Farm sector economics in India – 4

Farm sector economics in India – 4

Continuing from yesterday ……

Yesterday, I suggested 10 illustrative farm level reforms that need to be implemented “urgently, vigorously, simultaneously”, along with the necessary policy level and social level reforms to have a positive structural shift in the conditions of the farmers in India. It is critical for ensuring sustainable higher economic growth and realization of the objective of self reliance.

Policy level reforms

There was this feudal lord, who had enslaved a number of peasants on different pretexts. He would make them toil hard the whole day and give two inadequate meals to survive.

Occasionally, on festivals, birthdays of his children, his marriage anniversary, and death anniversary of his parents, he would treat them with a good meal and sweets. Once in 3-4yrs, during winters, he would give them new blankets so that they do not die of cold. In return, the bonded peasants were expected to hail him as protector and great benefactor of the poor.

No one ever dare ask for freedom from bondage. No one ever considered freeing these poor enslaved peasants.

The condition of Indian farmers is no better than those bonded labors in the story stated above. Various governments have been exploiting them, giving occasional doles and expecting favors in the form of votes. No one has considered making these farmers self-reliant – financially secure and economically viable. Unfortunately, the farmers have also been quite satisfied with occasional doles and have not been seeking redemption from slavery.

The recent episodes of loan waivers, interest subventions, hike in MSP etc are nothing but the new blanket and packets of sweets offered to the farmers so that they survive the chilly winter. Anyone assuming it to be anything more than that is seriously mistaken.

I believe that this is the primary reason for Indian economy not being able to grow faster on sustainable basis. Unless, two third of the population earns enough so that it can adequately consume, save and invest – it may be actually foolish to believe that an inwardly oriented economy like India can consistently grow faster.

The following are some of my ideas for the policy level reforms. These ideas are based on the insights gained through numerous interactions with the farmers, organizations and individuals working in rural areas for welfare of the farmers, local administrators etc.

Since independence the government has focused on development of industrial infrastructure in the country. It has actively participated in the endeavor through a large number of public sector enterprise; besides offering a myriad tax and other concessions to the private entrepreneurs. Now, the country has a reasonably strong industrial base. Many of our industries are globally competitive. We have a strong set of entrepreneurs and risk takers. It is therefore high time when the government should reset its priorities and turn its primary focus on agriculture. To meet this end, the government may consider implementing the following five policy level measures:

1.    Exit all industrial and banking activities and actively undertake agricultural activities. It should develop barren lands; develop water bodies and irrigation facilities; develop and use technology for enhancing productivity; give employment to landless farmers; take risk with new technologies & crops; partner with marginal farmers in consolidating their land and do farming on that land – just the way it undertook industrial activities immediately after independence.

2.    Undertake, on mission basis, the task to re-skill the underemployed farmers and farm labor. The farmers and their family members may be trained as dairy workers, domestic help, nurses, tourist guides, artisans, etc. Expecting construction sector to absorb all surplus farm labor is a bad idea.

3.    Develop at least 5 very large special agri export zones in rocky and desert areas of central and western India and undertake export of farm produce as a commercial activity. These zones may be developed in public, private or joint sector. Besides, it may acquire farm assets, especially rice farms, overseas to reduce water intensity of Indian agriculture.

4.    Encourage various states to make bilateral or multilateral agreements for procurement, processing and trading of farm produce and movement of labor within states.

5.    Nationalize all rivers. Develop a national water grid. Set up a national water regulator, who shall work out water sharing formula for all states and union territories every three year and maintain adequate provisions for managing droughts. The idea should be to ensure that not a drop of river water flows into sea from India.

It has taken seven decades for Indian industries to reach a stage where the government may consider fully exiting the industrial activities. It may take 2-3 decades for Indian agriculture to reach a stage where the government will be able to exit farming activities completely.

Please note that I am also not suggesting nationalization of agriculture sector. I am just saying that the government should undertake the activity on commercial basis to provide the sector with much needed escape velocity in terms of capital, technology, and risk taking capability.

