Urjit Patel has not understood the index of rural distress

Unfortunately, Governor Urjit Patel of the Reserve Bank of India has not been able to understand the index of distress of farmers, when he demonstrated the negative impact on the economy due to farm loan waivers.

Written by Dr Rakesh Sinha | New Delhi | Updated: June 12, 2017 10:26 am
Madhya Pradesh, Mandsaur, farmers' agitation, Urjit Patel, Mandsaur farmers, Mandsaur farmers agitation, madhya pradesh farmers agitation, Kanhaiya Lal Patidar, india news Bhopal: Farmers torch vehicles during a protest in Phanda near Bhopal on Friday. The situation in the state remained tense after a couple of days of Mandsaur incident where five farmers were killed in police firing. PTI Photo(PTI6_9_2017_000165B)

The recent farmers’ agitation in Madhya Pradesh is indicative of the unaddressed distress and pain of Indian farmers since the 1960s. Like other peasants agitations in the past, this agitation too has been politicized by parties who claim themselves as champions of farmers interests. Certainly, no political party has any definite agenda. But especially the Congress party, which was at the forefront of accusations against Madhya Pradesh Chief Minister Shivraj Singh Chauhan for allowing the unfortunate violence and 5 farmer deaths to take place, forgets its own history.

On January 12, 1998, 18 farmers lost their lives in police farming in the Multai tehsil of Betul district in Madhya Pradesh, when Congress leader Digvijay Singh was chief minister of that state. At the time too, farmers were demanding loan waivers and compensation to their crops destroyed in bad weather. It’s clear that such accusations and counter accusations and claims and counter-claims giving benefits to farmers have dominated the discourse for many decades. There is no doubt that governments have instituted various programmes, like crop insurance, loan waivers, subsidies, low interests credits, etc, which definitely give seasonal relief, but the truth is that the economic fundamentals of farmers remained unchanged.

Unfortunately, Governor Urjit Patel of the Reserve Bank of India has not been able to understand the index of distress of farmers, when he demonstrated the negative impact on the economy due to farm loan waivers. No doubt this burdens the economy, but why did he single out only farmers? The Seventh Pay Commission has added the extra burden on the treasury of almost Rs one lakh crore. But Urjit Patel seems distressed when farmers are saved from committing suicide. Perhaps he is right, according to textbook calculations, but the fact remains that he is grossly mistaken if the context is taken into account.

After the First Five Year Plan, agriculture was made subservient to the industry. But despite the absence of sound agricultural policies, the characteristically strong resilience of the farmers continued to sustain this sector. Farmers remained on their lands despite wretched conditions, despite hundreds committing suicide. The fact is, most policy measures end up with benefitting big farmers, while medium and marginal farmers, despite all the welfare schemes targeted at them, find agriculture unsustainable. Their migration to big cities, preferring the degradation of the urban poor rather than remain rural poor, demonstrates the unviability of urban-centric economic policies since independence. That is why Prime Minister Narendra Modi’s emphasis on connecting India’s poor with rural banks and welfare schemes has disappointed corporate apologists.

There is need to address the root cause of agrarian unrest, which may be dormant but can be unpredictably explosive. Is it not a fact that there has not been even a shallow discussion of land reforms among policy makers for the last many decades, despite their lip-service to creating parity between rural and urban India?

The Bihar government’s Bandyopadhyay Commission report submitted in 2009 remains undiscussed. West Bengal’s CPI(M)-led government in 2004 commissioned the US consultancy firm, McKinsey, to formulate a policy blueprint for agrarian issues. The Swaminathan Commission report (2006) was considered useful for writing essays on farmers and agrarian sectors during the UPA regime.

Unfortunately, even in the post-UPA era, these policies have been implemented only partially. Land reform is essential, but as much as 54 percent of land holdings remain under the control of 10 per cent big farmers, while the majority of middle and marginal farmers struggle to survive. Absentee landlordism remains another critical issue, which may be countered by land banks and cooperative farming – the latter is especially useful for farmers with small holdings. Land banks, besides reaffirming ownership rights, will allow the optimal use of land, thereby checking rural unrest to a large extent.

All these issues must be discussed by the Niti Aayog. A working group is required to initiate the process. The most important goal is to save land and forests from corporates greed and evolve a perspective which privileges rural India to be an equal partner in both development and benefits. Manmohanomics was corporate-centric. In contrast, Modinomics is expected to be holistic and judicious to rural India.

The writer is associate professor, Delhi University and honorary director, India Policy Foundation

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  1. C
    Jun 12, 2017 at 1:11 pm
    Agriculture is made subservient to industry? Seriously? How? Agri loans are offered by government owned banks at 7 . Industry pays 12 Tax on agricultural land is least whereas that on industrial and commercial land is highest. Electricity is practically free for farmers. Industry pays anywhere from 8 to 14 rupees per unit. Water is again free for farming. Industry pays the highest rates Farmers don't have to maintain any books of accounts so paying tax is ruled out. No minimum wages, no labour laws, no unions for farmers. Yet, it is subservient to industry? Get your facts right, please.
    1. V
      Jun 12, 2017 at 11:09 am
      I am not sure where Rakesh Sinha got his degree from most likely from Bihar who don't even know agriculture loans are already discounted and rate cuts will bring inflation problem. What a bogan. Not even mention why this problem is ???? Useless lefty liars.
      1. T
        Jun 12, 2017 at 9:09 am
        Urjit Patel "understood" everything on 8th November 2016, but carried out Modi's command by agreeing for DeMon..........Now, as Dr. MMS and other great Economists around the world had correctly predicted, the economy is indeed spiral-ing downwards with fiscal deficits, low investment,unemployment, farmers crisis, etc, mounting up.........Urjit Patel is busy trying to plug-in all possible losses to keep the economy from crashing ........Modinomics is outrageously DeMonomics !