronutrient levels.
• Credit and Insurance: Expand outreach of formal credit system; reduce crop loan interest rates to 4%; provide moratorium on debt recovery; agricultural risk fund; kisan credit cards for women farmers; integrated credit-cum-crop-livestock human health insurance package; crop insurance across country for all crops with reduced premiums; sustainable livelihoods for the poor, investment in human development; institutional development services etc.
• Food Security: The commission recommended implementation of a universal public distribution system; reorganising delivery of nutrition support programmes on a life-cycle basis with panchayat participation and that of local bodies; elimination of micronutrient deficiency induced hunger and food cum fortification; community food and water banks to be operated by women self-help groups; help small and marginal farmers; formulate national food guarantee act with features as food for work and employment guarantee programmes.
• Prevention of Farmer Suicides: Providing affordable health insurance at primary healthcare centres in villages; national rural health mission to be extended to suicide hotspots on priority basis; state level farmers’ commissions with representatives of farmers, restructuring of micro finance policies that may serve as a sort of livelihood finance; covering all crops by crop insurance; village to be the assessor and not the block, social security net that gives old age support with health insurance and aquifer recharge and rain water conservation; plans for decentralised water usage etc.

The first right on all resources rests with poor, peasants & workers.

My View:
Even today, agriculture employs over 1.3 billion people throughout the world, or close to 40% of the global workforce. The ratio of farmers has declined from 35 to 4% in developed nations between 1950 and 2010, and from 81 to 48% in developing countries. In India, the workforce in agriculture was 76% in 1961. The number decreased to 51% in 2010. Still agriculture provides the bulk of employment in the rural areas. Post liberalization, cutbacks in agricultural subsidies increased the costs of inputs but market prices have not seen a corresponding increase. The rising of costs of production and the falling prices of farm commodities have transformed agriculture from a positive economy into a negative economy for peasants. Both these factors are rooted in the policies of trade liberalization and corporate globalization. Today they barely make enough to feed themselves. Over three lakh farmers have committed suicide since 1995, mostly in Maharashtra, Madhya Pradesh, Andhra Pradesh, Karnataka and Chhattisgarh. Farmer suicides have largely been attributed to debt, drought, crop failure and poor returns. Debt is a reflection of a negative economy. Their main source of capital for farming remains loans. While bank's share is 60% only, most farmers depend on moneylenders, at exorbitant interest rates. Swaminathan commission recommended sweeping reforms and massive investments for viability of agriculture, successive governments makes promises for winning elections and forgets thereafter. Occasionally, they announce farm loan waivers as temporary relief but agriculture problems remains as they are and farmer suicides continue unabated, which is a national shame. During 2014 election campaigning, Modi made categorical promise to implement Swaminathan commission report with MSP of inputs cost plus 50% profit margin and doubling farmer's income in 5 years in real terms, with unforgettable rhetoric for garnering rural votes, and after getting the votes, he never bothered to do anything during the past three years and is following same style as Congress. His desperate attempt to win UP elections by announcing farmer loan waiver, much against BJP's stated policies, and after winning the scheme announced was scaled down to less than 25% is an outright atrocity on UP farmers and had ignited violent agitations in many states endangering national economy. In addition BJP's new "Anti slaughter rules" had destroyed dairying, along with beef export & leather industry, which is the second and last source of income for rural masses. Instead of alleviating farmer's woes, generating new jobs and improving economy, Modi successfully destroyed agriculture, dairying & rural economy and his acts of insanity resulted in loss of millions of jobs and millions of dollars of export income.

Modi's Illusionary of reforms

Modi is a Hindu zealot disguised as an economic reformer, or the other way round? Modi has pandered to religious sentiment by appointing a rabble-rousing Hindu prelate as CM of UP. Modi’s government is the strongest in decades. The opposition is hopeless. The low oil price of late has been boosting growth by perhaps two percentage points a year. India is young. He has not come up with many big new ideas of his own (the GST and the bankruptcy reforms date back long before his time). Over a quarter of the people joining the world’s workforce between now and 2025 will be Indian. And there is enormous scope for catch-up growth: India is the poorest of the world’s 20 biggest economies. Modi, in short, is squandering a golden opportunity. 

