The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price. File
| Photo Credit: PTI

As the general elections draw closer, agrarian concerns have once again taken centre stage. Farmers from the heartland of the Green Revolution have travelled to the border of the capital to not only voice their distress, but also to shape the electoral discourse. The ruling dispensation, sensing adverse electoral implications, attempted to reach out to the farmers. It said it was ready to procure pulses, maize, and cotton at MSP, but this was contingent upon farmers guaranteeing crop diversification. However, these efforts were rejected as the core issues were not addressed, say farm leaders.

The perennial issue of fair pricing of farm produce reigns supreme, now coupled with calls for legal assurances of Minimum Support Price (MSP). However, beyond mere legal mandates lies the pressing concern of maintaining self-sufficiency in food production and addressing the ongoing challenge of distribution. This underscores the ethical imperative of anchoring a legal guarantee for MSP.

The MSP regime was a vital instrument for ensuring food security in India. Given the unique nature of agriculture, farmers lack the ability to exert significant influence, let alone determine the price of their produce. This constitutes a ‘market failure.’ Thus, MSP ensures that agricultural commodity prices remain above a predetermined benchmark to facilitate remunerative price discovery.

Produce and perish trap

The MSP is announced annually for 23 crops covering both the kharif and rabi seasons, well in advance of sowing, with 21 of them being food crops. However, despite the announcements, the implementation of MSP remains poor. Only 6% of farmers, primarily those cultivating paddy and wheat in States such as Punjab, benefit from MSP. Most transactions involving these essential food commodities occur below the MSP, rendering farming economically unviable for the majority of producers in India. As a result, farmers are trapped in a dangerous cycle of produce and perish, leading to crippling debt and deaths by suicide. All these emphasise the pressing need to ensure MSP, including the one recommended by the eminent agricultural scientist M.S. Swaminathan (with a 50% profit margin).

Several articles under the Constitution, as well as the United Nations Declaration on the Rights of Peasants, support the legal recourse to guaranteeing MSP. According to a recent opinion survey by an English TV channel, 83% of landowners and 77% of farm labourers expressed solidarity with the agitating farmers. Notably, 64% of the public also endorsed the farmers’ demand for a legal right to MSP.

Sugarcane growers already benefit from a ‘statutory’ MSP, which sugar factories strictly adhere to when purchasing cane from farmers. A few years ago, Maharashtra attempted to amend its Agricultural Produce Market Committee (APMC) Act to prevent the purchase of agricultural produce below MSP, but the effort failed due to a lack of political will and a comprehensive strategy. The Karnataka Agricultural Price Commission has laid out a clear roadmap, including potential financial commitments, to ensure a legally binding MSP for crops cultivated in the State. A private member bill on The Farmers’ Right to Guaranteed Remunerative MSP for Agricultural Commodities was tabled in Parliament in 2018. The Andhra Pradesh government unveiled a draft bill last year aimed at guaranteeing MSP for crops grown in the State. These efforts show that the objective of establishing a legal recourse to MSP has not emerged suddenly, nor is it impossible to attain.

The solution

A minor amendment to respective State APMC Acts or the Centre’s Essential Commodities Act would suffice to introduce a law ensuring that no transactions of farmers’ produce occur at prices below the MSP. The budget outlay will not be as large as projected if legal recourse to MSP is accompanied by essential backward and forward linkages. Crop planning, market intelligence (including price forecasts), and other pre-sowing measures, along with the establishment of post-harvest infrastructure for efficient storage, transportation, and processing of farm commodities, greatly assist in managing the post-harvest glut in the market. Therefore, a legal route to MSP, complemented by the development of such linkages, would provide protection against “market failures” in addressing the surplus, rather than leading to “market distortion,” as claimed by some mainstream economists.

Even enhancing MSP to provide a 50% profit margin over total cost is not challenging, considering that current margins already stand at around 22%. Finally, effective procurement and distribution, as envisaged under the National Food Security Act, 2013, is the most appropriate means to not only ensure MSP but also address hunger and malnutrition.

The PM-AASHA comprises schemes for price support and price deficiency payment, along with incentives to private traders to ensure MSP. While it possessed all the necessary elements as precursors to guarantee the MSP, its side-lining in policy circles highlights how political expediency rules the roost.

