Feroze Varun Gandhi

Designing Policies to end their plight

A Rural Manifesto By Feroze Varun Gandhi

THE idea of writing a tome, nay, a dense synthesis of facts, forecasts and, at times, personal anecdotes, came from my travels in India’s dusty hinterland.

Whether it was campaigning in the deltaic regions of West Bengal, or conducting field visits in the vicinity of Sultanpur and Pilibhit, or more simply, meeting students of provincial 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. 

A century ago, farmers in Champaran district in Bihar were forced to set aside 15 per cent of their land for the cultivation of indigo, under the Tinkathia system.

Once planted, the farmers were still subject to a variety of extortionist cesses, termed abwabs—even the cost of an elephant for colonial shikaar was included.

Farmers naturally rose in resistance in the thousands, but were crushed by the East India Company until the arrival of a barrister from South Africa, who fought for the cause of the harassed tillers of the soil.

And yet, a century after the Mahatma sought freedom from exploitation for them, India’s farmers remain a beleaguered lot. 

In the preface to his book, the member of Parliament from Sultanpur and scion of Nehru-Gandhi family, Feroz Varun Gandhi explains the arduous intellectual task he has undertaken to make sense of rural India

In Majuli district of Assam, farmers are increasingly taking to eating beetles, as a way of beating back pests from their marginal farms.

Meanwhile, in Maharashtra, onion farmers routinely see over 20 per cent of their produce wasting due to lack of cold storage facilities. At a granular level, marginal farming in India is a highly complex and decision-intensive process.

Consider the landscape that India’s farmers survive in. The country’s heat-baked plains are criss-crossed by a range of turbulent rivers, many worshipped and dreaded since prehistory.

Such rivers have repeatedly altered course, changing the way they deposit sediment during the monsoons, and overrunning ancestral fields.

Even major distributaries would end up getting diverted—consider the case of the Bhagirathi in West Bengal—whence the main course of the Ganga shifted eastwards towards the Padma; and post the floods of 1770, even the Damodar witnessed a change of confluence point.

For India’s farmers, agricultural risk has been ever-present. They have to take a variety of decisions, right from choice of crops (annual or short-term) to time of tillage.

The challenge is further exacerbated by rising prices of agricultural inputs, availability of water, soil suitability and pest management. All these decisions and uncertainties narrow the window of economic benefit for the marginal farmer.

A faulty decision can wreak significant havoc. The viability of being a marginal farmer is further eroded due to macro developments. 

This uncertainty is reflected in rural debt levels. Large farmers (>10 hectares) in Punjab typically have a debt to income ratio of 0.26, while medium farmers (4–10 hectares) and semi-medium farmers (2–4 hectares) have a debt to income ratio of 0.34—all seemingly affordable .

However, small (1–2 hectares) and marginal farmers (< 1 hectare face a greater burden of debt with a debt income ratio of 0.94 and 1.42, respectively, with over 50 per cent of their loans from non-banking sources.

About 30.5 million peasants quit farming over 2004-05 and 2010-11, seeking employment in the secondary and tertiary sectors. The size of this agricultural workforce is expected to shrink to 200 million by 2020.

With the average land holding size decreasing (from 2.3 hectares in 1971 to 1.16 hectares in 2011) 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 ₹2,400 per month per hectare of paddy and about ₹2,600 per month per hectare of wheat, while farm labourers earn less than ₹5,000 per month.

Real farm wages have grown at an average annual growth rate of 2.9 per cent between 1991 and 2012, with farm wages actually declining between 2002 and 2007 .

About 30.5 million peasants quit farming over 2004–05 and 2010–11, seeking employment in the secondary and tertiary sectors. The size of this agricultural workforce is expected to shrink to ~200 million by 2020.

When we talk of rural distress, these are some of its symptoms. Minimum support prices have also declined. Food inflation has declined significantly over the past year, with the price of arhar down by 45 per cent in April 2017 compared to the previous year, while the price of urad has declined by 29 per cent.

Soyabeans were down by 24 per cent, while potatoes were cheaper by 41 per cent in April 2017. Expansion in acreage, along with improvement in procurement, a rise in buffer stocks and imports, and global agro-commodity trends, along with fire sales during the demonetization period have combined to accentuate the fall in.

Rajiv, Sonia, Grandmom Indira Gandhi and three kids at a function

The dismal consequence is—acutely depressed farmers committing suicide. Officially, around 12,602 individuals associated with the farm sector committed suicide in 2015, about 2 per cent more than 20145 .

Farmer suicides have increased primarily in states with limited irrigation and variable rainfall (e.g. Maharashtra, Karnataka, Telangana, Chhattisgarh, Andhra Pradesh, Tamil Nadu and Madhya Pradesh), which contribute 87.5 per cent of total farmer suicides in 2015.

