Mohali: In April this year, the Punjab government constituted an expert panel on the economy to aid medium and long-term revival strategy for the state post the COVID-19 induced lockdown. The other state which has set-up a similar expert panel is Rajasthan.
The Punjab panel, headed by the former deputy chairman of the Planning Commission of India, Montek Singh Ahluwalia, submitted its first report on July 31.
Some of the other members in the panel include economists M. Govinda Rao, member of 14th Finance Commission, Rathin Roy, director of National Institute of Public Finance and Policy, Ashok Gulati who is Infosys Chair Professor of Agriculture at the Indian Council for Research on International Economic Relations (ICRIER) and K. Srinath Reddy, chairman of the Public Health Foundation of India.
Among several recommendations to strengthen healthcare, improve skill development, and deploy digitisation, the report stresses on ‘transforming Punjab’s agriculture’ and ‘revitalising industry in the state.’
Apart from this, the panel touched upon several issues which are being called ‘controversial’. High taxes on liquor, increasing the ceiling of professional tax, avoiding fresh recruitments to the state police force, reducing higher pay scales of certain government employees and matching them with the central pay scale, leasing of land to set up agro-processing units are some of them.
Several farmer unions vociferously opposed the recommendations pertaining to the state’s agriculture and called it ‘anti-farmer.’ The report has also once again opened debate on matters of agricultural reform in the state.
A large chunk of the Montek-led panel’s report is on Punjab’s agriculture. The Group of Experts (GoE) have suggested rationalisation of power subsidies given to farmers. According to the panel, total power subsidy for agriculture has put an “unsustainable burden on the state’s budget”, is highly “regressive” and has had “damaging effects” for the environment because it promotes water-guzzling paddy cultivation.
‘Whoever removes power, will be removed from power’
This recommendation is being heavily criticised by farmer unions. The opposition Shiromani Akali Dal also raised an objection. Soon, chief minister Amarinder Singh issued a statement to try and prevent it from becoming a contentious poll issue in the assembly elections, which are scheduled for the next year.
Captain Amarinder said that the report is preliminary and that his government will not consider any recommendation on the withdrawal of free power. “As long as I am here, free power to tubewells will continue,” he said, in effect, rejecting the recommendations of the panel which he set up.
Professor S.S. Gill, economist and professor at Punjabi University, Patiala told The Wire, “Whoever removes power, will be removed from power, you know.”
Gill agreed that the overuse of groundwater for paddy cultivation is a problem but he says that there is no political will to remove the subsidy.
According to a draft report released by the Central Ground Water Board (CGWB) in 2019, Punjab will run out of groundwater at 100 meters depth within the next 10 years. The overuse of groundwater has resulted in the withdrawal of groundwater larger than its recharge. According to the same draft report, groundwater is falling 51 cm every year and against an annual gross groundwater withdrawal of 35.78 billion cubic meters (BCM), the annual recharge has only been 21.58 BCM.
“Most big farmers, or MPs and MLAs are beneficiaries of the subsidy scheme. Sukhbir Badal himself has 10-15 tubewells,” says Gill.
Retired economics professor of Punjabi University, Gian Singh told The Wire that while power subsidy benefits big farmers, it is heavily relied on by small and medium farmers too.
Reportedly, in most parts of the state, in the absence of canal water, small and medium farmers rely on tubewell irrigation – not just for paddy, but for wheat as well. In the past, farmers have accused the irrigation department of not ensuring regular supply of canal water; because of which they have had to rely on tubewells drawing underground water. In villages of Sangrur district, which has been classified as a ‘dark zone’ (where groundwater has been over-exploited), all farmers have had to get a tubewell because reportedly, the canal water has dried up and is accessible only once in a while.
Jagmohan Singh of Bhartiya Kisan Union [BKU] (Dakaunda) said that with ongoing farm debt, small farmers cannot be expected to pay for power as well.
Speaking to The Wire, panel member Ashok Gulati said that the report has suggested different ways to compensate farmers. “Nowhere have we said to snatch all gains,” he said.
Gulati added that the report has recommendations to increase the income of farmers but has only suggested the use of different instruments.
The GoE has recommended that the state government’s pilot scheme – ‘Pani Bachao, Paisa Kamao’ – which is being implemented with the World Bank and JPAL, should be evaluated and scaled up in the next two-three years to all overexploited blocks in the state.
According to the Punjab State Power Corporation, from June 2018 to July 2019, more than 200 farmers in Fatehgarh Sahib, Jalandhar and Hoshiarpur districts have been given Rs 15.74 lakh in subsidy for “judicious use of water”. Calling it a success, the scheme was extended to 250 agricultural feeders in 2019.
