New Delhi: On Friday, finance minister Nirmala Sitharaman held her third press conference in as many days to follow up on Prime Minister Narendra Modi’s promise of a Rs 20 lakh crore financial stimulus package. After focussing on Micro, Small and Medium Enterprises (MSMEs), and migrant workers in the first two days, Sitharaman turned her attention to agriculture.
Sitharaman spent about fifteen minutes listing steps that the government had taken in the nearly two-month-long period of lockdown. These steps included the transfer of PM Kisan dues to nine crore farmers and payment of crop insurance claims to farmers – which had already been due and, in fact, delayed in the case of crop insurance claims.
The steps that Sitharaman subsequently announced included promises of three legal reforms to ease up agriculture marketing and the reinforcement of certain schemes that had been announced by the Centre in the past.
For instance, she announced that the government was launching the National Animal Disease Control Program which would ensure 100% vaccination of 53 crore animals and would involve spending Rs 13,000 crore. The same scheme had also been launched by PM Modi in September 2019 with an allocation Ra 12,600 crores.
Sitharaman also announced, as part of the COVID-19 relief package, existing schemes which have achieved varying degrees of success. She announced that the Operation Green launched in 2018 by the then finance minister Arun Jaitley would now be expanded to include fruits and vegetables. It was directed at easing the transport and storage of perishables and an allocation of Rs 500 crore was to be made for this – the same amount that was announced by Jaitley.
The first actual approval of spending (not actual spending) under Operation Green came in February this year – two years after Jaitley’s announcement – when the Centre announced that it had approved projects where it would be spending Rs 162 crore for strengthening production clusters and farmer producer organisations. How much of this amount has been spent remains unknown.
The announcement to enhance the infrastructure for bee-keeping was also only a reiteration of the promise made in Sitharaman’s budget speech in February this year. Similarly, the Pradhan Mantri Matsya Sampada Yojana (PMMSY) to promote the development of marine and inland fisheries is also an existing scheme which was announced in July 2019 in the first budget after the NDA won a second consecutive term.
The government has now promised to spend Rs 20,000 crore under this scheme, which is a substantial increase from the Rs 3,700 crore that had been allocated at the time.
The Animal Husbandry Infrastructure Development Fund which Sitharaman has said will now be provided with Rs 15,000 crore through NABARD, is also an existing scheme which was set up in March 2018.
On the reform front, the government finally took the plunge and decided to roll out three key reforms which economists have long advocated for to ease the lock jams in the process of selling of produce and providing farmers with more avenues of sale.
These include relaxing the agriculture marketing rules, which Sitharaman promised would be done through a central law in due course and would enable farmers to make inter-state sales and enable e-trading of produce.
The finance minister also said that the government would amend the Essential Commodities Act of 1955. The Act, which was brought into effect during a time of scarcity, allows the government to control the price and quantity stored of any commodity listed as an essential.
“What is happening is that farmers are producing. There is an abundance of crops, and this sometimes leads to issues because they would want to export, and we don’t permit that. Because of a flip-flop sometimes, farmers don’t get the benefit. Some other times, the consumers suffer. So there is a need to amend the Act,” Sitharaman said.
The government has now said that cereals, edible oils, oilseeds, pulses, onions and potato will be deregulated. It has also said that stock limits will only be imposed in “very exceptional circumstances like national calamities, famine with surge in prices.”
The third such reform announced by Sitharaman was that contract farming will be enabled and a legal framework will be devised to oversee the initiative. This would mean that farmers would be able to enter into contracts with buyers with assured sales price and quantities before the crop is sown providing them with an assured income.
These steps have been advocated by agriculture economist Ashok Gulati for decades and he welcomed the steps. “What the government is doing with these reforms is it is creating alternative channels for farmers to sell their produce. So, they will have more choices,” he told The Wire in an interview. “I am happy that we are finally moving in the right direction. I congratulate the government for these steps.”
CPI(M)-affiliated All India Kisan Sabha, however, criticised the move. “Clearly, the move is to promote free trade under the slogan of one nation one market. The peasantry at large will be at the mercy of the Agri Business Corporations since there will not be any arrangements for price support and price stabilisation for crops. The Agriculture Produce Market Committees will be side-lined and the powers of the state governments will be eroded,” it said in a statement.
Politician and social scientist Yogendra Yadav, while agreeing that the reforms were necessary and overdue, was critical of the government for not focussing on the problems faced by farmers during the period of the lockdown and those that they would face in the next few months.
“I honestly don’t understand what happened this afternoon. Was it a supplementary budget or a policy statement or were they just sent to occupy one hour of screen time and to manage headlines? What do any of the steps announced have to do with COVID and the lockdown? None of the steps will help the farmers in the next three or four months,” he said.
Yadav argued that the government ought to have compensated farmers for the losses suffered in the almost two-month-long lockdown and provided relief for the post lockdown period. A problem that the government and several commentators, including Gulati, have identified for this is that the government lacks the fiscal space.
“Why does the government lack the fiscal space? I will tell you why. Because it overestimated its revenues last year. Because it gave an ill-advised Rs 1.45 lakh crore tax break to corporates to deal with an economic downturn. This is why the government doesn’t have the money,” Yadav said.
Former Union agriculture secretary and visiting senior fellow at ICRIER Siraj Hussain said, while writing for MoneyControl, that the Centre’s announcements on Friday also signalled that it doesn’t view its ‘JAM trinity’ (Jan Dhan, Aadhar and mobile) as being capable of addressing the woes of the poor. “While the governance reforms of Essential commodities Act and agricultural marketing are good long-term measures, an important inference from three packages announced by the FM is that the Government does not see Jan Dhan, Aadhaar and Mobile trinity of much use to address the distress of the poor,” he wrote.
“The sad message for a vast majority of India’s poor is that: you are on your own,” he said.