You have authored a book on rural India - so what is the book all about?
The book titled “A Rural Manifesto” explores the feasibility of an Indian village as an independent socio-economic entity, capable of sustaining itself independent of external linkages. It delves into the lives of a rural Indian citizen by analyzing various aspects of their lives – be it agrarian conditions, provision for healthcare and education, non-farm incomes and labour conditions. It seeks to explore what it means to be a marginal farmer these days, and the role non-farm income plays in supplementing oneself below the poverty line.
What is the inspiration behind the book? What made you write this rather difficult book?
The idea or inspiration for the book came from my travels across India’s hinterland. Be it campaigning and conducting field visits across India, including my constituencies Sultanpur & Pilibhit, or more simply, meeting students of universities in states often forgotten by national media, the cause of marginal farmers and their current dismal condition struck in a chord for me. This issue, once proudly espoused by all up and coming politicians, was at once an intellectual and emotional problem, and one with no easy solutions.
What have been the main learnings while you wrote the book?
One of the main learnings when we explore the socio-economic feasibility of an Indian village is that small and marginal farming is largely unrewarding – rising input prices, unsustainable water usage, inadequate energy access and failure to take any advantage of economies of scale makes farming a difficult proposition each day as landholdings continue to diminish. To compound matters, quality healthcare and education continue to be out of bounds for most citizens. With farm incomes proving insufficient, we need to improve non-farm incomes for a village to sustain. Besides, we need policy interventions to retailor and revive Indian agriculture.
How are our water policies unsustainable?
Our tubewell subsidy culture, entrenched through political patronage, has contributed to unsustainable extraction and misuse of our groundwater resources. Subsidies have hurt our groundwater levels – the interplay between farmer crop choices (cultivating improper crops i.e. water intensive crops in water scarce and water sensitive regions) and our energy subsidies for irrigation needs makes for difficult choices.
Such subsidies have placed a massive burden on state exchequers – the associated fiscal deficit between 2008 & 2009 was $6 Billion in the energy sector. Most State Electricity Boards operate at a loss, leaving nothing for investments in new infrastructure for generation and transmission purposes. Energy subsidies, such as these, are increasingly crowding out investments on higher education or health care, while farmers still wait for quality power supply.
What is your view on farmer suicides?
This is primarily because of rural distress. With the average land holding size decreasing and average input prices rising, the cost of cultivation has increased and with it, margins associated with farming have reduced. A farmer now typically earns Rs 2,400 per month per hectare of paddy and about Rs 2,600 per month per hectare of wheat, while farm labourers earn less than Rs 5,000 per month. Nearly 31.4% of all rural households remain indebted, with average debt of Rs. 1.03 lakhs. When we consider poorer rural households, their debt levels even exceed the amount of assets owned. As much as 44% of rural households still prefer informal sources of credit (among poorer households, 72% of credit is informal) which may highly likely be usurious in nature. This condition results from an interlocking of the credit market with imperfect markets (land, input, output, labour and land-lease markets), which is a pathway to peasantry pauperisation. With almost 60% of loans in rural areas being utilized for non-productive purposes (not directly contributing to raising household income), household debt becomes permanent in nature. Amidst such indebtness, even a sickness in the family can have disastrous consequences – an estimated 39 million people are pushed back into poverty annually in trying to avail healthcare.
Agri-distress has persisted for far too long. Even colonial officers have observed that the “The Indian peasant is born in debt, lives in debt and dies in debt.” (Malcolm Darling, 1925)
The situation is getting increasingly desperate with most farmers wishing that their sons do not take up farming. Effectively, about 30.5 million peasants quit farming between 2004-05 and 2010-11, seeking employment in the secondary and tertiary sectors. Furthermore, the size of this agricultural workforce is expected to shrink to ~200 million by 2020. Meanwhile, the average growth in minimum support prices of kharif crops has been ~4%, compared to the ~13-15% growth seen between 2010 and 2013. The consequence is farmers committing suicides.
Does the book offer any remedy to correct rural indebtness?
Aside from farm loan waivers, which remain necessary, there are other ways to mitigate their plight. Greater subsidies could be extended on the purchase of agricultural equipment, fertilisers and pesticides, while medical insurance coverage could be expanded through the Rashtriya Swasthya Bima Yojana. In addition, the scope of MNREGA could be increased, allowing marginal farmers to be paid for tilling their own fields could reduce their input costs – they can’t afford other agricultural labourers and find it socially awkward to till someone else’s field. Such measures could increase their net income, reducing the scope of rural distress. Small steps like these can make a meaningful contribution to their lot. Even more so, we need a national conversation on rural distress. Unlike the Champaran Satyagraha, national attention has been curiously lacking. With empathy for India’s marginal farmers, we must make the right choice to support them.
