DNA Edit: Feed farmers, don’t fast

Madhya Pradesh Chief Minister Shivraj Singh Chouhan, in an act that harks back to Gandhian techniques, started an indefinite fast yesterday calling for peace in the state, which had been shaken to its core last week by violent demonstrations and paralysing protests by the state’s farmers. What purpose has the fast served is anyone’s guess, and new reports indicate that the CM has ended the fast on the second day itself.

Irrespective of whether the farmers were moved by his fast or not, there is little doubt in anyone’s mind that the incredibly large share of farmer’s woes will not wither away by resorting to such political theatrics.  At the heart of the agitation in Madhya Pradesh is the price of soybean, which has crashed to Rs 3,500 per quintal from Rs 4,500 per quintal in March 2015. This has translated into farmers getting low or negative returns for the expenditure that they incur on seeds, soil, pesticide and other equipment.  It is not as if things have suddenly come to such a pass in Madhya Pradesh.

For years now, the state government has been complacently incentivising soybean production in the state without encouraging farmers to take to other crops. Since 2012, an average of 5.7 million hectares of area in the state has been under soybean farming, while production has suddenly jumped from 684 kg per hectare in FY13 to 1,116 kg per hectare in FY16, thanks to a good monsoon in 2016. An unusual and dramatic spurt this is, and it has led to a precipitous fall in the market prices. Now, Madhya Pradesh farmers are calling for a waiver of their loans, in the same fashion that their counterparts in Uttar Pradesh and Maharashtra have enjoyed. This is a small relief that comes at a high cost for state governments. Loan waivers mar fiscal discipline, and depress earnings of public sector banks, at a time they are locked in a fierce turf battle with their private competitors. Not just that, loan waivers also result in inflationary spillovers and undo fiscal rectitude that the government has set itself to in the last three years.  

Even politically, there is little dividend to be reaped from loan waivers. Already, there are talks of Madhya Pradesh protests spreading to Rajasthan and Punjab given that farmers’ organisations have picked that a pliant government will waive loans in the face of coordinated protests. There is a way out of this: modernise the economy. Agriculture’s share in India’s GDP has been sinking gradually over the decades. Now is the time to aggressively focus on creating manufacturing capacities that give out gainful employment to thousands.