Farmers’ Agitation

Being in Assam it is difficult to understand and appreciate the farmers’ agitation in Mandsaur and Nashik. The problem of plenty in these places as reported is not reflected in the vegetable market of Guwahati even if we take into account the benchmark items viz potato, onion and tomato. Having learnt that Assam is the “emerging state in agricultural growth” as per India Today group and given that there is record agricultural production in  major Indian states and there is  record low level inflation in the country my natural expectation was some  relief in food and vegetable expenses , which has not come true till date.

But articles and opinions published across media on agrarian crisis have not convinced me much. Experts summarize that agriculture currently is an unviable activity in India. If agriculture employs more than half of India’s workforce and contributes less than one fifth to the GDP then more than half of Indian population is underemployed and contributing insignificantly to the national income. If the statement is true then the story that India is an emerging economic powerhouse is redundant.

India’s central bank is primarily focused in controlling inflation. The present RBI governor is continuing the legacy of Raghuram Rajan, who took a rigid stand on inflation and we may recall his inflation vs dosa analogy. As per reports the  country  is  through  the lowest rate of inflation and there is  free fall of food and vegetable prices  and that in turn boomeranged as farmers did not  get right price for their produce. So can we say that the crisis is due to RBI’s mismanagement of the economy?

Various reasons identified by experts include higher input costs and small land holding in agriculture. But the recent problem is in higher output and higher output should have had counter effect to mitigate the problem.  Also both are controllable parameters. If there is indeed overproduction then there has to be a relook at the agricultural policy which at the moment talks about increasing farm productivity and provides various state sponsored incentives.

As possible solutions many are suggesting steps such as loan waiver and minimum support price or MSP. But the banking sector is already in trouble due to bad loan. Also a progressive government should have talked about price discovery through efficient commodity exchanges rather than the archaic MSP.

A new idea suggested in one place is a “decentralized futures market by agri entrepreneurs”. The idea is not clearly elaborated but the reason why existing commodities exchanges can’t be developed to address the problem is not understood. The state policy on agricultural commodity derivative market has been inconsistent since independence and current crisis is probably an opportunity to correct it.

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