The story of policies and farmers working together

When all other sectors recorded negative growth last year, the only bright spot was agriculture which recorded close to four per cent growth

Two major recent changes, coming in quick succession, which are directly related to the farm sector initiatives of the Mods Government bode well for a further push for sectoral economic growth and are likely to improve incomes and create surplus value for farmers across the country.

The first one is the move to entrust the responsibility of Cooperation based on the theme of “Sahakar Se Samriddhi” (Prosperity through Cooperation) to an experienced Cooperative movement veteran like Union Home Minister Amit Shah, and the other is the decision to bring the Mandis or the Agriculture Produce Marketing Committees under the purview of the Rs 1 lakh crore Agri Infrastructure Fund (AIF) as part of the Atma Nirbhar package.

These two are a continuation of a series of steps taken in the agriculture space by both editions of the Mods Government. Perhaps at no time in the past have so many decisions for bringing about positive changes in this sectorrolled in like now.

Of course, this is not to forget the widespread protests against the three farm laws mainly from farmers in Punjab and Haryana who were worried that the “social and economic compact” among farmers and Arthias (Commission Agents) would be broken with the coming into force of these Acts. Looking back, it needs to be conceded that the “marketing” or “communication of intent” of the Acts could have been done better from the side of the Establishment. Unfortunately, in our country, there is a proclivity to politicise and exploit misunderstandings among political parties depending on short-term exigencies. No party is free from this malaise.

While a separate focus on Cooperation could do good to many areas, it is in agriculture and allied activities that the immediate potential is the greatest. It is hoped that the spirit of Cooperation which has worked wonders in the dairy sector can be replicated with greater vigour in all other areas including banking but after taking care to see that “commercial viability” of operations is never jeopardised. That should be the Least Common Denominator (LCD) of any changes or reforms. Unless there is a common commercial benefit to be derived, there is no way any change or reform will be welcomed with enthusiasm. As the man who turned around the Ahmedabad District Cooperative Bank in 1999-2000 (sans any support from the caste-dynamics which controlled this bank then) there is nobody better than the 54-year-old Amit Shah to bring in this change.

The Cabinet decision permitting Mandis to be financed under the AIF gives a lie to the theory that the Centre aimed to torpedo or overturn the system of Mandis or the role of the Arthias and the APMCs. Viewed from that perspective, this is just the right thing to do to reassure our farmers and the Agri ecosystem which includes the Arthias (who also cultivate apart from providing informal financial mediation including loans) and the APMCs which are aggregating points/centres for market control at the local level. Like in all other organisations, there are power plays in the APMCs too.

There has been a continuous focus by the Centre on reforming the agriculture sector though it is on the State List. It takes two to tango as they say. Unless the States also work in tandem with the Centre on policy implementation it will be difficult to achieve the desired outcomes.

There are at least 10major moves that have been introduced in the last six to seven years for the benefit of the farm sector.

The MSP for most commodities like paddy, wheat, pulses, soyabean, cotton, etc., has been hiked from 37 per cent to 50 per centin the last seven years. Common paddy for instance which was being procured at Rs 1360 in the first year of Mods I is now being procured at Rs 1940 a quintal. Wheat is now being bought by the Government at Rs 1975 against Rs 1450 then. Soyabean has seen a rise from Rs 2560 to Rs 3950, while cotton fetches Rs 6025 against Rs 4050 then.

The efficiency of procurement has improved with paddy and wheat in the major producer States being supported by FCI, pulses and oilseeds by NAFED, and cotton by the CCI. In February 2019, the interest subvention on crop loans wherein the Centre pays a total of five per cent subsidy annually for prompt repaying borrowers and two per cent for all others was extended to cover working capital loans for dairy, poultry, and fisheries farmers. While the dairy sector has seen loans being given under this scheme, the low-cost loan is yet to pick up under fisheries and poultry for various reasons related to coordination and sectoral problems. (For instance, insurance cover is practically not available for poultry.)

The Department of Agriculture and the Department of Financial Services, mainly with the active participation of banks led by the State Bank of India, hasconducted a Kisan Credit Card Saturation Drive since February 2020 to include the unfounded farmers under the KCC scheme.

For farmers, the Centre introduced the much-vaunted PM Kisan Scheme in 2019 whereby they get Rs 6000 every year through Direct Benefit Transfer to their accounts without a paisa of leakage. The number of farmers receiving this benefit, on average, is about 10 crore. The allocation for this year is Rs 65,000 crore. The total amount paid so far under the scheme by the Centre is about Rs 2 lakh crore.

During the lockdown last year, the Centre transferred about Rs 30,000 crore to the accounts of about 20 crore women owing basic banking accounts for three months as income support. This had gone mainly to the accounts of women of. agricultural families.

Recently, the Union Government hiked subsidy rates on DAP fertiliser by Rs 700 per bag.  This would cost an extra Rs 14,775 crore to the Government but the benefit goes directly to the farmers.

The Atma Nirbhar package had provided for an additional credit deployment of Rs 2 lakh crore to farmers and the target has almost been achieved.

The Agri Infrastructure Fund that envisages credit deployment of Rs 1 lakh crores with. Interest subvention of seven per cent annually for a tenure of seven years is being closely monitored for implementation.

A Credit Guarantee Fund for farm loans, under NABARD, has already been formulated. Once it is rolled out, it will de-risk agricultural lending to a large extent.

When all other sectors recorded negative growth last year, the only bright spot was agriculture and allied activities which recorded close to four per cent growth.

 It is a matter of pride that our farmers have worked their hearts out to produce food in plenty for all of us. As a bank executive, it is my thesis that the Mods Government’s well-meaning steps have played a great role in this outcome. It is for academics to study these efforts in their entirety. Surely, they will find a lot that is positive in terms of impact in these governmental measures.

(The writer is a top executive in a public sector bank. The views expressed are personal.)

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