At present, farmers hardly get 30% of the price paid by the consumers; this will increase if MSP is guaranteed. Establishing a legally binding MSP will anger intermediaries as their share will get reduced. Often, government intervention, and particularly a legally binding MSP, is deemed a problem. It is this adherence to free market dogma that is preventing a just solution to the ongoing crisis in farmer incomes.

T.N. Prakash Kammardi is an agricultural economist and former chairman, Karnataka Agricultural Prices Commission, Government of Karnataka

Well before Finance Minister Nirmala Sitharaman rose to present the Interim Budget for 2024-25, there were indications as to what its focus would be. Doubts that this would be anything more than a vote-on-account had been settled when Prime Minister Narendra Modi publicly declared that “when polls are this close, the government presents an interim budget” — and went on to say with confidence of a victory in the polls, “we will bring a full budget when a new government is formed”.

Meanwhile, an ‘interim Economic Survey’, innocuously titled “The Indian Economy: A Review”, has presented a survey of post-Independence economic development, with a periodisation that divides those years into the pre- and post-Modi government eras. In language reflective of an electioneering pamphlet, peppered with the Prime Minister’s own assessments of his government’s record, the document concludes that the decade 2014-24 was one of “transformative growth”. Periods of significant or even high episodes of growth prior to that transformative decade are identified as wanting, on the grounds that such growth either left structural challenges unaddressed or was the result of an unsustainable credit boom that damaged the banking sector.

A eulogy

Given this background, it was to be expected that the Budget speech would be a vocal expression of this eulogy of the two governments of the last 10 years. For years, Part A of the Budget speech has been a tiresome recounting of policies already adopted, and to be adopted, many of which have little to do with the issues of resource mobilisation and allocation and the strategy they signal, which must be the actual concern. That has been true of this year’s Interim Budget as well, which focused on all the “welfare” schemes, in areas varying from housing to food, which have been largely attributed to the Prime Minister. It is another matter that the Prime Minister has in the past dismissed such schemes as representative of a “revdi” (sweet gifts) culture when implemented by non-Bharatiya Janata Party (BJP) State governments.

With the Interim Budget being identified as a mere vote-on-account, Part B of the speech was a declaration that while pursuing consolidation in the sense of achieving periodically revised fiscal deficit to GDP ratios, the government will be stepping up spending on infrastructure and welfare. In the circumstances, what can be assessed from the detailed Budget documents is the fiscal performance of the Centre in the current (rather than next) financial year, 2023-24. Even that exercise is fraught with difficulty because the practice of presenting Budgets on February 1 adopted in recent years has meant that “revised estimates” for the financial year incorporate projections relating to most of the last quarter of the financial year extending to March 31.

CGA data sheds more light

The only substantial figures at hand are the estimates of actual expenditure under different broad heads for the first three quarters of 2023-24 provided by the Controller General of Accounts (CGA), which can be compared with the estimates for the whole year provided in the Budget. This is, in certain areas, quite revealing. For example, if we take the estimates for the Department of Rural Development, under which the all-important Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) scheme falls, as compared to budgeted expenditures of ₹1,57,545 crore for 2023-24, the revised estimates are placed at a much higher ₹1,71,069 crore. That points to a significant step up relative to that budgeted, despite claims that the NREGA scheme is being inadequately funded, wages are in arrears and job card holders are being excluded from work because wage payments are to be linked to Aadhaar.

Editorial | Poll posture: On the 2024 Interim Budget

But a comparison of revised and budgeted expenditures conceals what is actually occurring. The actual expenditure on the MGNREGA scheme was ₹1,11,170 crore in the COVID-19 year 2020-21 and ₹98,468 crore in 2021-22. That came down to ₹90,806 crore in 2022-23 and the revised estimate projects spending on the programme in 2023-24 at an even lower ₹86,000 crore. The figures clearly do not match the government’s pro-poor rhetoric. Interestingly, the CGA reports that expenditure of the Department of Rural Development till December 2023 amounted to only ₹1,07,912 crore or 63% of the total projected in the revised estimates. So, more than a third of the estimated expenditure for the financial year is projected to occur in the last quarter of the year.

