December 4th, 2017

Dear Shri Arun Jaitley,

Alliance for Sustainable and Holistic Agriculture, also known as ASHA-Kisan Swaraj, is a national network of organizations and individuals working for sustainable farm livelihoods, advocating for income security for farm households, ecologically sustainable agriculture, protection of rights over resources and access to safe, nutritious food for all.

As the Union Budget for 2018-19 is being prepared, we urge the government to announce some major measures that seriously address the extent of crisis that is being faced by India’s farmers, and go beyond tinkering with a few schemes and their allocations. Therefore we present our suggestions, beginning with the most significant and far-reaching ones.

1.    Price Support: There is a need for a major raise in Minimum Support Prices of all crops, and introduction of more categories of agricultural produce into the MSP system. Farmers across the country are demanding that the MSPs should be set at a level which gives 50% margins above the C2 Cost of Cultivation. This was promised by your party during the elections, and we expect that you take serious steps towards implementation of the promise.

a.    As the first step, the MSPs of all crops should be raised to provide at least C2+25% in Kharif 2018 and Rabi 2019.

b.    A statutory guarantee of MSP should be instituted for all farmers.

c.    Procurement operations should be expanded to include all crops where MSP is declared, including cereals, pulses, millets and oilseeds.

d.    Effective market intervention should be implemented across the country to ensure that farmers get at least the MSP.

e.    A Price Deficiency Payments scheme should be implemented so that the government is accountable for ensuring that MSP is realized by every farmer and will pay the shortfall in prices if any. The first launch of such a scheme in Madhya Pradesh saw many pitfalls due to serious flaws in rules and concept. These should be set right if the scheme is to be expanded to other places.

f.     The Market Intervention and Price Support Scheme currently has only Rs.199 crores allocated. This along with the Price Stabilization Fund for Cereals and Vegetables should be allocated Rs.10,000 crores. Without a large allocation, these schemes are completely ineffective.

2.    Debt Relief:

In view of successive droughts, natural calamities, unremunerative prices and demonetization, the farmers across the country are mired in debt. Loan waivers and debt relief have been promised to farmers in several states including Maharashtra, Uttar Pradesh, Rajasthan and Punjab in recent months. However, a large allocation from the Centre is required for a meaningful implementation of the loan waiver. This has become clear from the experience of loan waivers in Telangana and Andhra Pradesh without any central support.

Therefore, we demand that the Centre should declare an Agricultural Debt Relief package of Rs.200,000 crores for the entire country, which is used with matching contributions from the state governments to implement debt relief. At least 25% of the package should be used to provide debt relief from non-institutional loans to tenant farmers, sharecroppers, adivasi farmers and women farmers who did not have access to institutional loans.

3.    The Budget speeches in 2016-17 and 2017-18 talked about ensuring “income security” and reorienting its interventions to double farmers’ incomes by 2022. However, no roadmap has been put in place so far. In Budget 2018-19, the Government should establish a permanent, statutory Farmers’ Income Commission to ensure basic living incomes to all agricultural households. Especially in the light of 7th Pay Commission, the incomes of the employees in organized sector have seen a substantive increase, whereas the incomes of farmers are either stagnant or declining (taking inflation into consideration). A Farmers’ Income Guarantee Act is being demanded by farmers’ organizations, and such a measure would prove that the government is serious about tackling the long-term crisis in agriculture.

4.    Natural Disasters including drought and floods are a major cause of farm distress. Farmers reeling from two consecutive years of Drought got very little timely support from the government – as established in the Supreme Court too. A serious overhaul of the Disaster Relief system is urgently required, including the institutional machinery between Finance, Home and Agriculture Ministry streamlined and overhauled. Meanwhile, outlays for disaster relief to farmers should be increased to at least 25000 crore rupees, going by the drought experienced this year in various states (this is based on requests from states after their assessment of loss) for SDRF/NDRF to respond promptly to extreme weather events even as crop insurance system has to be improved drastically.