• But he has also pushed through reforms and these are deceiving. 
• The GST, is unnecessarily complicated and mangled, greatly reducing its efficiency. Keeping petroleum products and liquor outside GST is unnecessary. A simple GST might have added two percentage points to GDP growth. The complicated version will probably yield less than half that and only after a painful transition.
• The new bankruptcy law is a step in the right direction, but it will take much more to revive the financial system, which is dominated by state-owned banks weighed down by dud loans. The government has known about the problem for years but has done little to resolve it.`
• When Modi was elected many business leaders winced him as a reformer promising “minimum government, maximum governance”. It was hoped that the state apparatus would be aimed away from trying to do everything and towards providing basic services, such as education, health care, a functioning market for land and labour, a working judiciary, and a stable and predictable regulatory environment in which the private sector could create jobs. Three years on, those hopes are fading. 
• Corruption seems to have abated, at least at the highest levels of government. But he has demonstrated little appetite for the reforms which would bring sustained growth that could transform the lives of Indian citizens.
• Analysts estimate that low oil prices alone has boosted GDP by 1-2%. Modi also benefited from the tenure of Raghuram Rajan, whose inflation-targeting regime has helped keep prices in check. (Mr Rajan was, in effect, sacked by Mr Modi in 2016.)
• Growth of 7% or so is nothing to scoff at. But Modi’s ministers speak of an economy expanding by 8-10% a year is necessary to absorb the 1 million Indians who enter the labour market every month. Achieving this would require deep and broad reforms.
• The central government’s response to the difficulty of buying land to the reform of rigid labour laws, has been to pass them to the states. 
• One of the big reforms it has undertaken, demonetization of 86% of currency, in an effort to curb the black economy was counterproductive, hamstringing legitimate businesses without doing much harm to illicit ones. It was certainly brave but did not make it a sound policy. Lack of planning and unclear objectives mean the exercise has damaged the economy; its potential benefits remain hard to judge. It seems to have paid off politically. The BJP thumped opponents in UP elections in Feb 2017. People queued for days on to exchange old banknotes but were apparently consoled by claims that the rich were suffering far more (they were not).
• He is no good at working systematically to sort out the underlying problems holding the economy back. Lending to industry, which once grew at 30% a year, is contracting, for the first time in 20 years.
• Infrastructure projects are stalled for lack of cash and corporate India is in the doldrums. 
• Modi should have recapitalized state-owned banks and sold them off, to get loans flowing again. 
• Too often, he ducks essential reforms. When courting voters he talked tantalizingly “I believe that government has no business to be in business,” he proclaimed. But the much-discussed privatization of state-owned firms is yet to take place. The problem is that Modi is not that brave as he exhibits. 
• Modi has proved the exception rather than rule. “We elected a radical, we got a tinkerer,” rues a banking boss.
• He should be working to simplify the over-exacting labour law, property purchases are a forbidding quagmire; try to improve the quality of registers to reduce the scope for disputes. 
• His government recently created havoc in the booming beef-export business with annual earnings around $4 billion (nearly a third of the country’s trade deficit) from exporting beef, and last year was the world’s biggest exporter of the product. But nearly all of it comes from buffalo, not cow.
• Modi has kept the focus on smaller projects at the expense of broad reforms. The government has proved adept at dealing with the consequences of bad policy rather than recasting policy itself. One scheme put forward by Modi bailed out state-owned electricity-distribution firms at vast expense, because their weak financial position was hampering efforts to electrify rural India.
• The “Make in India” campaign, designed to lure foreign manufacturers, has loudly proclaimed the country open for business, organizing conferences and photo-opportunities for Modi and foreign bosses. But little has been done to tackle the shortcomings that discourage foreigners from building factories in India.
• Most economic activity takes place in the shadows. A round nine in ten workers toil in informal jobs. One of the aims of demonetization was to bring more of India into the open. If it has achieved that, it is only by clobbering the informal sector rather than helping the formal one.
• Companies deemed to earn excessive profits are hounded: makers of stents, pharmaceuticals and seeds have been forced to cut prices recently.
• A plan to improve the skills of 500 mn Indians by 2022 has been hastily dropped. A Rs. 400 bn public-private fund unveiled in Dec 2015 to finance infrastructure is reportedly yet to find a single investor or project. This government moves from decision to decision, without checking performance or compliance.
• Senior ministers relegated to the edges of a policy making machine run by a tight group around him, few people know what Modi has in mind. But most conclude that his core beliefs are already in evidence. And with the economy ticking along nicely thanks to the oil dividend, overhauling it has not required, or received, much attention.
• GDP growth faltered in the latest quarter. The sag seems to have begun before demonetization but has been aggravated by it. Creation of ever fewer jobs in the formal sector have added to a recent sense of economic malaise. Political attacks on the government’s job-creation record are common.
• Rules issued in May to protect cows have put in jeopardy buffalo-meat export industry as well as dairy and leather producers. State governments are caving in to demands for farmers’ loans to be forgiven, that will bring short-term relief but make it harder for farmers to borrow in future. It could also add two percentage points to the fiscal deficit, nullifying the hard-won consolidation of recent years.
• If the economy falters, Modi may will try to maintain his popularity by stirring up communal tensions. That is how his BJP first propelled itself to government in the 1990's. 
• Modi himself was chief minister of Gujarat in 2002, when rioting for over 2 months, killed at least 1,000 people, most of them Muslims. To this day, he has never categorically condemned the massacre or apologized for failing to prevent it.
• Hindu nationalist thugs intimidate those who chide the government for straying from India’s secular tradition, or who advocate a less repressive approach to protests in Kashmir, India’s only state with a Muslim majority. 

