While the government would make us believe that all is well with the economy, and that the Indian economy is resilient enough to withstand the shocks of global recession, one visit to any vegetable market in Delhi or for that matter anywhere in the country actually gives a very different kind of a picture. Food prices, in the last one year or so, have skyrocketed to such an extent that many items have become beyond the reach of the common man. For the common man in India, the staple diet consists of things as basic as potato, pulses and rice. But given the way the prices have increased in the recent past, today they can no more be called the ingredients of the common man’s diet. The price of pulses is almost touching Rs 100 per kg, while that of potato is hovering around Rs 40 per kg. Even a year back, pulses were available in the market for less than half the price and almost a fifth in the case of potatoes. So does it mean that all of a sudden the farmers of the country have decided to quote higher prices and pocket the abnormal surpluses?
Well, if that had been the case, then I would surely have been one of the happiest persons, as then for a change, the tables would have turned towards the farmers, whose increase in income and thus the purchasing power, would have definitely helped the Indian economy to grow manifold. It would have also ensured that the farmers are able to come out of the debt trap and become self sufficient. But unfortunately, that is not the case. While the common man is finding it difficult to make both ends meet and is probably even contemplating skipping one meal a day to make sure that the house budget doesn’t go beyond control, the farming lot of the country continue to be equally distressed. A recent piece of news carried in The Times of India had stated that there is a 400% increase in the price of vegetables by the time it reaches the vegetable vendor from the dealer via the mandi. This is not just shocking but outrageous. The issue here is that if the farmers continue to get a pittance for all their effort, then would they ever be able to be financially viable and self sufficient? As such, there is not much organized debt available and farmers are always vulnerable to private money lenders, who charge the most obscene interest rates (the biggest reason for farmers suicides in India); and on top of it, there is no viable option for the farmers to market their produce.
There is no reason why the middlemen in Indian agriculture should get such high margins. More shocking is the fact that in the case of no other commodity, especially in the industrial sector, have the manufacturers been a deprived lot as is the case with the Indian farming community. The middlemen add no value whatsoever and yet corner hefty margins. Most of the elements involved in these activities have strong political lobbies because of which they are always able to prevent the entry of organized retailers in this business. We all know how e-choupal of ITC benefited the farming lot. Similarly, if organized wholesalers like Metro Cash & Carry or Reliance Field Fresh are allowed to enter into contracts with the farmers directly, then the farmers would surely get far higher prices than what they get right now. Also, along with all that, the central government should take necessary steps to amend the Agriculture Produce Marketing Committee (APMC) system. It is through this that state governments control agriculture in their respective states. And this is the system because of which farmers cannot sell their produce directly to the end user or the retailer. Reform in the APMC would go a long way in correcting the anomaly in the agricultural market. In an era where the price of everything is going down, there’s no reason why the price of farm produce should increase – and given that, why the farming community should continue to be the deprived lot.
In fact, the villain of peace with respect to Indian agriculture is none else than the government itself. Asymmetries are being deliberately engineered in this sector simply because that’s the only way political parties can go about extorting votes from farmers (as they form the majority of the voting population and their illiteracy being the biggest boon for politicians). The dynamics is pretty simple. First, you make the farming community perennially vulnerable by denying them organized debt while guaranteeing market distortions. At the peak of their vulnerability, to extort votes, you become a demi-god by waiving off loans to the tune of thousands of crores for the farmers. And why would you not! After all, waiving thousands of crores is a visible and populist act, and on top of it, it is the tax-payers’ money. So why bother at all! As such, tax payers are just 2% of the entire population and most of them are so disgruntled that they don’t even vote. So while this continues, the middle men make merry by cornering abnormal margins and money which in turn finds its way into election campaigns.
All in all, Indian agriculture is a classic case of sustained political abuse. Otherwise, it had the potential to not only feed the entire nation but the world at large. It is so unfortunate that we have converted the world’s food bowl into a begging bowl.
- 24 December 2009 |
- Dr. Arindam on Indian Economy