That deviation between revised expenditures over the financial year and the actual till December 2023 is even larger in the case of the Department of Agriculture and Farmers Welfare, under which the much-touted Pradhan Mantri Kisan Samman Nidhi (PM-KISAN) scheme of transfers falls. The budgeted expenditure for 2023-24 for that department was placed at ₹1,15,532 crore and the revised estimate is projected at ₹1,16,789 crore. The actual till December is placed at ₹70,797 crore by the CGA, or 61% of the revised estimate. Spending on the PM-KISAN scheme alone, which amounted to ₹66,825 crore in 2021-22, fell to ₹58,254 crore in 2022-23 and is projected at ₹60,000 crore in 2023-24.

There are two ways in which such deviations between actual spending till December and the revised estimates in the Budget can be interpreted. One could be that the Finance Minister has chosen to inflate revised estimates of spending to back her claim that the government has provided massive support to farmers and rural workers. The other could be that, despite tardy spending till December, the government plans to launch a pre-election spending blitz in areas where it believes it can swing votes in favour of the BJP. Being election season, the latter is a possibility. But trends of the kind noted with regard to spending on the MGNREGA scheme suggest that the government believes that rhetoric can be a substitute for actual allocations. Thus, despite claims that free rations for 80 crore people are a huge expansion of food support under the National Food Security Act, the total food subsidy has fallen from ₹5,41,330 crore in 2020-21 to ₹2,88,060 crore in 2021-22 and a projected ₹2,87,194 crore (RE) in 2023-24.

Estimates and projections

At the macroeconomic level, the Budget’s claim is that in 2023-24, the central government has managed to ensure that its receipts other than borrowing are almost equal to that budgeted. This is because it has met budgetary expectations with respect to tax revenues as well as expects to raise its non-tax revenue receipts by 25% relative to budget. The explanation for that hefty increase is that income from dividends and profits is slated to rise from ₹99,913 crore in 2022-23 to ₹1,54,407 crore in 2023-24 (RE). This is because, as compared with a budgeted ₹48,000 crore to be received as dividend/surplus from the Reserve Bank of India and nationalised financial institutions, the revised estimates suggest that the actual inflow will be more than twice that figure at ₹1,04,407 crore, largely because of transfers from the central bank. This has more than made up for a projected fall in miscellaneous capital receipts, consisting of receipts from disinvestment from a budgeted ₹61,000 crore to ₹30,000 crore. It is not clear whether even the figure of ₹30,000 crore can be realised, since the CGA estimates that ‘other non-debt capital receipts’, consisting of disinvestment proceeds, just crossed ₹10,000 crore by December.

Estimates and projections of this kind allow the Finance Minister to claim that even while ensuring total expenditure in line with the budgeted, she has managed to keep the fiscal deficit, at 5.8% of GDP, marginally below the budgeted level, hoping to please financial markets with her government’s prudence. Whether it would please voters to give the National Democratic Alliance a “resounding victory”, as she hopes, is yet to be seen.

C.P. Chandrasekhar is an economist and columnist based in New Delhi

Finance Minister Nirmala Sitharaman on Wednesday, February 1, presented the last full budget of the Narendra Modi government before the 2024 general elections. The Minister announced a range of new initiatives, revised income tax slabs and customs duty, and sops for agriculture and energy transition.

The Union Budget 2023-24 document also listed the new allocations for core welfare schemes that drive socio-economic development. Here’s a roundup of how the budgetary allocations for some of the key schemes have changed-

MGNREGS: The government slashed the budget for its flagship rural employment scheme, the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) by nearly 32% compared to the ₹89,400 revised estimate for the scheme in the current year.

Also read | Explained | The funding and demand for MGNREGA

The Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) was passed in 2005 and aimed at enhancing the livelihood security of households in rural areas. Under it, the MGNREGS is a demand-driven scheme that guarantees 100 days of unskilled work per year for every rural household that wants it, covering all districts in the country except those with a 100% urban population.

Food Subsidies: The Centre has allocated a little above ₹2 lakh crore for the food subsidy under the National Food Security Act (NFSA)- this includes funds for the Food Corporation of India, funds for decentralised procurement of grains by State agencies, and other logistical costs. Starting from January 1, 2023, the Centre had decided to provide 5 kg of free foodgrains per month to the 81.35 crore beneficiaries of the NFSA for one year starting from January 2023, rather than charging them a subsidised amount of ₹3 a kg of rice, ₹2 a kg of wheat and ₹1 a kg of coarse cereal as is usually done.

