Financial Daily from THE HINDU group of publications
Wednesday, Oct 09, 2002
Agri-Biz & Commodities - Agricultural Policy
Columns - Down to Earth
Paddy MSP Politics, economics and common sense
The Punjab Chief Minister, Capt Amarinder Singh, and his Cabinet colleagues staging a dharna before the Prime Minister's residence in New Delhi on the paddy MSP issue... Highlighting the simmering discontent of the Punjab peasantry.
THIS was bound to happen sooner or later, and it has happened. The ruling coalition at the Centre does not have a reliable majority in Parliament. And the majority of States are ruled by the party in the Opposition. The State governments owing allegiance to the leader of the Opposition at the Centre take instructions from Ms Sonia Gandhi rather than from the NDA Prime Minister.
The NDA Government takes decisions that the Opposition governments in the States cannot stomach; and the State governments take policy lines that do not match with those of the Centre. Sooner or later, the Congress Chief Ministers would have had to face a situation where they could not support the Central policies and keep quiet about it.
The Punjab Chief Minister, Capt Amarinder Singh, was the first to offer a dharna on the question of the minimum support price (MSP) for paddy right in front of the Prime Minister's residence. He was taken into custody and charged under Section 144 of the IPC and released without any further ado.
Mr Ajit Jogi, another Congress Chief Minister (of Chhattisgarh), had to show the world that he was as concerned about the MSP for paddy as his Punjab counterpart.
Ms Sheila Dixit, the Delhi Chief Minister, has warned the Home Minister that she will have to take the path of agitation if he does not withdraw his Ministry's diktat.
And Mr S. M. Krishna of Karnataka, confronted, on the one hand, by Veerappan and, on the other, by enraged, drought-affected farmers, has declared his intention to flout the injunction of the Supreme Court to release Cauvery waters to Tamil Nadu. He has gone on a padayatra that could only provoke further disturbances.
Most politicians of the vintage required to reach the chief ministerial gaddi have a background of leading agitations. When they find themselves caught between the devil in New Delhi and the deep turbulence of mass hostility, the easiest option is to make a theatrical gesture of resisting the impugned orders through a personal satyagraha.
Those interested in the democratic institutions of the country would be perturbed at this development. That the phenomenon of satyagrahi chief ministers is limited to economic causes is great comfort. If the divergence of opinion spills over to non-economic issues, the situation could be highly explosive.
The Tamil Nadu Chief Minister, Ms Jayalalithaa, has announced her intention of filing a contempt petition against Mr Krishna. It is a safe bet that somebody in Tamil Nadu will soon try and organise ryot uprisings that would match those in Karnataka.
If the Chief Ministers take to deliberate disobedience of the law to vindicate their positions and to counter the policies of opposition, India could be on the brink of conflicts between and among States. Karnataka and Maharashtra may break into hostilities on the border dispute. So, possibly, would Punjab and Haryana, on the Yamuna-Sutlej canal dispute. Karnataka and Tamil Nadu have a common interest in Veerappan and, therefore, may not break into violent conflict immediately, even on the Cauvery water issue.
Even on economic issues, the rebellious Chief Ministers appear more concerned about their political image and the electoral mileage they can draw. The Centre itself appears to be working against its own interests. There is reason to believe that somebody is subverting the policy structures to put the Centre in trouble and the nation in jeopardy.
Let us examine the question of paddy MSP that infuriated the suave Punjab Chief Minister enough to offer a dharna. By announcing the MSP, the Centre commits itself not to let the price sink below that level. The announcement of the MSP has to take place before sowing. The idea is that it should help farmers decide the crop pattern.
The MSP for paddy should have been announced the latest by early June. But no announcement was made till 15 days after the new harvest started arriving in the mandis of Punjab and Haryana. As misfortune would have it, both these food-granary States suffered from an unprecedentedly severe drought. There was a wave of sympathy for the victims of the failed monsoons. The Chief Ministers concerned presented demands for assistance of thousands of crores of rupees for drought relief.
