Like GST, we need a similar effort for agriculture: Siraj Hussain

In a chat with ET Now, Mythili Bhusnurmath , Consulting Editor and Siraj Hussain , Former Agriculture Secretary, discuss how the kind of reforms which the country demands, which the financial press demands, which the media demands for industries, the same kind of intensity is not seen for reforms in agriculture sector.

The economy is bouncing back, growth engines are humming again but if there is one area of concern it has to be the agriculture data…

Mythili Bhusnurmath: There has been a lot of hand ringing about the rate of growth of agriculture for the second quarter which came in at just 1.7%. However, a lot of solace has been taken from the fact that the base effect of Q2 of the last fiscal was 4.1%. But actually, if you look at the average rate of growth of  agriculture in the three years of the BJP government, it has only been 1.8%. As a former agriculture secretary, are you surprised by the fact that the rate has come in so low?

Siraj Hussain : Actually we cannot hold the government responsible for the poor growth of agriculture in the first two years because 2014-15 and 2015-16 were drought years and the poor performance of agriculture was expected to some extent. In 2016-17, of course, the growth picked up and we saw good numbers last year. However, 2017-18 has been a really disappointing year and that is because of lower prices.

Even though the production did not go down very much even this kharif season, the market prices of almost all the commodities have crashed to such an extent that the numbers are lower at 1.7%. However, we must say that about 52% of the GVA comes from non-agricultural things like dairy, fisheries, forestry etc and in milk sector we have seen good growth. However, the kind of reforms which the country demands, which the financial press demands, which the media demands for industries, the same kind of intensity is not seen for reforms in agriculture sector.

Mythili Bhusnurmath: Why is that because there have been a number of committees which have been set up giving suggestions, giving a blueprint for what needs to be done in the agricultural sector, removing all the distortions on the input as well as the output side. But we have seen that every time the price of some agriculture commodity goes up, the government immediately puts a ban on the export, puts a minimum export price. Why is it that we do not allow market forces to operate in the agriculture sector the way we do in industry? Is it because politically it is too hot a potato?

Siraj Hussain : That is one reason and the second reason is that the farmers as a group are not as well organised and they do not have a voice in media unlike the urban consumers whose views are projected by the media all the time. Recently, we have seen in case of onion, the farmers were realising just about Rs 30 a kilogram in Lasalgaon and the government did everything in its power to depress the prices. The MEP was imposed, there were income tax raids, what you have. So it is true that the farmers do not have the kind of voice which the urban consumers have as a result of which the government policies have been skewed in favour of the consumers.

However, recently in the last one or two months, we have seen a number of restrictions lifted, export restrictions on pulses, for example, stock limits etc . But one hopes that if there is a price rise in any of these commodities, the government would not bring back those restrictions. Also, reforms in agriculture sector similar to the reforms in labour sector are more difficult because it affects a whole lot of people, not only the farmers but also the consumers, the poor people, people below PPL, also there has to be a consensus with the states.

Unfortunately, the kind of efforts which are required to bring a consensus with the state governments we have not seen. However, there is one piece of good news today that Government of Maharashtra is going to allow direct marketing of onion. You know this is the kind of reform one has to see across board, across all commodities and in all the state governments but somehow the centre has not been able to persuade and in fact I have a sense that the kind of engagement of centre which was seen in GST is missing in case of agriculture sector.

Mythili Bhusnurmath: Yes, you are right that the urban consumer seem to have a large voice but in a democracy the pharma and the rural sector should match up much more because the rural sector still accounts for about close to 60% of the population, so there is some disconnect over there. This is number one. Number two is there again is a disconnect between the micro level and the macro level. At the micro level we have been talking about doubling the farmers’ income by 2022 and that is never going to happen. If any time prices rise you impose some restrictions on them and it is true, the centre alone cannot do much. The states also have to cooperate because agriculture is a state subject. So what is the way forward?