Referring to this scheme, Gulati explained that cash transfers will be made to all those who save power. “If you have a metering system, and if you save power, that much money will be transferred to you automatically. Farmers will be better off and the water table can be re-energised a little bit at least,” he said.
Gulati agreed that the lack of political will is a problem. He said that the GoE’s job is to provide options, not do politics. “We are professionals, not politicians,” he said. But by not rationalising power, Punjab will be “axing its own feet”, he said.
‘Diversification was recommended 40 years ago’
The other suggestion made by the panel is to diversify crops. The report suggests that no subsidy on power would mean that more farmers would want to opt out of paddy cultivation. This means Punjab’s farmers will look towards diversification.
“From a sustainability point of view, the basic agricultural objective should be to reduce the area under common paddy by about 1 million hectares (out of total 3.1 million ha under paddy) over the next 6-7 years along with a blueprint for diversification into other crops over the same period. Haryana is currently giving an incentive of Rs 7000 per acre in over-exploited blocks to shift out of paddy. Punjab should consider something along these lines.”
The GoE believes that diversification may make Punjab’s agriculture more profitable. But farmers say that while diversification sounds good and should be done, it will put them under extreme stress.
“We are in support of diversification. But we don’t know what MSP we will get for our crops. In the open market, it is going to be very difficult. There are no buyers for other crops in the region. While it sounds good, without proper infrastructure and reform, it will kill us,” Jagmohan Singh of BKU (Dakaunda) told The Wire.
Professor Gill agreed. He said that every economist has been suggesting that diversification is needed, but no one knows how. Gill said that several reports, including the Johl committee report of 1986 and 2002, have said the same thing but without remunerative support prices and well-oiled marketing, diversification won’t help the state’s agriculture.
Gill further said that the wheat-paddy cycle of Punjab is definitely putting pressure on the state’s groundwater. “But even after 40 years, we still don’t have an alternative,” he said.
Ashok Gulati referred to S.S. Johl’s report too. He said that even 40 years after this recommendation, “nobody has the guts to bell the cat.”
Gulati added that when everything gets hooked to MSP, it becomes problematic. He said that MSP helped the country and it helped Punjab 20-30 years back, “but now you have to adjust to a new system.”
“Government cannot have MSP for diversified crops. It has to be market-driven,” he added.
Gulati added that Punjab’s refusal to move out of paddy has ‘overloaded’ the country. “The country is overloaded with grains. The country doesn’t know where to keep grains,” he said.
Gulati’s statement comes despite experts’ suggestions that excess food grain could be used to universalise the PDS system and be distributed among those who need it the most, especially during a health crisis.
The panel’s report has also suggested that new crops will “require opening up agricultural marketing beyond the APMCs.” It notes that while the government of Punjab has taken steps to amend the APMC Act, many rules still contain restrictive provisions like high license fees.
“If Haryana and Uttar Pradesh move to a more liberal arrangement, Punjab runs the risk of losing potential investments by processors, exporters, organised retailers etc,” the report states.
According to Gian Singh, the report is hinting towards an open market economic system and the scrapping of the APMC Act. “We have seen the results of scrapping the APMC Act in Bihar. Why should we increase more problems for farmers in our state by doing so,” he said.
According to Singh, the Montek-led panel’s recommendations and the Centre’s farm ordinances are not too different. It is important to note that recently the Punjab government opposed the Centre’s farm ordinances.
‘Report did not assess immediate losses’
Professor S.S. Gill explained that in the period of the COVID-19 induced lockdown, the maximum loss was faced by farmers who produced diversified crops such as fruits and vegetables. “All these come under diversification. But the report has been completely silent on this,” he said.
“The main objective of the report should have been to estimate and address the losses faced by farmers because of the COVID-19 lockdown along with addressing unemployment and providing relief to businesses which have been forced to shut down, but nothing has been prescribed for them by this panel,” he added.
Responding to this, Gulati said, “sometimes the market goes up, sometimes it is down.”
He said that Punjab, in particular, has been “very lucky” during the pandemic. He referred to the purchase of the entire wheat stock by the Centre at the MSP.
But data shows that procurement from Madhya Pradesh was at a record high during the Rabi season this year. According to the Food Corporation of India’s data, MP procured 129.35 lakh metric tonnes (LMT) of wheat, whereas Punjab was number two with 127.14 LMT wheat procured. Data also shows that the Centre only procured a fraction of the grain. It is the state agencies which procured a large amount of grain from farmers.