It was announced in December that the government was terminating the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY), which had provided an additional 5 kg of free grains every month to NFSA beneficiaries after being launched as an emergency measure in response to the COVID-19 pandemic in April 2020 and received multiple extensions since. In a normal year, without COVID disruptions, the Centre’s food subsidy bill on account of the NFSA amounted to around ₹2 lakh crore, similar to the newly-announced allocation, but the PMGKAY had effectively doubled that sum for the past two years.

Jal Jeevan Mission: The Centre increased its budgetary allocation for the Jal Jeevan Mission (JJM) or the National Rural Drinking Water Mission by about 27% to ₹70,000 crore from the current year’s revised estimates of ₹55,000. The Jal Jeevan Mission aims to provide safe and adequate drinking water through individual household tap connections by 2024 to all households in rural India.

The Jal Shakti Ministry tweeted last week that the government had provided 11 crore rural households with a tap water connection under the JJM scheme. Data from the Ministry’s dashboard suggest that 56% of the targeted 19.3 crore households had been covered.

The scheme has a total financial outlay of about ₹3.60 lakh crore, with the Centre funding 50% of the cost with States and Union Territories, except for Union Territories without a legislature, where it foots the entire bill, and northeastern and Himalayan States and Union Territories with legislatures, where it funds 90% of the bill.

Ayushman Bharat-PMJAY: The budget for the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (PMJAY) — the national public health insurance fund, saw an increase of about 12% at ₹7,200 crore compared to the ₹6,000 crore revised estimates for the current year.

The Ayushman Bharat PM-JAY is a health insurance scheme launched in 2018, aiming to provide a health cover of Rs. 5 lakh per family per year for secondary and tertiary care hospitalization. It aims to over 10.74 crore poor and vulnerable families (or 50 crore beneficiaries) from the bottom 40% of the Indian population. Union Health Minister Mansukh Mandaviya had said in December 2022, that 4.5 crore people had so far been empanelled under the scheme.

PM-Kisan: The allocation for the Prime Minister’s Kisan Samman Nidhi (PM-KISAN) scheme was the lowest in five years and remained the same as the revised estimates for the current year at ₹60,000 crore. PM-Kisan is a flagship Central scheme launched in 2019 for cash transfers ₹6,000 per year to eligible farmer families in three instalments of ₹2,000 each.

Finance Minister Nirmala Sitharaman informed while presenting the Union Budget on Wednesday that the government has made cash transfers totalling ₹2.2 lakh crore to around 11 crore farmers under the PM-Kisan scheme.

PM-POSHAN: The government has allocated a budget of ₹11,600 crore to the Pradhan Mantri Poshan Shakti Nirman, or the rebranded version of the mid-day meal scheme for 2023-24. This is down 9.37% from the current year’s revised estimates of ₹12,800.

In 2021, while renaming the mid-day meal scheme to give hot cooked meals to 11.8 crore government school students from Class 1 to 8, the Centre had also decided to extend the scheme to 24 lakh children studying in balvatikas, the pre-primary section of government schools from 2022-23.

National Education Mission: A total of ₹38,965 crore was allocated to the National Education Mission for 2023-24, up 19.44% from the ₹32,612 crore revised estimates for the current year. The Mission is the umbrella scheme integrating major education-related schemes so education can be provided holistically and without segmentation from pre-primary to class 12. It includes the Sarva Shiksha Abhiyan under the Right to Education and schemes for secondary and higher education as well those for teacher training and adult education.

PMAY: The Centre allocated ₹79,590 crore to the Pradhan Mantri Awas Yojana (PMAY), up 3.19% from the current year’s revised estimates and 66% from the budget estimates. The PMAY aims at constructing houses in both urban and rural areas. PMAY-Gramin (rural) was initiated in November 2016 with a target of completing 2.7 crore houses and PMAY-Urban was initiated in June 2015 with a target of constructing 1.2 crore homes.

National Social Assistance Program: The budget allotted ₹9,636 to the National Social Assistance Program (NSAP), which provides monthly pension assistance to the elderly, widows, and persons with disabilities.

Development of Scheduled Tribes and Scheduled Castes: The budget allocated ₹4,295 crore and ₹9,409 crore to the umbrella programs for the development of Scheduled Tribe and Scheduled Caste communities respectively. While the ST development allocation saw a nearly 10% increase, the SC programme funding rose by close to 22%, compared to the current year’s revised estimates.

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