Social reforms

The disproportionate rise in aspirational consumption; distortion of social customs (especially marriage, death, birth) for the sake of vanity, ignorance, and misguidance; rise in crime and litigation expenses; rise in cases of chronic diseases and hence prohibitive healthcare expenses form an overwhelming part of “farmers’ debt”. This debt usually has nothing to do with farming activity. This is in fact true for a large majority of urban poor and lower middle class people also. To cure this problem on sustainable basis, it is important that economic reforms are implemented with social reforms.

The social initiatives like focus on cleanliness, cooking gas connection to BPL families, medical insurance, etc are commendable,. But what we need is a social renaissance. Small correction and incremental improvement might not be enough given the serious nature of the problem, in my view.

I am not a social scientist. I may therefore not be an appropriate person to suggest the steps that could be taken within the Indian sociological framework. But this does leaves me at freedom to throw some thoughts that may not belong to the box. I would sugegst the following specific programs at social level:

(a)   The government should take strong affirmative steps to eradicate social distortions that have crept in over a period time in our social, religious and cultural events.

To begin with the government should totally nationalize the religious part of the birth, death and marriage ceremonies. The government should appoint qualified religious persons (QRP) who can perform these ceremonies at the designated venues established by government in every Block of the country. All the expenses like salary of QRP, cost of performing the rituals, food offered to QRP, cost of feeding upto 20 close relatives of the person for whom the rituals are being done, etc. should be borne by the government. Special officers may be appointed to supervise all such ceremonies and issue certificate (Birth, Death, Marriage) on the spot.

The government should actively discourage profligate spending on the social part of these events. All expenses on marriage & birth related parties and social functions relating to death, may be taxed @100%. Meaning, if anyone wanting to spend Rs10,00,000 on marriage party of his/her child, he/she shall be required to pay an equivalent amount as tax. This money may be used exclusively for performing the religious ceremonies stated above.

(b)   A dignified birth and death shall be made fundamental right of every citizen.

In case of birth, the government should assume responsibility of the child from the conception stage, for upto two children for each parent. This includes good diet for mother, medical tests, medicine, delivery expenses and immunization of the child. This should be done on a global standard basis not the way typical government medical facility is run by the government. In case of death, the final rights of the deceased should be performed in a dignified manner, as per his/her religious traditions. This should apply to all unclaimed and unidentified bodies also.

The insurance companies may be directed to make the claim payments on the spot when the final rituals are done on 13th, 17th or 40th day as the case may be, in cases where the deceased’s life was insured, either individually or under some government group scheme. The corporates may be required to fund this initiative under their CSR obligation.

(c)    All regular visitors to the holy shrine of Mata Vaishno Devi in Jammu, who are more than 50years of age, would vouch that the assigning the administration of the shrine to an independent Board in 1986 has led to dramatic improvement in the management and infrastructure in and around the Shrine. No one’s religious feelings have been hurt and the number of pilgrims visiting the holy cave has multiplied exponentially.

The government may consider constituting an autonomous constitutional body like Election Commission to take over the management and administration of all places of worship in the country to put an end to rampant cases of exploitation, mismanagement, money laundering and other disputes, encroachment of public land, environment degradation, and promote secularism, brotherhood, tolerance etc.

A separate assembly of religious leaders, holy men for each religion may be formed. This assembly may be given the task to reevaluate all Holy Scripture, and find if there is any need to reinterpret the scriptures in the light of modern day circumstances and realities. The religious leaders should be requested to weed out the redundancies and misinterpretations, so that no one manipulates the religious sentiments of the people in the name of scriptures and divine mandate. The assembly should also frame a code of conduct for all people responsible for helping people with their religious ceremonies and duties. For example, the Hindu assembly may want to ban flowing the last remains of dead people in holy rivers to save them from dying. The ashes may be used for making bricks that can be used to build places of worships and houses for the poor. It may also encourage people to use electronic or gas based cremation, instead of wood pyres. Alternatively, each family member of the deceased may be required to plant two trees each and take care of it till it grows to become self-sufficient.

These steps, if taken, may make the life of poor (both rural and urban) materially comfortable and substantially increase the happiness quotient of the country, in my view.

These thoughts and suggestions are nothing new. I have been presenting this to the concerned authorities and to the readers (through this post) frequently. I promise to keep pressing with this in future also, till I see some progress on this.

Author: Midas Finserve

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