Over 321,428 farmers have committed suicide in the past 20 years. 

India’s agricultural strategy has historically sought to raise productivity (through high-yield varieties) while seeking to keep input costs low (through fertilizer subsidies and seed grants), and attempting to guarantee a minimum return (through minimum support prices).

Meanwhile, consumers were provided cheap food through the public distribution system. However, this strategy has outgrown its utility—India’s agricultural inputs market is increasingly deregulated, with subsidies for fertilizers being cut.

Public investment in irrigation, flood control and high-yielding varieties has been affected by a shift towards lessening the fiscal deficit. Liberalised imports of agricultural commodities have also done their bit to dampen domestic prices.

The viability of being a marginal farmer in India has been eroded. Meanwhile, governments have sought to address production shortfalls and rising food inflation in urban markets by liberalizing imports and releasing buffer stocks into the market, further reducing prices.

Thus, even in good harvest years, farmers end up with low minimum support prices and limited procurement of their produce. So, India’s agriculture sector is increasingly exposed to market signals that it hasn’t been prepared for. 

Amidst this, access to agricultural inputs has grown more fraught—large farmers in Maharashtra typically have access to modern pumps, thereby consuming large amounts of water, leaving little, if any, for small and marginal farmers.

Fertilizer and pesticide prices have risen continuously over the past few years, causing marginal farmers to adopt organic means instead. The limited availability and high cost of high-yielding seed varieties in India also hampers agricultural productivity.

Given such constraints, farmers have limited scope for crop diversification, choosing to focus primarily on staple crops like wheat and rice, for which the government offers a price guarantee for produce and the availability of post-harvest infrastructure.

Unhappily there are limited capacity building programmes and extension services for farmers, with universal access far from being achieved. 

Institutional support for mitigating the plight of such farmers has been provided in various forms since Independence.

The National Bank for Agriculture and Rural Development (NABARD) was established in 1982, seeking to provide financing support to tube well irrigation, farm mechanization and other ancillary activities.

The institution of a nationwide agriculture loan waiver in 1990 had a deleterious impact on the provision of rural credit, providing a short-term palliative while breeding credit indiscipline amongst farmers and leading to a shortfall in rural credit growth.

The 2004–05 Union budget sought to double agricultural credit, while a 2 per cent interest subvention was provided in 2006, allowing farmers to avail of Kisan Credit Card (KCC) loans at per cent per annum (up to 3 Lakhs).

Another agricultural loan waiver was provided in 2009, just prior to the Lok Sabha elections. In 2011, the government provided a further 3 per cent interest subvention for farmers making immediate payments on their KCC loans.

More recently, the Uttar Pradesh government’s farm loan waiver scheme has been replicated by Maharashtra, Punjab and Karnataka (estimated to total 0.5 per cent of India’s GDP), while demands are arising in Madhya Pradesh, Rajasthan and Haryana.

Ideally, India ought to have no rural distress—we have the Second largest quantity of arable land in the world. And yet, less than 35 per cent of this land is irrigated, with the remnant land subject to fluctuations in rainfall.

Small and marginal farmers certainly deserve greater support from the government. However, India’s historic agricultural policy has disincentivised the creation of a formal credit culture amongst Indian farmers.

When the next election is likely to bring about another farm loan waiver, why would any farmer seek to pay off their loan on time? Such schemes can also prompt farmers to take on risky ventures that are beyond their capacity. 

Ideally, India ought to have no rural distress—we have the Second largest quantity of arable land in the world. And yet, less than 35 per cent of this land is irrigated, with the remnant land subject to fluctuations in rainfall.

Growth in agriculture and allied sectors has been almost offset by rural inflation. With small farm sizes and rising agricultural input costs, farmers have increasingly grown indebted. Rural India remains where it was, mired in its own abyss. 

The writing is on the wall. India’s small and marginal farmers will need another agricultural loan waiver. However, granted this once, it just cannot continue in the future.

The highly responsive young MP has the genuine affection of millions

There are other ways to mitigate their plight. Greater subsidies could be extended on the purchase of agricultural equipment, fertilizers and pesticides, while medical insurance coverage could be expanded through the Rashtriya Swasthya Bima Yojana.

In addition, the scope of the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) 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. 

For centuries, India’s economic strength was based on the agricultural surplus generated by its farmers, and the trade revenues brought in by its rural entrepreneurs in handicrafts, calico and metalwork.

And yet, suddenly, over the past few centuries, India’s natural competitive advantage vanished. Our agricultural techniques grew outdated, our handicrafts, once pillaged by the British, found fewer and fewer markets as the years passed.