As prime minister, Modi has been just as careful to court militant Hindus as jet-setting businessmen. Modi himself has become the object of a sycophantic personality cult. The prime minister may intend all this as a way to keep winning elections. But it is not hard to imagine it going disastrously wrong. Modi’s admirers paint him as the man who at last unleashed India’s potential. In fact, he may go down in history for fluffing India’s best shot at rapid, sustained development. And the worries about a still darker outcome are growing. Modi’s backers fear more erratic decision-making would be an expensive way to conceal an absence of reform. If he continues in this vein, Modi will leave India a little better off but otherwise not much different from how he found it.

My View:
Any reform will create initial disturbance and after stabilizing the fruits will be seen with passage of time. Aggressive reforms are necessary only when economy is in distress. Otherwise step by step reforms eliminating ills of the existing system is most preferred. Last year our economy was doing reasonable good with GDP growth of 7-8% better than China. Modi's senseless demonetization was utterly unwarranted which almost destroyed informal sector and agriculture. Even before it has shown any signs of recovery, adventuring GST (in mangled format) now, without adequate transition time will only complicate matters and its devastating effects are beyond imagination or prediction. His hurried nature of financial reforms indicate that his objective is to please FII's and World Bank for ratings upgrade rather than any sincerity towards poor people of the country and his deep desire to go down in history as 'the greatest reformer of India'. It is design of God that deep desires will never get fulfilled. History is testimony that never results would be as predicted. Commonsense tells me that when goings are good, it makes sense to adopt slow and seamless changes and poor and vulnerable are never subjected to any discomfort. Alas, if Modi has that much of serenity of mind, he wouldn't have become PM at all.

Agriculture in distress in India

• More than 50% of workforce is employed in agriculture in India, most of them underemployed.
• Agriculture constitutes 17% of GDP.
• Country will develop only when large part of its workforce is gainfully employed in other sectors.
• Many schemes have been launched to improve appalling inefficiency of agriculture, but is an herculean task.
• Agriculture growth is 2% per annum where as GDP growth was around 7%.
• In 1960's agriculture has done commendable job [Green Revolution] of feeding country's large populace.
• Little has changed in the past 50 years of agriculture, since 1960's.
• Every variable of agriculture namely land holding, soil, water, farming technology, and markets is in crisis, today.
• An estimated 3.18 lakh farmers committed suicide between 1995-2015.
• 55% of agriculture is monsoon dependent. Only 45% of cultivable land is irrigated.
• Droughts often leads to small farmer suicides.
• 60% of irrigated land is ground water dependent and its water efficiency abysmal. Shift from flood irrigation to micro irrigation systems will be helpful for conserving water and saving on irrigation costs.
• With free irrigation and electricity, maintenance of these systems deteriorated effecting farming. Maintenance fee should be revived for making these irrigation systems sustainable. Solar powered pump sets will be helpful.
• Average land holding have halved from 2.5 hectares in 1970 to 1.2 hectares today. Majority of the holdings are less than one acre. Almost 70% of farmers hold 30% of cultivable land. Small holdings make them good only for subsistence agriculture.
• Half of the land holdings are ravaged by erosion and alkalinity. Excessive usage of urea and pesticides has compromised soil fertility. Organic farming should be promoted for soil conservation.
• Labor component is 40% of total cost of inputs. Farm mechanization will reduce this expense and dependence on manual labour.
• Meager cold storage facilities in case of excess produced.
• While input prices are steadily increasing, output prices are falling, making farming risky and unviable proposition in India.
• Agriculture loan waivers by states makes them compete with each other  and pull down national economy. About Rs.3 lakh crores is needed if all farmer loans are to be waived in the entire country.
• Modi has promised for doubling of farmer income by 2022. Nothing much has been done in the past three years. To achieve this, an investment of Rs.3 lakh crores is needed. Reduce costs by farm mechanization and reduce dependence on manual labour. 
• Food processing industry is at its nascent stage.
• The country desperately needs another revolution in agriculture for the farmer to breakout of his vicious cycle of misery and for us to become a modern economy.

What ever can go wrong, has gone wrong with rural India

My View:
On one hand centre and RBI warns states to be cautious of their own finances before announcing populist measures, it is Modi who announced farm loan waiver for UP farmers during election campaign, few days before start of polling, without which BJP wouldn't have won UP elections 2017. Modi opened Pandora's box and farmers in all states are pressurizing state governments to waive their loans and till then they are reluctant or refusing to pay up outstanding loans. Only left parties argued that if banks can have NPA's and black money continues to be stashed abroad, why can't farmer loans waived. Unless land reforms are implemented to pool lands to holdings of viable size of 20-50 acres with easy lease enforcement, agriculture may not become viable. Quality inputs, easy credit, warehousing & cold storage and effective marketing must be organized for higher farm productivity and income enhancement. If government is serious about well being of farmers, correction of policy distortions, promotion of organic farming for sustainable agriculture etc. the vicious cycle of farmer indebtedness and suicides will never end.