(Juhi Aishwary, Journalist): On Friday, finance minister Nirmala Sitharaman held her third press conference in as many days to follow up on Prime Minister Narendra Modi’s promise of a Rs 20 lakh crores financial stimulus package. After focusing on Micro, Small and Medium Enterprises (MSMEs), and migrant workers in the first two days, Sitharaman turned her attention to agriculture.
Sitharaman spent about fifteen minutes listing steps that the government had taken in the nearly two-month-long period of lockdown. These steps included the transfer of PM Kisan dues to nine crores farmers and payment of crop insurance claims to farmers – which had already been due and, in fact, delayed in the case of crop insurance claims.
The steps that Sitharaman subsequently announced included promises of three legal reforms to ease up agriculture marketing and the reinforcement of certain schemes that had been announced by the Centre in the past.
For instance, she announced that the government was launching the National Animal Disease Control Program which would ensure 100% vaccination of 53 crores animals and would involve spending Rs 13,000 crores. The same scheme had also been launched by PM Modi in September 2019 with an allocation Ra 12,600 crores.
Sitharaman also announced, as part of the COVID-19 relief package, existing schemes that have achieved varying degrees of success. She announced that the Operation Green launched in 2018 by the then finance minister Arun Jaitley would now be expanded to include fruits and vegetables. It was directed at easing the transport and storage of perishables and an allocation of Rs 500 crores was to be made for this – the same amount that was announced by Jaitley.
The first actual approval of spending (not actual spending) under Operation Green came in February this year – two years after Jaitley’s announcement – when the Centre announced that it had approved projects where it would be spending Rs 162 crores for strengthening production clusters and farmer producer organizations. How much of this amount has been spent remains unknown.
The announcement to enhance the infrastructure for bee-keeping was also only a reiteration of the promise made in Sitharaman’s budget speech in February this year. Similarly, the Pradhan Mantri Matsya Sampada Yojana (PMMSY) to promote the development of marine and inland fisheries is also an existing scheme which was announced in July 2019 in the first budget after the NDA won a second consecutive term.
The government has now promised to spend Rs 20,000 crores under this scheme, which is a substantial increase from the Rs 3,700 crores that had been allocated at the time.
The Animal Husbandry Infrastructure Development Fund which Sitharaman has said will now be provided with Rs 15,000 crores through NABARD is also an existing scheme which was set up in March 2018.
On the reform front, the government finally took the plunge and decided to roll out three key reforms that economists have long advocated to ease the lock jams in the process of selling products and providing farmers with more avenues of sale.
These include relaxing the agriculture marketing rules, which Sitharaman promised would be done through a central law in due course and would enable farmers to make inter-state sales and enable e-trading of produce.
The minister of finance also said that the govt. would amend the Essential Commodities Act of 1955. The Act, which was brought into effect during a time of scarcity, allows the govt. to regulate the worth and quantity stored of any commodity listed as essential.
“What is occurring is that farmers are producing. Crops and abundant, and this sometimes results in issues because they might want to export and that we don’t permit that due to a flip-flop sometimes, farmers don’t get the benefit. Another time, consumers suffer. So there’s a requirement to amend the Act,” Sitharaman said.
The government has now said that cereals, edible oils, oilseeds, pulses, onions, and potato are going to be deregulated. It’s also said that stock limits will only be imposed in “very exceptional circumstances like national calamities, famine with a surge in prices.”
The third such reform announced by Sitharaman was that contract farming is going to be enabled and a legal framework is going to be devised to oversee the initiative. This can mean that farmers would be able to enter into contracts with buyers with assured sales price and quantities before the crop is sown providing them with an assured income.
These steps are advocated by agriculture economist Ashok Gulati for many years and he welcomed the steps. “What the govt. is doing with these reforms is it’s creating alternative channels for farmers to sell their produce. So, they’re going to have more choices,” he said. “I am happy that we are finally occupation in the proper direction. I congratulate the govt. on these steps.”
CPI (M)-affiliated All India Kisan Sabha, however, criticized the move. The move is to market trade under the slogan of 1 nation one market. The peasantries at large are going to be at the mercy of the Agri-business Corporations since there’ll not be any arrangements for subsidy and price stabilization for crops. The Agriculture Produce Market Committees are going to be side-lined and therefore the powers of the state governments are going to be eroded,” it said during a statement.
Politician and scientist, Yogendra Yadav, while agreeing that the reforms were necessary and overdue, was critical of the govt. for not focusing on the issues faced by farmers during the amount of the lockdown and people that they might face within the next few months.
“I honestly don’t understand what happened this afternoon. Was it a supplementary budget or a policy statement or where they only sent to occupy one hour of screen time and to manage headlines? What do any of the steps announced need to do with COVID and therefore the lockdown? None of the steps will help the farmers within the next three or four months,” he said.
Yadav argued that the govt. need to have compensated farmers for the losses suffered within the almost two-month-long lockdown and provided relief for the post lockdown period. A drag that the govt. and several other commentators, including Gulati, have identified for this is often that the govt. lacks the fiscal space.
“Why does the govt lack fiscal space? I will be able to tell you why. Because it overestimated its revenues last year. Because it gave an ill-advised Rs 1.45 lakh crore tax benefit to corporates to affect an economic downturn. This is often why the govt. doesn’t have the cash,” Yadav said.
Former Union agriculture secretary and visiting senior fellow at ICRIER Siraj Hussain said while writing for Money Control, that the Centre’s announcements on Friday also signaled that it doesn’t view its ‘JAM trinity’ (Jan Dhan, Aadhar and mobile) as being capable of addressing the woes of the poor. “While the governance reforms of the Essential Commodities Act and agricultural marketing are good long-term measures, a crucial inference from three packages announced by the FM is that the govt. doesn’t see Jan Dhan, Aadhaar and Mobile trinity of much use to deal with the distress of the poor,” he wrote.
“The sad message for a huge majority of India’s poor is that: you’re on your own,” he said.