Why Indian Farmers Find it Hard to Trust the Government's Promises

The Centre has had a topsy-turvy relationship with the agriculture sector since 2014, with a few hits, but also a lot of misses.

On Monday, Prime Minister Narendra Modi made yet another attempt to diffuse the anger of farmers against the three new farm laws which have – for over two months now – inspired protests in large parts of the country, led by the farmers of Punjab, Haryana and now western Uttar Pradesh (the green revolution regions).

Modi said that farmers should trust him, his government and their intentions. “I want to tell my farmer brothers and sisters from the sacred ghats of the holy city of Kashi (Varanasi) that our intention is as pious as the water of Maa Ganga (the holy river Ganga),” he said as he admitted that farmers are apprehensive about the new laws. 

The fact that Modi, who was trusted – more or less – with the demonetisation of 86% of currency notes, which was little explained, reckless and now proven disastrous for most Indians, felt the need to say this speaks volumes for the level of distrust that farmers now feel with him and his government. 

The issue of trust – or lack of it – is key with respect to these protests. The farmers are most agitated at something that the new laws, by themselves, don’t necessarily do – abolish the minimum support price (MSP) regime or curtail procurement under it. 

And the ruling National Democratic Alliance (NDA) has pulled out all the stops to assure the farmers that this isn’t going to happen. The prime minister, the finance minister and the agriculture minister have all said that procurement under the MSP regime will continue. 

But farmers, at least in a few states, don’t appear to trust them.

For instance, this is what a protesting farmer said when The Wire pointed out that the government has said that MSP will continue:

Sarkar to ye bhi kaha tha ki 2 crore logon ko rozgar denge… sarkar to ye bhi bol rahi thi kala dhan le aaye, sarkar to ye bhi kehti hai ki China ko khader diya (The government also said that 2 crore people will be given employment… the government also said that black money has been recovered, it also said that China no longer occupies Indian territory). 

He goes on to list a couple of other unfulfilled promises of the government or achievements of the government according to news channels allied with it, before saying, “Sarkar puri tarah jhuti hai. Aur Modi sarkar pe ratti bhar bhi bharosa karna apna gala ghotne jaise hai (This government is full of lies. To trust the Modi government is like strangulating yourself).” 

Farmers at the Ghazipur border. Photo: The Wire

And this sentiment of lack of trust has been echoed by most farmers and farmer organisations during these protests which have now stretched on for over 2 months. It’s not without reason that farmers don’t trust the government. Since 2014, when the Modi-led government came to power, it has failed to deliver on a range of its pre-election promises and flagship schemes across the spectrum. 

The Wire will provide a brief snapshot of some of the government’s unfulfilled promises and some of its schemes which have flattered to deceive with respect to agriculture specifically. Bear in mind, this list is not exhaustive. 

Implementation of the Swaminathan commission report

Prior to the 2014 Lok Sabha elections, Modi promised that if voted to power, his government will change the way MSP is set. “There will be a new formula—the entire cost of production and 50% profit,’ he had said and thus promised to implement one of the key recommendations of the 2006 M.S. Swaminathan commission on farmers. 

It will help to just briefly understand how MSP is decided. It is declared by the Central government on the advice of the Commission for Agricultural Costs and Prices (CACP). The CACP calculates three different costs of productions – A2 (actual paid out cost), A2+FL (actual paid out cost plus imputed value of family labour) and C2 (comprehensive cost including imputed rent and interest on owned land and capital). 

It should now be obvious that C2 > A2+FL > A and that C2 is the entire cost of production. Plus, it’s also obvious that Modi was referring to C2 because MSP for most crops was already higher by more than 50% of A2 and A2+FL when he made the promise.  

That promise is yet to be fulfilled but the government does continue to falsely claim, as Modi did again in Varanasi on Monday, that MSPs have been set as per the formula he promised in 2014 – the entire cost of production plus 50% profit.

As the table here shows, that is simply not true and the MSP for crucial crops such as paddy and wheat is 12% and 34% higher than C2 and much lower than 50% for all crops. 

In fact, as Dheeraj Mishra of The Wire has reported, several states – including those ruled by the BJP – have objected to the costs calculated by the CACP, arguing that those costs are much lower than the actual cost of production of crops in states. 

