For the Congress, which has stormed to power in Madhya Pradesh, Chhattisgarh and Rajasthan largely on the back of farmer discontent against governments both in these states and at the Centre, managing expectations is going to present an enormous challenge. With national elections scheduled barely four months from now, any perceived inability to meet campaign promises is fraught with immediate political risk. The party’s manifesto for Chhattisgarh has pledged to waive the loans of farmers “within 10 days of government formation”. That, by itself, is amenable to flexible interpretation. The states that have implemented debt relief in recent years have either limited the same to credit extended by cooperative banks (Punjab) or restricted it to a certain outstanding amount (Rs 1-1.5 lakh in Uttar Pradesh, Karnataka and Maharashtra). Besides, they have imposed eligibility conditions that exclude, for instance, farmers who have filed income tax returns or have family members with government jobs. But such creative dithering may not be easy when April-May 2019 isn’t far away.
But the more difficult promise to meet is paying paddy farmers a minimum support price (MSP) of Rs 2,500 per quintal, which is more than the Rs 1,750 rate fixed by the Centre. That, given an annual paddy procurement of nearly 50 lakh tonnes (lt) from Chhattisgarh, would cost the state exchequer a whopping Rs 3,750 crore. And since the kharif marketing season is already underway, this money will have to be paid well in time to reap the next electoral reward. In MP, too, the Congress faces a similar pressure, of implementing a Rs 500/quintal bonus on soyabean and maize that was announced by the outgoing Shivraj Singh Chouhan-led BJP government. The estimated cost of this — on expected sales of 28 lt of soyabean and 16 lt of maize by farmers in mandis across the state — is Rs 2,200 crore, to be paid after the marketing season ends next month. Political exigency may leave the new dispensation with little choice but to foot the bill.
The unfortunate byproduct of such political competition is policies that will eventually harm the farmer: How is his cause going to be served through unrealistic MSPs that drive away the private trade, or loan waivers that will discourage banks from extending further credit? This is where the approach of the K Chandrashekar Rao government in Telangana holds promise. Under its Rythu Bandhu scheme, farmers are given a flat Rs 4,000 per-acre per-season support. The best thing about the scheme is that it is not market-distorting. Farmers will be paid the subsidy directly, irrespective of which crop they grow or whatever be the market prices. Yes, it is necessary, for fiscal and equity reasons, to limit the payment to, say, 15 acres per farmer. But that is a matter of detail. For now, the good news is that Rythu Bandhu has also paid political dividends.