Making income of an Indian farmer predictable and assured was a daunting task, something that remained intractable for 75 years for all Indian governments
Published Date – 11:45 PM, Tue – 28 November 23
By Dramila
In India, about 58% of the population depends on agriculture as the primary source of income. In most developed countries, this number is around 2% (Germany 1.2%, USA 2%, Japan 2%). As a country develops and progresses, invariably, lesser and lesser number of people depend on agriculture as the primary source of income. This is the general trend across all developed countries (with the exception of port-based and mineral-rich countries). In China, it has already come down to 25%.
The fact that even after 75 years of Indian Independence, a majority of Indians continue to depend on agriculture as the primary source of income is because, for most of them, it is a subsistence economy, an occupation which is essentially a ‘poverty trap’, something they cannot escape from in their lifetime. Because they never had enough cushion of cash, enough savings, enough predictability and enough avenues to actually escape it.
In India, an average farmer holds 2.6 acres. And 67% of the Indian farmers have a marginal holding, of less than 2.5 acres. For most of them, farming is not a predictable, secure and viable income.
Many people ask, ‘If it is so unviable, why can’t the farmer just quit farming and do something else?’ It may come as counter-intuitive to many of us, but to be able to escape a poverty trap, you cannot just switch to another mode of occupation unless you have enough savings, and enough means to do it. That’s why it is called a trap: you can’t get enough capital, you can’t get enough education or skills, to be able to take on anything else.
To understand this problem better, we can ask ourselves a simple question:
• What is the essential difference between an average farmer in India and an average salaried employee in India?
• The answer is: Predictability (and assuredness) of income.
With the bulk of the Indian farmers holding less than 2.5 acres, which most often results in unpredictable income, farming never gives enough cushion of capital, enough assured income, thus becoming a trap. The farmer in India is beset with many vagaries and unforeseen circumstances. Even if the farmer creates a small extra income for two years, he loses it in the third year because of an unpredictable mishap. These vagaries can be broadly classified into: erratic natural circumstances (too less rain or too much rain), lack of water, failure of crops and market fluctuations (price so low that crop becomes unviable).
Simple yet Grand
What K Chandrashekhar Rao is trying to do is something very simple, and yet so grand. He is trying to make a farmer’s income predictable (and assured). It is a simple goal but is fraught with so many complex issues, so many spokes that a complete wheel has been tough to make. A task so daunting that this alone qualifies for a Nobel Prize in Economics.
Rythu Bandhu: It is the first layer of predictability, a cushion of cash. It is a message to the farmer, that no matter what you do, no matter what happens to you, you will receive this amount so that it forms your first layer of cash. You can use it to buy tools, or equipment, or hire labour, or buy seed, or just feed your hungry children when there is a mishap.
Kaleshwaram, Mission Kakatiya, Irrigation, Mission Bhagiratha: This is the second layer of predictability that was earlier a missing feature for farmers of Telangana. The farmer in Telangana was afflicted with a lack of water. Borewells went dry because the water table hit rock bottom. There was no canal irrigation. Lake irrigation was not maintained, lakes went dry. Kaleshwaram, Mission Kakatiya and other irrigation activities ensure that water is always available, thus creating a more predictable source for a farmer. Now the water is available as canal water, lake water and borewell water (the water table levels increased because of Kaleshwaram and Mission Kakatiya).
24×7 free electricity: It is the third layer of predictability. It is a message to the farmer, that no matter what time of the day, you will receive your free electricity so that you can manage your affairs at your convenience. Get up in the morning, feed your cattle, drop your kid to school, go to your farm, there will always be water from the pump because you have 24 by 7 free electricity. You don’t have to miss a day of watering your crop because you failed to go late in the night to turn on the motor.
MSP and Rythu Vedika: It is the fourth layer of predictability (and assuredness). It is a message to the farmer, that no matter how low the market prices dip, we are here to guarantee you a reasonable and viable pricing so that you don’t have to consider your crop as utter loss. We will soften the blow, if the market fluctuates, but at the same time, assure you a bounty when things go well so that you can start saving, and plan for many years of bumper crops.
Rythu Bima: Since life can be unpredictable, it is a message to the farmer that even after he is gone, his family will not suffer financially. This is an assurance that every salaried employee gives to his family, which was earlier missing from a farmer’s life.
Dharani: This is the sixth layer of predictability. For centuries, lack of proper, authenticated document, which ascertains, from a legal standpoint, a unique owner for a piece of land, was a major problem in this region. While a salaried employee could afford an asset that had proper documentation, thus allowing him to buy at will, sell at will, mortgage at will, lease at will, a farmer in Telangana could not. Dharani gives assuredness, predictability, a legal way to enter a lease agreement, a legal way to mortgage it in a bank to avail of a loan, an assurance that your kids will inherit it after you are gone, without any hassles.
Making the income of an Indian farmer predictable and assured was a daunting task, something that remained intractable for 75 years by all Indian governments. It was an economist’s nightmare, a political leader’s unsolved conundrum, a bureaucrat’s unfathomable puzzle. It could not be unravelled by great visionaries and stalwarts who grappled with this problem, without ever being able to give a comprehensive set of solutions.
Rewarding Journey
K Chandrashekhar Rao’s grand vision that is unfolding in the agrarian sector in Telangana is nothing short of a socioeconomic miracle in the history of this planet. It is one of the most holistic, most comprehensive, most integrated socioeconomic engineering tools. He is tackling individual spokes of the wheel, one by one, to finally make the life of the Indian farmer predictable with assured income.
Only when the farmer’s income becomes predictable and assured, can he start dreaming of sending his kids to school and college, can he think of participating in collective farming, and probably in future industrialised farming. Only when he has proper documentation, can he lease it to other farmers, can he mortgage it to take a loan to start a business.
We are in the middle of that journey, hence many of us may not be able to appreciate all the spokes of the wheel, we may not be able to see the unfolding from within. But the wheel is already turning.
• We are number one in paddy production.
• We are the highest per capita income State in the country.
• We are the fastest GDP-growing State in the country.
This is only the first step towards a much greater income opportunity. Without this essential step, no amount of trickle-down economics will ever work. In fact, trickle-down economics is bunkum. Milton Friedman is wrong. Jeff Bezos is wrong. Ronald Reagan is wrong.
K Chandrashekhar Rao got it right. Now, we can set this wheel in full motion to reach $12,000 per capita by 2032, and $20,000 per capita by 2040.