Before the new farm laws were brought in, setting of higher MSPs as per the recommendations of the Swaminathan commission report had been the key demand of farmer movements across the country. 

Also Read: Exclusive: Centre Rejected MSP Hike Recommendations by Several BJP-Ruled States

Irrigation projects 

The BJP’s 2014 manifesto also promised that once it comes to power, it will introduce a new irrigation scheme and promote low water consuming techniques.  

The Pradhan Mantri Krishi Sinchai Yojana (PMKSY) was launched in July 2015 to increase overall irrigation coverage and thereby reduce the dependence of the Indian farmer on the monsoon. But the scheme has underwhelmed. 

The PMKSY website shows that 58% of the projects under the scheme remain ‘ongoing’ more than five years after it was launched. In 2018, a parliamentary committee found that only 10% of the projects under the watershed component of PMKSY had been completed. 

At the time of the launch of the scheme, it was promised that the Centre would spend Rs 50,000 crore until 2020 on the scheme. But, so far only Rs 32,000 crore has been spent by the state governments. The Centre’s share of expenses in this is only Rs 8,000 crore. The rest has been incurred by the states from their own budgetary sources. 

Improved irrigation is key for agriculture in India, where the monsoon has often been called the real finance minister due to agriculture’s dependence on it and dependence of over 50% Indians on agriculture for their livelihood. While highlighting that only 34% of India’s total cropped area is irrigated, the 2017-18 economic survey also warned that unless ‘dramatic’ improvements are made in irrigation, climate change could reduce farmers’ incomes by 25%.

Crop insurance 

The Centre’s flagship Pradhan Mantri Fasal Bima Yojana was launched in January 2016. The government said that the new scheme incorporated the best aspects of existing schemes and weeded out their shortcomings. 

Crucially, it allowed private players entry into the crop insurance market and all farmers who were availing of credit on their Kisan Credit Cards (KCC) were compulsorily enrolled in the scheme. A subsidised amount of insurance premium was deducted from their loan amounts. 

The scheme turned out to be a major flop and faced with farmer opposition the BJP was even forced to promise in its 2019 manifesto that it will make the scheme voluntary and that farmers could opt out of it. 

The key problem with the scheme was delayed settlement of claims. As per the guidelines of the scheme, claims of farmers ought to be settled within two months of the final harvest of the season. The timeliness of settlement of a claim is crucial because after suffering crop loss, farmers are short on working capital to sow for the next crop. Insurance claim settlement can bridge that gap if it is provided quickly enough. 

That, however, almost never happened in the PMFBY as claims worth thousands of crores have been delayed by months, sometimes even years across the country. Some of the reasons for the delay have to do with state-level inefficiencies in collecting and sharing crop loss data, delay in paying the state’s share of the premium. But, the Centre did not act with enough urgency to address the issues. 

The scheme has also attracted criticism for allegedly benefitting private insurance companies to the tune of thousands of crores. 

After 2019 though, the Centre has drastically reduced its focus on the scheme by not only making it voluntary but also by capping the amount of premium it pays. Although questions do remain on how far the scheme is really voluntary, farmers in large numbers have already opted out of the scheme. 

Representative image. Photo: Reuters

Operation greens

In his 2018 Budget speech, the then finance minister Arun Jaitley had announced that to help farmers deal with the problem of volatility in the prices of tomatoes, onions and potatoes, the government will introduce the Rs 500 crore ‘Operation Greens’. The ‘operation’ was supposed to create new and better storage facilities, facilitate food processing industries and compress supply chains to aid farmers in realising a better price for the consumers and to be better equipped to deal with the whims of the market. 

This is crucial in the case of perishables like tomatoes, onions and potatoes as farmers each year have to deal with the problem of peaks and troughs in supply. During the harvest season, prices crash as the market is flooded with supply while prices rise during the off-season with limited supply. If farmers had access to appropriate and affordable storage facilities, it would enable them to store and make sales in a staggered manner throughout the year. It would also mean that consumers, on the other hand, do not have to face a sudden rise in the price of onions, for example, in the off-season. 

The government said ‘operation greens’ would achieve this. However, since that February 2018 morning, there has been little mention of the scheme. 

In fact, the first actual allocation of money under the scheme only came in February this year, when Rs 162 crore was allocated for projects to strengthen production clusters and farmer producer organisations. It yet remains unclear how much of this allocation has been spent. 

