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Monday, July 06, 2020

Neediest states got a small slice of big govt infusion in farm economy

At their respective minimum support prices (MSP) of Rs 1,925, Rs 1,815, Rs 4,875, Rs 4,425 and Rs 5,800 per quintal, the combined value of these procured crops would be over Rs 1,15,000 crore.

Written by Harish Damodaran | New Delhi | Updated: June 23, 2020 10:48:58 am
farm economy, farm economy coronavirus, coronavirus economic package, India farmers, state swise distribution of corona relief funds, indian express At their respective minimum support prices (MSP) of Rs 1,925, Rs 1,815, Rs 4,875, Rs 4,425 and Rs 5,800 per quintal, the combined value of these procured crops would be over Rs 1,15,000 crore. (File Photo)

Since March 25, when the nationwide lockdown came into effect, government agencies have procured around 38.2 million tonnes (mt) of wheat, 15.2 mt of paddy, 1.8 mt of chana (chickpea), 0.8 mt of rapeseed-mustard and 0.3 mt of tur/arhar (pigeon-pea).

At their respective minimum support prices (MSP) of Rs 1,925, Rs 1,815, Rs 4,875, Rs 4,425 and Rs 5,800 per quintal, the combined value of these procured crops would be over Rs 115,000 crore. Add the Rs 16,600 crore direct transfers to 8.3 crore farmer accounts as first-installment payment of Rs 2,000 each under the PM-Kisan Samman Nidhi scheme, the total liquidity pumped into the farm economy by the government alone, post lockdown, will work out to nearly Rs 132,000 crore.

That isn’t small, especially given the less-than-three months period within which this infusion has happened and the sheer logistics involved in physical grain purchase from farmers without violating social distancing norms.

However, all this liquidity pumping has taken place not in the states bearing the brunt of the lockdown-induced reverse labour migration crisis, but in those having already established agricultural marketing infrastructure.

Take wheat, where 86.5 per cent of the overall 38.2 mt government procurement has been accounted for by three states: Madhya Pradesh (12.9 mt), Punjab (12.7 mt) and Haryana (7.4 mt). On the other hand, Uttar Pradesh, which is India’s largest wheat producer, has contributed hardly 3.2 mt and Bihar a mere 50,000 tonnes.

Similarly, in paddy, out of the roughly 15.2 mt of procurement undertaken since lockdown, about 62 per cent has been from just two states: Telangana (6.4 mt) and Andhra Pradesh (3 mt). A few migrant labour origin states have also delivered significant quantities after March-end: Odisha (1.4 mt), West Bengal (0.9 mt) and Chhattisgarh (0.9 mt). But these are small in comparison to the first two states. And even smaller are the shares of Bihar (0.6 mt), Jharkhand (0.1 mt) and UP (0.1 mt).

The story isn’t different in the other crops. More than three-fourths of chana procurement has been from three states (MP, Rajasthan and Maharashtra). The share of the top three (Rajasthan, Haryana and MP) has been even higher, at almost 96 per cent, for rapeseed-mustard. Only the PM-Kisan scheme has been somewhat beneficial to farmers in UP and Bihar. UP farmers would have received close to Rs 3,500 crore and Bihar’s another Rs 1,300 crore out of the total Rs 16,600 crore under PM-Kisan.

Simply put, the liquidity pumped into the farm economy after lockdown through government spending has largely helped the better off agricultural states. The states in eastern India, where the return of migrant labourers is currently concentrated, haven’t really benefited from increased grain procurement (all-time-high in both wheat and paddy) by the Food Corporation of India, Nafed and other government agencies.

Chinmay Tumbe, economics professor at the Indian Institute of Management-Ahmedabad, estimates the total inter-state reverse exodus population over the last three months at 2 crore. He reckons the share of UP and Bihar in that at 80 lakh, while 20 lakh for West Bengal, 10 lakh for Odisha and 5 lakh for Jharkhand.

The farm economies in these states haven’t also fared too well. Wholesale prices of maize, Bihar’s main crop, have collapsed to Rs 1,200-1,250 per quintal, well below the MSP of Rs 1,760 and the Rs 2,000-plus levels last year at this time. Sugar mills in UP are yet to pay farmers over Rs 14,000 crore out of the Rs 35,750 crore worth of cane they have crushed in the current season from October. There has been no MSP procurement of maize in Bihar and little government attempts so far at ensuring payments to UP’s sugarcane growers.

The limited effectiveness of farm liquidity infusion is what is now prompting non-farm interventions. On Saturday, Prime Minister Narendra Modi launched a new Garib Kalyan Rojgar Yojana for creating livelihood opportunities through focused public infrastructure works in 116 districts with large returnee migrant worker populations. The Rs 50,000 crore programme, to be implemented over 125 days and covering activities from construction of wells and Anganwadi centers to laying of optic fibre cables, was flagged off from a village in Bihar’s Khagaria district. That happens to also be a major maize bowl.

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