In this era of social media, do you think rural distress remains ignored?
One cannot say that rural or agrarian distress remains ignored – but inadequately represented for sure. While few movements have highlighted the plight of our farmers, the issue warrants critical attention. Few measures have been taken to aggravate the situation, but much remains to be achieved. With small and marginal farming proving increasingly uneconomic (at a time when ~72% of our farmers are small and marginal), agrarian distress can cause large scale social unrest and needs to be addressed on a priority basis.
Do you think agricultural income should be taxed as well? Many policymakers increasingly seek to target the rich farmer?
Wealth and Income (the Raj Committee) (1972) sought to institute a progressive agriculture tax on agricultural income in a norm based manner, with regional average crop yields defining levy rates in a universal manner. The recommendations were not accepted, given limited political and grassroots support.
However, there remain significant pitfalls with this demand. Given the level of informal occupation prevalent in agriculture, implementing an agricultural tax will not be easy. Any agricultural tax system would have to evolve crop specific norms of return to the land, while accommodating external shocks like droughts, floods or pests. Furthermore, for imposing tax on value of goods produced, the mechanism would fail to take individual farm economics into account, thereby presenting a case wherein a farmer would be taxed even if he makes a loss on sale. It shall require administration to ensure exact estimate of crop productivity and realized sale price per crop harvested – a seemingly humongous task for all farmers.
Further complications arise if farmers suffer from multiple crop failures followed by one successful crop, for the income in that period may be subjected for tax payment. In addition, any crop specific taxation would have to be traded-off against input subsidies, which are nationally uniform for fertilisers and vary on a state wise basis for water and electricity. Instead of raising agricultural income, we would trend back to age-old farmer pauperisation. Amidst all this, it is hard to determine if there would be net benefit to taxing agricultural revenues, even for rich farmers (defined on local thresholds), compared to cost of monitoring and rolling out such a system.
What solutions does the book provide to rural distress?
Let’s take the case for farmer income. One would expect that ideally the market, and if not the market, the government, would ensure that the farmer receives good value for all his work. The price spread, between what the farmer earns and what the end user is charged remains stark. A study in 1972 in Kolkata found that just 2% of the end user price of an orange reached the farmer – such marketing channels have taken to consuming the majority of the value. The regulated marketing system, despite its optimistic intentions, has also induced significant downsides. Consider postharvest losses – about 15%-50% of India’s fruits are lost during marketing. Roads inside such regulated markets are usually unpaved, with auctions conducted in open spaces, while being prone to congestion.
What are your thoughts on basic income? Can India pursue such a radical policy idea?
India has tried basic income, in pilot studies. A pilot in eight villages in Madhya Pradesh provided over 6000 individuals a monthly payment (Rs 100 for a child, Rs 200 for an adult; later raised to Rs 150 and Rs 300 respectively; Guy Standing, 2014). The money was initially paid out as cash, while transitioning to bank accounts three months later. The transfer was unconditional, save the prevention of substitution of food subsidies for cash grants. The results were intriguing.
Most villagers used the money on household improvements (latrines, walls, roofs) while taking precautions against malaria – 24.3% of the households changed their main source of energy for cooking or lighting; 16% of households had made changes to their toilet. Before moving ahead, we would need more data to prove its applicability in the Indian context.
A regular unconditional basic income, scaled up through pilots, and rolled out slowly and carefully, seems ideal for India. It can help improve living conditions including sanitation in our villages, providing them with access to better drinking water, while improving children’s nutrition. It could cut inequality; grow the economy; all while offering the pursuit of happiness.
Is rising non-farm income truly a panacea for rural India?
Typically, agriculture forms the basis of any non-industrialised economy. When industrialisation does occur, the higher productivity of the non-agricultural sector leads to the share of agriculture declining in the economy. Labour typically moves away from agriculture towards industry and services, while a boost in machine led agricultural productivity helps narrow the wage gap. When countries develop, their agricultural sector approaches a “tipping point”, one where agricultural income rises but most of the agricultural labour heads out of the fields and into towns and cities.
Non-farm diversification is typically an important pathway for empowering landless labourers and marginal farmers. While agriculture remains the dominant source of income for rural households, non-farm sources are increasingly contributing a larger share of the pie. While this share does decline with landholding size, diversification towards it can serve as a mechanism to making the village economy resilient and stemming urban migration. Our policies should help create sustainable long term rural non-farm employment options which can aid the rural poor in overcoming barriers to economic prosperity. India’s rural development policies should increasingly focus on developing markets, infrastructure and institutions that can help sectors like livestock and construction grow. While India’s post-independence rural policy has primarily been about flushing people away from agriculture and towards cities, we now need to incentivise job creation at their doorstep.