Interview | Income Support Announcement Represents a Tectonic Shift, but Inadequate

Given the failure of price support policies, it was imperative that the government focus on an income policy, argues Devinder Sharma.

Chandigarh: Last week, while presenting the Narendra Modi government’s last budget, acting finance minister Piyush Goyal announced a direct income support scheme for small and marginal farmers across the country. Under the Pradhan Mantri Kisan Samman Nidhi scheme, farmers owning less than two hectares will be provided Rs 6,000 per annum by the Centre.

Punjab-based agriculture policy expert Devinder Sharma was among the first, in 2013, to propose the idea of direct income support for farmers. On the sidelines of the 4th International Dialogue on Himalayan Ecology in Chandigarh, The Wire spoke to Sharma about the need for income support, the adequacy of the Centre’s scheme and other reforms that the agriculture sector needs.

The interview has been edited for clarity.

Why did you feel, as early as you did, that India’s farmers needed an income support scheme?

When I looked at the agriculture sector as a whole, there was a very clear message. Farmers were suffering as a result of two things – 1. Lack of public sector investment and 2. Denial of rightful income. I also understood that farmers were victims of market volatilities. There was no way that the markets would be able to rescue farmers.

Looking at global agriculture, it was obvious that agriculture was in decline across countries because farmers were being denied their rightful income.

And you felt that this was happening primarily because of the way markets were designed?

It was primarily because of the economic design. Agriculture is being sacrificed to keep economic reforms alive. Farmers don’t realise that when they cultivate crops, they actually cultivate losses. The same principle works globally, not just in India. The state of Indian agriculture is a result of the economic model that we have borrowed from the West.

Also read: The Trials of an Accidental Farmer in Tamil Nadu

If you look at American or European agriculture, the share of population engaged in agriculture is much lower than that in India. But still it was surviving because of substantial state subsidies including direct income support to farmers.

So you don’t agree with the argument that is sometimes made that we have too many people in agriculture and that is the basic problem.

No, I don’t agree with that. Agriculture cannot survive without subsidies because otherwise volatility of markets will mean that farmers are denied their rightful income.

The prevailing economic design wants two things from agriculture – 1. Provide cheap raw material for the industry and 2. Keep food prices low to keep a check on inflation.

Institutions and think-tanks keep telling us that we have to move people from rural to urban areas. But they don’t say what they will do in urban areas. The idea is that they will provide cheaper labour as daily wage labourers. That is the economic design. Is that a sensible design?

Devinder Sharma. Credit: Youtube

How do you view the recent announcement by the Central government that it will be providing Rs 6,000 per annum as a direct income support to small and marginal farmers?

The announcement itself is a tectonic shift. The time has come when we need to shift from price policy to income policy. Price policy has failed and income policy is the only way to bail out farmers. So, in that sense it is good and it is a big shift.

Is it adequate?

The thing is, it has not been done in a way that it can make an impact now. Rs 6,000 means Rs 500 per month. How do you expect to solve agriculture distress by Rs 500 per month?

What would have been a figure that would have been adequate?

I would say Rs 6,000 per month. I know that there are limitations and that won’t be possible. But still they could have doubled what they have given. They could have provided Rs 12,000 per year to begin with.

And there is no lack of money. I will tell you why. Over the last few years India has provided several lakh crores to the industry. We have provided them fiscal stimulus packages, we have waived their loans through bank recapitalisation.

Also read: Farmers’ Crisis: Are Loan Waivers, MSP Hikes, Assured Income the Solutions?

Did anybody ask the question ‘where will the money come from?’ No questions on ‘fiscal slippage’ either.

Why are these questions only asked when we have to give money to farmers? Nobody wants to close the tap which gives money to corporates.

Why is it important to move from a price policy to an income policy?

If you see in the last three years, prices of crops have continued to be well below MSP. For certain crops they have remained 40-50% below MSP throughout the season. It is clear that the price policy is not working. The economic design ensures that farmers don’t get the rightful price for their produce.

So is an income policy by itself going to be enough to address agrarian distress?

No, you need other reforms. We need to set up enough functional markets. We need to have mandis within a five-km radius so that farmers can easily reach them. Our credit policy needs urgent reforms. We need to move from chemical to non-chemical agriculture. Our storage capacity needs to increase for that we need to invest in warehouses.

There need to be multiple reforms to solve the problem. If industry can be provided 7,000 steps for ease of doing business, why can’t we provide at least 1,000 steps for ease of doing agriculture?

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