Interestingly, the responsibility of operation greens lay with the Union Ministry of Food Processing Industries. That ministry was held by Shiromani Akali Dal’s Harsimrat Kaur Badal from May 2014 to September 2020, when she resigned “in protest against anti-farmer ordinances and legislation.”

Payment of sugarcane dues within 14 days in UP

Farmers from the sugarcane belt of western Uttar Pradesh have also joined the protest on the borders of Delhi. Their key demand is that sugarcane dues be paid within 14 days. 

That is another unfulfilled promise of the BJP. In February 2017, leading up to the UP assembly elections, Modi promised that if voted to power in the state, the BJP will ensure that all sugarcane dues are cleared within 14 days of sale. 

However, pending dues to the tune of thousands of crores continue to be a major problem for farmers. For instance, sugarcane dues in excess of Rs 8,000 crore pertaining to the previous season remain unpaid even as the new season is set to begin. 

Linking MGNREGA to agriculture 

The BJP’s 2014 manifesto had promised that the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) will be linked to agriculture. 

Four years after being voted to power, the government was ‘mulling’ linking MGNREGA to agriculture. A committee of seven chief ministers was set up under the NITI Aayog to examine the feasibility and devise methods to implement the linkage. 

However, there has been no progress or action taken on the report of the committee. 

Linking MGNREGA to agriculture, in theory, could provide a way for the government to pay a part of agricultural wages which have shown a stagnant trend in the last few years, and even declined in real terms for certain periods. 

Representative image of NREGA workers. Photo: PTI

Single national market 

The 2014 manifesto of the BJP had said that it will evolve a ‘single national agricultural market’ to check price rise. 

In April 2016, the government announced that it will be bringing the APMC mandis to a platform of electronic national agricultural markets – an online trading platform which will lead to better price discovery for farmers. 

Once again, progress has been slow. A 2018 study found that less than 1% of total produce traded in APMCs was traded through the e-NAM platform. The struggle to take off has been marked by a lack of adequate infrastructure – particularly reliable internet – and lack of initiative in getting stakeholders on board.

A committee set up by the government has also found that mechanisms of transparency and fair price discovery are not being adequately followed. 

In May, the government informed that 1,000 of the almost 7,000 mandis in the country have been integrated with the e-NAM platform. While only about 1.66 crore farmers of the at least 14 crore farmers in the country have been registered on an e-NAM platform. 

Another announcement aimed towards the direction of providing farmers with better sales infrastructure was the promise to convert village markets into agricultural markets. In 2018, the Centre said it will convert 22,000 such village markets into agricultural markets. 

However, as Dheeraj Mishra of The Wire has recently reported, not a single such village market has yet been converted into an agricultural market. 

Also Read: Centre’s Scheme to Convert Rural Haats into Agri Markets Remains Unutilised

PM Kisan 

In February 2019, in a bid to quell rising anger on the agricultural front a few weeks before the Lok Sabha elections of 2019, Modi promised that his government will provide every small and marginal farmer with income support of Rs 6,000 a year, broken into three equal instalments. The first instalment was to be provided with effect from the period beginning December 2018 in order to ensure that one instalment could be provided before polling. 

Initially, the scheme was to benefit 12 crore small and marginal farmers. Its ambit was increased to include all farmers in the NDA’s second term. The government said that the scheme will benefit 14.5 crore farmers. 

However, two years into the scheme, about 11 crore farmers have been registered under the scheme, according to its website. The government has claimed that the initial 14.5 crore figure might have been an overestimate and there might actually be fewer farmers in India. (The government is not sure how many farmers there are in India.) 

Another factor is inefficiencies at the state level. For instance, West Bengal has refused to register its farmers under the scheme. 

Therefore, the Rs 75,000 crore allocated for the PM Kisan scheme has never actually been fully spent. The agriculture ministry has even asked the finance ministry to reduce the allocation for PM Kisan and use the money elsewhere. However, the finance ministry did not do so in this budget. 

Another reason for the low spending is that if a farmer is registered under the scheme in period 4 of its implementation, she will only get the subsequent instalments and not the previous instalments. The scheme does not make retrospective payments which could raise a few eyebrows for a scheme which was launched with retrospective effect just before elections. 

Nevertheless, it is important to point out that PM Kisan is by far the best performing agricultural scheme of the Modi government.