India - Farmers Vs Peons

By pointing out that the overwhelming majority of farmers are economically worse off than the lowest-paid government employee, the apex body of farmers’ organisations has not unveiled any secret. This has been well known for some time. And although the spate of suicides by farmers in recent years has not usually been by the poorest among them, the severe problems faced by farmers have come into focus. The service done by the Confederation of the Indian Farmers Associations (Cifa) is to dig out some intriguing evidence from reports of various committees and commissions, in order to make its point. Cifa has simultaneously sought to highlight the steadily growing gap between income levels in the agricultural and non-agricultural sectors. This is a matter of special concern, especially considering that the proportion of the population depending on agriculture for subsistence is still more than 50 per cent, while the share of agriculture in GDP has dropped to 18 per cent. By definition, the average income in the non-farm sector will be nearly five times what it is in agriculture. Indeed, Cifa quotes studies done in the Planning Commission to show that the ratio is 1:5.2 — whereas a quarter-century ago it was 1:2.8.
Cifa has alluded to the findings of the Arjun Sengupta commission on unorganised workers to affirm that the earnings of even the bigger farmers compare rather poorly with those at the lowest rungs of the government system. The average monthly income per household from cultivation was reckoned by the commission at a paltry Rs 1,578 for small farmers and Rs 8,321 for the big farmers. By way of comparison, the lowest-paid government employee now gets Rs 10,000 a month. It is an easy point to make after this that while the government has taken no more than four months to implement the 6th pay commission report, and in fact improved on the commission’s recommendations, little action has resulted from the report of the National Commission on farmers, headed by M S Swaminathan, in 22 months.
The important issue is what keeps farm incomes low, and what needs to be done about it. The answer, however, is not what the Swaminathan commission suggested, namely to raise the government’s minimum support prices (MSP) by at least 50 per cent more than the weighted average cost of production. This is a solution that will add to food costs, and cause inflation. It could even result in an increase in the general incidence of poverty, because the primary link to poverty is food prices. Rather, the solution lies in bringing about a structural transformation in the economy, achieving significant productivity gains on the farm and simultaneously reducing the number of people who live off agriculture. That means creating more non-agricultural jobs, which in turn means achieving rapid growth in the sectors and activities that generate the maximum number of entry-level jobs. One obvious answer that this points to is labour-intensive manufacture of simple products, as the Chinese have shown. But this requires a change in the country’s labour laws, which the country’s politicians will not allow. If legislators could see the link between labour laws and the existence of rural poverty, perhaps their attitudes might change.