Anniversary of farmers’ protest: make PSM a legal right to rebuild agriculture, writes Devinder Sharma

As protesting farmers demand that PSM become a legal right, fears are expressed that such a move could lead to an economic crisis.

By Devinder Sharma

After the sudden withdrawal of the three contentious farm laws last week, the debate has now shifted to whether to provide farmers with a guaranteed minimum support price (MSP) or to let them face the vagaries of the markets. As protesting farmers demand that PSM become a legal right, fears are expressed that such a move could lead to an economic crisis.

In the heated debates that followed in the media, what is lost is the need to deal with the seriousness of the continuing agricultural distress that has prevailed over the past decades. Beyond the statistical numbers, what is not appreciated is that it is not just about numbers; it is human lives that we are talking about. With or without the proposed farm laws (which have now been withdrawn), the challenge is how to lift these millions of people out of abject poverty and hunger. Take for example the 2016 Economic Survey report which showed the average annual income of a farmer in 17 states of India, which is about half the country, at a paltry Rs 20,000. In others In the end, farmers in half the country somehow survived on less than 1,700 rupees a month.

More recently, the 2019 situation assessment survey report, published in September, shows agriculture in serious difficulty. As a result, the average income of a farmer from growing crops alone (without adding off-farm income) amounts to a meager Rs 27 per day. It is at a time when the country is harvesting a record 308 million tonnes of food grains and 325 million tonnes of fruits and vegetables. According to the FAO, in a report released in March 2021, the gross value of food production in India stands at $ 400,722,025 million. With farmers producing so much economic wealth for the country, what remains unexplained is why the annadata live in poverty.

Using outdated market principles, senior economists would blame the low productivity of crops and the lack of market dynamics that do not allow price discovery. Let us first take a look at the productivity dimension. In Punjab, the country’s food bowl, total crop productivity (from the rotation of wheat and paddy crops in one year) exceeds 11 tonnes per hectare, which is one of the highest in the world. And yet, the Punjab has become a hotbed of farmer suicides. One in three farmers in Punjab lives below the poverty line, and a record 16,600 farmers and farm workers committed suicide in the 15-year period between 2000 and 2015. This only shows that despite high levels of high productivity, the agricultural crisis persists.

If you’re still not convinced, let’s look at America. At the risk of sounding repetitive, it should be noted that despite high productivity levels in all crops and regions, and the prevalence of free markets in agriculture for more than a century, American agriculture is on the way out. In 2020 alone, farmers were grappling with a $ 425 billion bankruptcy and median farm income had remained negative for more than a decade. The suicide rate in rural America is 45% higher than in urban centers. A report from Down to Earth magazine shows that nearly 40 percent of farm income comes from federal grants.

In these difficult circumstances, while markets everywhere have failed to increase farm incomes, the belief that markets would do wonders for Indian agriculture is totally misplaced. Another argument I often hear is that given the small landholdings in India (86 percent of the properties are less than 5 acres), farmers will not be able to get a higher price due to lack of bargaining power. . Well, if that’s the case, I don’t understand why in Australia, where the average arm size exceeds 12,000 acres, 25 percent of farms have closed in the past 30 years. The suicide rate among male farmers in Australia is double that of other sections of society. In France, in early March, farmers hung suicide dolls from trees in front of Parliament to draw attention to the serious agrarian distress farmers were facing.

Given the painful experience of markets failing to support agriculture in developed countries, the demand to make PSM a legal right for Indian farmers makes economic sense. What farmers are asking is not for the government to buy all the produce, but to ensure that no trade drops below the advertised PSM. This is what even the Agricultural Costs and Prices Commission (CACP) suggested in one of its recent policy reports. It is not a measure of well-being as some economists suggest, but it is the real reform that agriculture is calling for. Studies have shown that the additional economic burden will not exceed Rs 1.5 lakh crore to Rs 2.5 lakh crore per year. But more importantly, the boost it will bring to the country’s economy is something that hasn’t been talked about.

Since almost 50 percent of the workforce is employed in agriculture, dynamic agriculture will certainly lead to higher economic growth. Since only six percent of farmers benefit from MSP and the remaining 94 percent of farmers depend on markets, forcing the trade to buy at the advertised price will result in higher incomes for farmers. If the 7th Wages Commission, which benefited government employees, could be seen as a booster dose to the economy, the increased income in the hands of the farming population will create huge rural demand, thus acting as a boost to the economy. rocket dose for the economy. With more purchasing power, the industry could also benefit. At the same time, a guaranteed price for farmers will help address growing inequalities in the country.

A guaranteed price has the potential to provide stable incomes to farmers and to help restore dignity in agriculture. This is the freedom that Indian farmers desperately need. Reducing the pressure to create more job opportunities in cities, making MSP a legal right is the only way to rebuild agriculture and thus realize the vision of Prime Minister Sabka Saath Sabka Vikas.

(The article is written by food policy analyst and author Devinder Sharma. The opinions expressed are personal.)

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