5.  Scaling up investments on risk-reducing ecological agriculture: The Paramparagat Krishi Vikas Yojana (PKVY) is the first national level scheme of its kind which seeks to promote organic farming and thereby, resilient farming to reduce riskiness in agriculture (whether of risk related to complete crop loss that afflicts monocropped, intensive agriculture systems, by introducing biodiverse cropping systems based approach, or by way of reducing out of pocket investments and thereby indebtedness of farmers). Such is the demand for agro-ecological approaches to be scaled up and mainstreamed that PKVY targets have been exceeded in the first year of implementation. This investment is also to be seen as both a mitigation as well as adaptation effort in the context of climate change, given that this approach reduces GHG emissions, as well as captures more carbon in the soil. From 270 crores in 2017-18, the outlays may be increased to at least 1000 crore rupees. Within this, a specific component of reviving traditional crop diversity in all farms of India may be introduced, to complement the efforts of revival of traditional cattle breed and agro-ecological farming.

6.    Higher allocation for PMKSY with special focus on Rainfed Areas: Only 7,377 crores was allocated to Pradhan Mantri Krishi Sinchai Yojana (PMKSY), which is less than the actual expenditure of 7,781 crores in 2015-16. PMKSY itself combined several existing irrigation schemes whose combined allocation in 2014-15 was already at Rs.13,492 crores. If the government is serious about expanding the area with irrigation access, this allocation should be at least doubled. Moreover, there should be a clear prioritization for Minor Irrigation projects and watershed development, with the aim of providing Protective Irrigation to irrigated dry crops in rainfed areas. The rainfed areas which constitute 60% of the cultivated area are most distress-prone and they are also the areas where there is a great potential for enhancing production and farm incomes.

7.    Ensuring that tenant farmers or lessee farmers get access to bank loans should be a high priority, given that their numbers are increasing and they form a high-distress category. In view of the Bhoomiheen Kisan Credit scheme and NITI Ayog report, we propose that a Credit Guarantee Fund be set up to increase the bankers’ confidence in lending to non-land owning “licensed” cultivators, both as individual farmers and in Joint Liability Groups. Such a Fund needs to be established and can have around 5000 crore rupees set aside for the purpose in 2017-18.

8.    Farmer Producer Organizations (FPOs) should be the focus of a really meaningful Startup India mission. All the incentives being provided under Startup India mission should be extended to FPOs, including tax exemptions, provision of capital and infrastructure. Though agricultural income of farmers is exempt from income tax, the income of FPOs is taxable at 30% from the very first year – this is a major disincentive for farmers to come together to establish collective business entities. With proper support systems, FPOs would lead to better profitability for small farmers. Government should provide investments into working capital, decentralized storage infrastructure, processing and value addition facilities for farmer collectives, for more direct and branded marketing by producer collectives etc. Allocation should be taken up to 3000 crore rupees.

9.    Cultivation incentive should be announced for pulses and oilseeds on the basis of extent cultivated. Minimum Support Prices should be effectively implemented for pulses and oilseeds, operationalizing the new MSP concept articulated in Economic Survey 2016-17. The report “Incentivizing Pulses Production through Minimum Support Price (MSP) and Related Policies” submitted by the Chief Economic Advisor Arvind Subramaniam makes clear recommendations on MSP and procurement which have not been implemented so far. MSP of Rs.6000 was recommended for tur and urad in Kharif 2017 and Rs.7000 in Kharif 2018. However, MSP in Kharif 2017 was set at Rs.5450 for tur and Rs.54000 for urad. The cultivation area of tur has drastically reduced in many states because of the lack of remunerative prices.

The MSP for Kharif 2018 should be raised to Rs.7000 for tur and urad, along with corresponding increases for moong and chana. In addition, the recommendations to ensure procurement operations at MSP, and to build up pulses stock of 2 million tons, should be implemented earnestly with Budget allocations for the same.

Kavitha Kuruganti, National Convenor; Ph: 8880067772; Email: kavitakuruganti@gmail.com;

Kirankumar Vissa, National Co-convenor; Ph: 9701705743; Email: kiranvissa@gmail.com

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