Forced to quit the Gandhi household after husband Sanjay’s death. Maneka always remained a doting mother

Such a progression rouses natural questions—how did India’s demographic change transform its rural economy? How do we transition out of this to rural prosperity? 

One requirement is retailoring our concepts. We have been besotted by the idea of villages being self-sufficient and self-regulating for centuries.

The idea that an Indian village was isolated and yet self-sufficient was first propounded by Charles Metcalfe in 1830—“The village communities are little republics, having nearly everything that they want within themselves, and almost independent of any foreign relations.

They seem to last where nothing else lasts. Dynasty after dynasty tumbles down; revolution succeeds to revolution; Hindoo. Pathan. Moghul. Mahratta.

Sikh, English are all masters in turn, but the village communities remain the same.” Karl Marx also popularized the idea of village self-sufficiency—“Under this form of municipal government, the inhabitants of the country have lived from time immemorial.

The boundaries of the village have been but seldom altered, and though the villages themselves have been sometimes injured and even desolated by war, famine and disease, the same name, the same limits, the same interests, and even the same families have contributed for ages.” 

Most writers of rural India have taken the idea of village autonomy and autarchy for granted, categorizing the village as a standalone community, with limited interaction with wider economic, political and religious systems.

More recently, questions have been raised about the idea of a nucleated village, with clear boundaries between one village and another. Migration patterns, farmer suicides and stagnating rural incomes, along with increasingly ad hoc land acquisition in the name of public good have politicized the idea of rural economics. 

Is a village simply a vertical economic unit composed of various castes, bound by ties of kinship, marriage and economic obligations? Or should we consider its deep dependence on towns for specialised services (construction, transportation, healthcare, education, etc.) as part of the hinterland’s paradigm?

How does economic policy at the village level result in sustainable and growing per capita income, while providing essential services and a safety net?

In India, the history of land, especially in rural India, has somehow not gone alongside history of capital, subsuming documentation about changes in the rural economy under a dialectic between capitalist development and the proletarian masses.

How can agriculture be revived in an era of fragmented land holdings and rising input and fuel prices? Does the rural economy offer enough opportunities to quell rising discontent?

Why does construction offer the only hope for rural youth, bereft as they are of any transferable skills in an urban context? 

Even more, we need a national conversation on rural distress. Similar to the decline of the peasant, so has the interest of historians and social policy observers in capturing their fate—India’s rich history has been illustrated with a range of tomes about kings, queens, nawabs and soldiers, and in some cases, even traders—and yet, the peasant himself, and the village economy he sustains has drawn limited attention.

As Eric Stokes, the most famed of agrarian historians at Cambridge, recognised, “the balance of destiny in South Asia rests in peasant hands”.

The challenge, however, has been to capture the travails and tragedies of a social group that resists classification and leaves little, if any, records.

The 1970s and ‘80s saw renewed focus on empirical research that sought to provide a historical reconstruction of our agrarian economy, seeking correlations and dependencies on a range of social factors and social groups.

In India, the history of land, especially in rural India, has somehow not gone alongside history of capital, subsuming documentation about changes in the rural economy under a dialectic between capitalist development and the proletarian masses.

Unlike during the Champaran Satyagraha, national attention has been curiously lacking. We must harbour empathy for India’s marginal farmers, we must make the choice to support them. 

Policymaking in a country riven by rural poverty, social faultlines and inadequate infrastructure should be focused on alleviating rural hardships while building the infrastructure for future growth.

The pursuit of grandiose urban infrastructure, and gigantic symbolic statues, is a luxury for other nations. This book hopes, through a series of vignettes, to elucidate answers to such issues, with their constraints and potential solutions.

It hopes to highlight experiences from my decade-long public life, serving as a Member of Parliament (MP) for mostly rural constituencies, while drawing lessons from sociological experts and development policy.

This set of experiences has been distilled into a rural manifesto, one that could help shift the contours of the rural economy into a more positive bearing for the marginal farmer. 

In writing this heartfelt and perhaps timely set of essays on the village economy, I am deeply indebted to India’s rich tradition of agricultural economists and agrarian historians, whose contribution is recognised through footnotes scattered across pages.

Writing this book has been a learning experience for me as well, helping me understand India’s rhythm, particularly in its villages and the aspirations of those living in them – I have travelled far and wide, across a multitude of Indian towns, villages and habitations, and everywhere I have heard stories of sorrow and yet been witness to the generosity and resilience that rural Indians possess.

I have drawn on resources and goodwill of a variety of people, including my research team.

Finally, my mother and my wife have lent unstinting emotional and intellectual support, while providing me with a sense of empathy for the downtrodden. It is to them, and my daughter that I dedicate this book.

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