All eyes on how FM measures up

Amid all-round optimism about the upcoming Budget of the Central government for the financial year 2018-19, Prime Minister has indicated that his government is not bent upon populist measures; instead, it would focus on corruption-free and development-oriented governance.

Mood upbeat
The mood is upbeat in the context of International Monetary Fund’s projection that the India’s growth is quite optimistic at 7.4 per cent for the ensuing fiscal (2018-19) and it could be even 7.8 per cent for 2019-20 – quite envious in comparison to the forecasts of the neighboring China’s slowing down from 6.8 per cent in 2017-18 to 6.6 per cent in 2018-19 and further to 6.4 in 2019-20. Whether this is a case for jubilance or only exuberance needs to be probed into.

Major concerns
There had been real concerns expressed over the growth story of the Country. It is believed that India is growing slower than in the past and that the growth rate has dipped below the average of the past three decades of 6.6 per cent, during current fiscal when it noted only 5.7 per cent. This needs to be considered a genuine concern. What measures the present government imagines for arresting this decelerating trend and rejuvenate all the important factors of the economy, viz., agriculture, industry and services, are the material now in the ‘Juke box.’

Will govt be radical?
The government has already come out with its ‘Transform India’ agenda focusing on 10 areas of priority covering agriculture, rural sector, youth, poor and underprivileged, healthcare, infrastructure, financial sector, public services, accountability and prudent management.

They rolled out this ‘Transform’ agenda two years ago and in the last year of their term cannot run the risk of ‘Turning the table.’ They are well knit into the already declared agenda. The moot question is: under these circumstances, to what extent do they wish to be innovative or radical? Lest, they should only attempt to tinker here and there and complete the ritual. After all, the budget is only an annual exercise, not a prospective plan.

Should they wish to go radical, the present government in office can think of more comprehensive and aggressive approach in each of these areas of their priority.

Farm distress hurting growth
There had been a general decline in the contribution of agriculture to the GDP and it is even doubtful if the rate of growth in the sector could reach the level of 2016-17 (4.1 per cent), leave alone the targeted growth rate of 6 per cent. Agriculture being the state subject, the Centre is not being able to stave off the bizarre policies of the States in respect of ‘farm loan waivers,’ and yet the migration and suicides of Farmers is rampant.

It is not just forcing banks to shell down the deposits the farm loans, it is about making ‘farming economical, if not lucrative.’ The centrally sponsored and state government schemes for the development of agriculture and farmers welfare could not bring about a recognisable change in the incomes of the living conditions of the farmers. The much-avowed goal of ‘Doubling Farmers Income’ is yet to ground itself. Similarly, the much-published market reform, e-NAM, also remained a damp squib. It thus appears that the Central government has to make some ‘Out of the box’ thinking.

One measure could be to focus on the yield and farming practices. It is a foregone conclusion that the yields in the farming sector are drastically low compared to those obtained in the advanced or even neighbouring countries like China. The average yield per hectare of foodgrains in India is hovering around 2 to 2.5 tonnes as against the Chinese record of 6 to 7 tonnes. Total reform could be brought about only through effective farming practices.

It is in this domain that the Centre has to focus its attention. Developing a strong mechanism for solving inter-state disputes of water for irrigation may prove to be significant. In addition, the Centre shall come out with a still stronger legislation in terms of acquisition of land by the States in the name of development. This had proved a telling effect on the area under cultivation.

Cultivation area shrinking
The speeding urbanisation, real estate growth and infrastructural projects are shrinking the area available for cultivation. In the recent past, the same has shrunk from 100.81 million hectares (in case of cereals) in 2013-14 to 98.55 million hectares in 2016-17. As a matter of fact, there had been little addition to the extent available in 1960-61 at 92.02 million hectares. The existing Land Acquisition Act of 2013 shall, in addition to focusing on the farmers and social impact assessment, shall also have a new dimension in protecting the area under cultivation. Last, there should be a situation where both rural and especially urban dwellers are to depend on the “Rooftop farming” for food items.

Corporate or contract farming?
As a measure of finding a solution to the problem of declining yields and improving upon the farmers income, the idea of ‘Corporate Farming’ has been advanced wherein the farmers would lease the land to corporates and remain as ‘rent-seekers’. While the idea appears logical, there are many dangers associated with the practices.

Now banks have advanced loans liberally with scant respect all prudential norms and now suffering from the problem of recovering of bad loans. And the Insolvency and Bankruptcy Code (IBC2016), 2016 being put in practice, companies are queuing to file petitions for Insolvency. If this trend continues and emerges as a business practice, it becomes hard to imagine the plight of the leased farmer.

More so, after the land is leased out, the farmer remains unemployed and the leasing firm may or may not press him into service. After all, land is an ‘emotional attachment’ to the Indian farmers in the course of promoting the rights and interests of the farmer. The Central government may think of constituting an ‘Empowered Authority’ under a special legislation to be passed, by hiving of the provisions from the Indian Contracts Act, 1872 and make it more comprehensive and protective.

It is in this context that the Central government has, of late, come out with a model Act under the title, ‘The State/UT agricultural produce livestock contract farming (promotion and facilitation) Act 2018,’ with the objective of protecting and promoting the interests of the farmers in general and small and marginal farmers in particular. In addition to covering agronomic and horticultural crops, the proposed Act also intends to cover diverse livestock, dairy, poultry and fisheries.

The chief feature of the legislation is the constitution of Contract Farming (Development and Promotion) Authority by the States to carry out and monitor the implementation of the provisions of the Act. The chief difference between the ‘Corporate Farming’ and ‘Contract Farming’ is that the agricultural operations are carried on by the farmers themselves under the latter, whereas under the former the job of the farmer is just to hand over the land as per the terms of the lease agreement and stay away from the land in anticipation of the lease rent.

Though the new model legislation intends to keep the land with the farmer, the entire responsibility of implementation of the provisions rests with the States. Instead, the Central government may create an empowering authority to carry out “Corporate Farming” with large holdings and with modern agricultural practices so that farmers are rest assured of the payment benefits resulting from the advancements.

By: Prof K Viyyanna Rao
(Writer is formerly Vice Chancellor, Acharya Nagarjuna University, and presently Director, SEA Group of Institutions, Bengaluru)