Why Short-Term Measures Won't Address Punjab's Agricultural Distress

Neglect of agriculture by successive governments has snared farmers in a cycle of debt, toil and protests that will only be broken if a comprehensive policy is put in place.

The blockade of the Amritsar-Delhi rail route by farmers protesting under the banner of Kisan Mazdoor Sangharsh Committee near the Jandiala town stranded thousands of passengers as nearly two dozen trains were cancelled on Tuesday.

If their demands are not met, the farmers have given a call for Jail Bharo Andolan. Their demands include complete debt waiver, implementation of the Swaminathan Commission report, return of blank cheques taken by banks, stopping the auction of land and payment of sugarcane arrears with 15% interest.

The stir has become ubiquitous in Punjab and not a day passes without farmers agitating for their demands. The seeds of discontent amongst the farmers show that the state is reeling under acute agricultural distress. The rural landscape of Punjab is marred by the menace of agricultural indebtedness and subsequent farmers’ suicides.

Also Read: 430 Punjab Farmers Committed Suicide in One Year Since Loan Waiver Rollout

Even the karj mafi or loan waiver scheme of the Congress government has failed to quell the agitation and a majority of farmers feel dejected. The scheme, which started in January 2018, has not yet been extended to the original number of beneficiaries, pegged at 10.25 lakh small and marginal farmers.

While the scheme aimed to waive debt of Rs 10,000 crore, only Rs 4,736 crore has been waived for 5.83 lakh beneficiaries. The farmers blame the present government and the chief minister for reneging on the pre-poll promise of a complete debt waiver. They plan to continue the agitation till their demands are met.

Institutional credit

Recently, banks have started taking blank cheques from farmers, which they use to pressure the farmers into repayment. If the cheque bounces, the farmers face imprisonment. Arrest warrants have been issued under section 420 of the IPC against nearly 350 farmers and a few have also been arrested, as per the estimates of a farmers’ union body.

The classic argument of increasing institutional credit to solve debt woes of farmers is not valid anymore. It is the institutional debt which the government is waiving off. Reports say banks in Punjab are taking triple securities from farmers – pledging of land, signature by a guarantor and post-dated cheques – before disbursing loans.

This forces farmers to return to informal moneylenders, says Ramandeep Mann, a farmer leader. The usurious interest rates in the informal credit market and the absence of safeguard mechanisms like debt tribunals to settle informal debt in the state will only increase the vulnerability of farmers.

Malcolm Darling, in his century-old classic The Punjab Peasant in Prosperity and Debt, says debt follows credit and credit as a servant can turn sand into gold, but as a master, it will convert gold into sand.

Over time, this credit has become a master of lakhs of farmers who continue to face an uncertain livelihood in Punjab. The debt relief package has so far been unsuccessful in dealing with the agricultural debt problem in the state.

Punjab chief minister Amarinder Singh with Rahul Gandhi. Credit: PTI

Low farm income and rising input costs

The negative debt repayment capacity of farmers in Punjab has been a consequence of a long-standing crisis in agriculture. Low farm incomes and rising input costs have reduced its profitability and viability.

In the past couple of years, deflated prices of agricultural produce, pest attacks and uncertain weather have unleashed havoc on farmers in Punjab. Barring wheat and paddy, for which there is a minimum support price (MSP), the prices of other commodities like sugarcane, potatoes and other vegetables are at the mercy of market volatility.

Last year in December, sugarcane farmers demanding the release of their arrears. They were pacified with the announcement that out of the State Assured Price (SAP) of Rs 310 per quintal, Rs 25 per will be paid by the state government and the remaining amount by sugar mills.

The promise was not kept and sugarcane farmers have resumed their protest, particularly in the Doaba area. Balbir Singh Rajewal, president of the Bharatiya Kisan Union (Rajewal), says that under the pretext of providing debt relief, the present government set ambitious targets.

The ground reality, is, however, different. The state government has been on a path of regressive taxation by increasing the Rural Development Fund and mandi fees, which are ultimately borne by the farmers. Such incongruous policies and announcements do not bode well for the agricultural sector.

Neglect by successive governments

The distressed farm economy is a result of neglect of agriculture by successive governments at both the Central and state level. Even 72 years after independence, there is no coherent national policy on agriculture.

Farm income growth dropped to a 14-year low in the last quarter of 2018, as per recent estimates by the Central Statistics Office. The newly-announced PM Kisan Samman Nidhi scheme, which will provide Rs 17 per day to marginal and small farmers as income support, does not even qualify as a relief measure for the growing agricultural distress. This is especially true of Punjab, where the average debt per household runs into lakhs of rupees.

Also Read: Ground Report: What Farmers Had to Say About Modi Govt’s Income Support Scheme

Over the last few years, policies by successive governments at the Central and state level have shifted the balance of support from producers to consumers. The inflation targeting framework has only worked in the favour of the urban middle class.

Furthermore, the deflationary trend in farm prices has hampered the prospects of dignified returns to the farmer in recent times. Unless basic structural issues concerning agriculture are not addressed and a comprehensive agriculture policy is not put in place, farmers will continue to agitate. Short-term, rhetorical promises will not alter the situation.

Anmol Waraich is PhD scholar at the Centre for the Study of Law and Governance, JNU.