The latest agitation of farmers in Maharashtra follows a series of protests from farmers since mid-2017 in various parts of the country. The farmers who assembled in Azad Maidan in large numbers yesterday were led by the Communist Party of India and supported by political parties of all hues and colours. Their demands included:
1. An unconditional waiver of all agricultural loans
2. Full implementation of the recommendations made by Swaminathan Commission, particularly relating to land reforms
3. Pension scheme for farmers
4. Monetary compensation for damaged crops
5. Increase in Minimum Support Prices.
While the demands may help in reducing distress in the agriculture sector in the short-run, they will not solve most of the long-term issues faced by farmers such as lack of opportunities, inability to move away from farming, functioning land and produce markets, etc.
As we have previously discussed, farm loan-waivers do not help the farmers. Only 23 percent of small and marginal farmers have access to formal sources of credit such as banks and financial institutions. As waivers are given to the debtors in the formal sector, 77 percent of the poor farmers do not get any benefits from a waiver.
Maharashtra government has already transferred over ₹ 12,000 crore in loan waivers to more than 30 lakh farmers. If that could not help the farmers, there is no guarantee another similar scheme would.
The root cause of the severe distress for farmers is the lack of opportunities to move out of farming and the excessive government intervention faced by them in every aspect of farming. From buying of the seeds to selling of the crops, farmers are stifled at each stage.
According to the National Institute of Rural Development, Ministry of Rural Development, agriculture sector can support only 14 crore people, and yet more than half of India’s population remains dependent on it. If we seriously want to improve the lives of millions of poor farmers, we need long-term solutions to their problems. The Central and State Governments must accept that in 70 years, we have made a mess of things with schemes, programs and loan waivers. We have only taken direct action to provide short-term solutions and not a policy action that could help farmers prosper.
Given the political calculations involved, the long-term reforms will not be easy to come. But we must fight to free the farmers from the chains of the state. They should lead their destiny on their own terms.
First, land and titling reforms are the need of the hour. Farmers must freely own the title of their land and should be free to sell, rent or lease at will for any purpose they wish. This will unlock enormous amount of capital most farmers need to invest in their farming enterprise. Some may even use the proceeds from their lands to leave farming and seek more productive employment. Farmers understand this and are rightfully demanding land rights.
Second, all export controls must be removed on export of agriculture produce. Instead of banning exports and then increasing the minimum support price, we should just let the farmers sell their produce in the international markets at competitive prices. Sure, this will increase a slight burden on the consumers, but they are already bearing this burden via higher taxes.
Third, the government must focus on job creation in industries. It will allow farmers the choice to move out of agriculture and make a steady income. This must be done by eliminating antiquated regulations and maintaining a business-friendly environment for entrepreneurs. The license raj, still prevalent for most enterprises should end immediately.
Lastly, counterproductive policies which make farmers dependent on government hand-outs should be removed. They must be free to sell their produce directly to consumers and free to sow profitable crops without considering government mandated price.
Only when the farmers, the backbone of the country, are free; we can become a prosperous nation.