We have been arguing that one of the major reforms which can be undertaken by the central government is to free up the agriculture markets that is point number one. Secondly, we feel that direct benefit transfer of several subsidies electricity subsidy for example the fertiliser subsidy could be undertaken but I think a large scale reform like the fertiliser subsidy reform perhaps will only come in when the next government is formed. Thirdly, we have seen that the markets are so skewed that the government did bring in electronic national agricultural market or eNAM, but somehow the state governments did not come on board and as a result of that, we did not see the results of eNAM which were expected.

In case of crop insurance, the government did very well, this new government’s Pradhan Mantri Fasal Bima Yojana was a very bold step in the right direction. However, the kind of urgency which has to be shown by the state government in assessing the crop losses and ensuring that farmers get their compensation in time was missing in most of the states. Even though Tamil Nadu did very well after last year’s drought and in Tamil Nadu the compensation was given within a very short period of about a month-45 days. These are some of the things which we have been writing about. The difficulty is that the farmers problems are not similar across all of India, the sugarcane farmers of UP have a different problem, the cotton farmers have a different issue, the paddy and wheat farmers of Punjab have a totally different issue and I wish that the Governments of the states and the centre paid a lot of attention to the problem of water which is going to become such a major issue in Punjab. But unfortunately, we have not seen much headway in the direction of even that. So, a lot of work is still to be done.

Mythili Bhusnurmath: This is a government which has been pretty bold. They had the courage to do away with petroleum subsidies entirely. Of course, they had the advantage that oil  prices were falling. Do you really foresee the government ever having the courage to remove the subsidies on both the input side – water, power, fertiliser, and as well as on the output side — the entire MSP domain? We have seen procurement is very skewed, it is only in some parts of the states. Many farmers do not realise even the MSP. How difficult will it be and what is the time frame when you will be able to do away with these distorting subsidies both on the input as well as the output side?

Siraj Hussain : See it is much too complicated to be covered in one television show, however, in case of subsidies on food, the PDS subsidies, I myself and Dr Gulati wrote a paper recently in which we gave a five-year timeframe. We recommended that there are certain states where the literacy levels are high, where the bank penetration is strong, where internet connectivity is good, and where the food availability is much better — states like Punjab, Andhra Pradesh etc. There is no point distributing food in physical form and we recommended that DBT for food subsidy can be undertaken in these states quite soon.

There are some other states on the other hand, where internet connectivity is not good, mobile penetration is not very high etc. There it could be done in a phased manner over a period of five years. However, in case of food subsidy, even in Punjab and Haryana, the food surplus states what is the point in distributing food through PDS when DBT for food subsidy can be easily undertaken but the kind of engagement which is required with agriculture and food sector is somehow missing and in fact many of the things which we thought would happen in the first two years of this government, are yet to be seen even we are now entering fourth year.

The reforms in agriculture sector are overdue because the farmers are in a real bad shape. While we discuss the GDP numbers and all these things, the soya bean farmers for example, the farmers of pulses, the farmers of ground nut — people I have met and have seen how helpless they feel in the face of so called market forces because the state government would not buy, the traders would keep the prices low, the marketing system is not reformed. There is too much to be done.

We need the kind of engagement with the states which we saw in case of GST. We need a similar kind of engagement for agriculture, may be a similar kind of committee of the agriculture ministers of the states as we saw in case of GST Council.

ET Now: You and Ashok had estimated that we need as much as Rs 6,40,000 crore fresh investments in the agriculture sector to really change the state of affairs and government has to bring in 80% of this. What do you think the chances are very briefly?

Mythili Bhusnurmath : We took that from the Dalwai Committee Report on doubling of farmers income that is the estimate they have made. So obviously, it would not be easy to find that kind of resources but there are certain things marketing reforms, for example or direct benefit transfer of electricity subsidy which could be done more easily and earlier.
This entire investment of Rs 6.40 lakh crore which has been estimated by Dalwai Committee is not going to come in one year. The reform of agriculture sector is going to be a long drawn process but what we want is that the first steps should be taken by taking head-on the problems relating to marketing of agriculture commodities.