The paddy farmers had no reason to believe that the State governments, even while waxing eloquent on the misery of the peasants, would leave them in the lurch. They did whatever they could to protect the paddy crop from the effects of the dry spell. Some sank new tube-wells; some deepened the existing ones. New and bigger power motors were installed. That electricity was free in Punjab at that time permitted reckless expenditure, which they would not have made had the power been priced.
Fertiliser prices were also hiked. In brief, the cost of production of paddy-2002 was at least Rs 100 more per quintal than last year. The farmers, as also the State governments, were expecting a hike in the MSP of that dimension Rs 660, instead of Rs 560, per quintal for A-grade paddy.
The Centre and the Food Corporation of India (FCI) together made the situation worse. If somebody in the Government forgot to announce the MSP, the FCI ought to have started the procurement to match the mandi arrivals. It did not. It was a tense fortnight for the farmers as the FCI did not commence procurement at all on the pretext that the revised MSP had not been announced.
Had the FCI commenced its operations at last year's MSP, the frustration among the farmers would have been less severe. The simmering discontent of the Punjab peasantry exploded when, towards end-September, the Centre announced that there would be no increase in the paddy MSP from last year's levels.
Mr Prakash Singh Badal of Punjab, Mr Om Prakash Chautala of Haryana and several others from Andhra Pradesh all allies of the NDA sought a meeting with Prime Minister, who characteristically directed that the farmers be paid Rs 20 per quintal more than last year; but this was not to be treated as an increase in MSP.
The hike could not be assigned either to the "Green Box" or to the "Blue Box". It was directly linked to the quantity actually procured and would certainly qualify as product-specific Aggregate Measure of Support (AMS), in WTO parlance. The Government desisted from calling it an increase in the MSP lest it become a precedent.
This three-legged hopping of the Government and the knee-jerk bravery of State governments are tragic, particularly because the two together lost a golden opportunity to make the right moves to resolve two chronic maladies. One, the wheat-paddy trap, in which Northern farmers have landed themselves since the advent of the Green Revolution; and, second, the poverty of post-harvest infrastructure, for which, generally, the FCI is blamed.
After the prolonged good fortune of 14 monsoons, India's food godowns are bursting. There is little scope for export because the international prices of foodgrains are low. The situation in oilseeds and edible oils is exactly the reverse. The production is poor, and 60 per cent of India's edible oil requirements are met through imports.
The solution to this paradox is clear. Following the oil technology mission of Rajiv Gandhi days, farmers need to be encouraged to shift a part of their irrigated lands from foodgrains to oilseeds. This could have easily been done had the Government taken the farmers into confidence, and explained to them the inevitable unremunerativeness of producing foodgrains and announced an attractive hike in the MSP of oilseeds.
It would have taken a massive PR exercise to make farmers put up with a status quo in paddy MSP. However, the job was not impossible. Had the Government marshalled the courage to scrap the inefficient FCI that gobbles enormous funds without delivering any tangible benefits for either the farmer or the poor consumer, the would have given it three cheers.
Further, the Government should have allowed the emergence of warehousing companies that construct silos and godowns and accept foodgrains for storage, paying farmers, say, 70 per cent of the market price and issuing warehousing receipts that are negotiable instruments. This would have released them from the stranglehold of inefficient FCI operations and simultaneously tackled the problem of abundance of foodgrains and shortage of oilseeds.
Not that conceptual inputs were lacking. Several committees made recommendations to this effect; but they were all brushed aside and whole issue has come to be centered on the MSP.
The fact is, whether MSP is increased, reduced or kept unchanged, the FCI will come out the victor; the only losers are the nation, its farmers and its poor masses.
(The author is Founder, Shetkari Sanghatana. Feedback can be sent to email@example.com)
The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |
Copyright © 2002, The
Hindu Business Line. Republication or redissemination of the contents of
this screen are expressly prohibited without the written consent of
The Hindu Business Line