PM’s Kisaan package: Little relief for peasants
Now that the media hype about the prime minister’s relief package for small owner-cultivators (kisans) has subsided, it is possible to carry out a realistic assessment of the beneficiaries and those left out.
The package is an attempt to redress some of the grievances about which quite a few farmers’ groups had been agitating in Punjab for months. Their argument has been that a heavy increase in costs had made farming uneconomic. These groups were, therefore, demanding relief in electricity charges, subsidy on fertilisers, the withdrawal of the sales tax on farm machinery, higher floor prices, financial support to exporters and prompt payment for the sugarcane supplied to sugar mills.
The other grievances included the low level of bank credit to the farming community; the increase in their share from Rs283 billion in FY2011 to Rs516bn in FY2015 did not conceal the fact that it still accounted for only 9pc of the gross disbursement by banks. The government was also chastised for not meeting the targets for rebate on the cost of tractors.
It is no surprise then that angry demonstrations broke out across Punjab. The bureaucracy woke up to the grievances only when the farmers destroyed potatoes and burned rice outside the Punjab Assembly hall and staged a dharna.
A critical look at the farm package will show that the worst-off small owners are unlikely to get much benefit.
Thus, a Rs341bn package was designed to meet some of the demands of better-off farmers. The benefits include a reduction in import duties, relief in electricity charges, interest-free loans for tube wells, a reduction in fertiliser prices, cash grants to the growers of cotton and rice, and an offering of 50pc of the guarantee for bank credit. A critical look at the package will show that the worst-off small owners are unlikely to get any significant benefit.
This inquiry will also bring out a rather queer method of computing the size of the package. For instance, it has been assumed that 300,000 small owners will seek a loan of Rs100,000 each and the state will incur a liability of Rs30bn by standing guarantee for 50pc of the loan amount. Such hypothetical calculations are quite common.
While the relief offered will mitigate the hardships of all those who can secure it, the bulk of the peasantry is unlikely to gain anything from it. Since the agitators did not include the tenants who have been fighting for ownership rights nor the scheduled castes of Rahim Yar Khan nor the bonded haris of Sindh, the package promises them little consolation.
Looking away from the package, the urgency for revamping the entire policy framework for agriculture cannot be overemphasised. A case for this exercise has been made in the latest Economic Survey in these highfalutin words: “To make agriculture more effective in supporting a sustainable higher economic growth trajectory and reducing poverty in Pakistan, a policy framework needs to be anchored, coupled with a favourable socio-political climate, adequate governance, and sound macroeconomic fundamentals.”
The means that have been chosen to realise the goal are, however, limited to increasing output in the horticulture, livestock and fisheries sub-sectors and better marketing and growth of the agro-based industry. The limitations of this approach are quite obvious.
During fiscal 2014-15, agriculture is said to have recorded a growth of 2.9pc, as against 2.7pc in the previous year. This is due to better performance in the livestock (4.1pc as against 2.8pc in 2013-14) and fisheries (5.8pc as against 1pc in 2013-14) sub-sectors. The crops sub-sector’s performance (up by 0.3pc) shows a decline from 8pc in 2013- 4.
In the light of these figures, it is difficult to justify the claim presented in the Economic Survey that “the agriculture sector has traditionally sustained a satisfactory growth to ensure food security for the growing population”. Off and on we are told of food security targets for 2025 but the government is shy of contesting civil society estimates about growing food insecurity. The situation has been compounded by the official experts’ decision to stop talking of poverty levels in their documents.
While issues related to returns to farmers and the provision of credit to them are important, the neglect of research and field services can hardly be justified. A government that is determined to take the land in Islamabad away from the National Agriculture Research Council for creating another jungle of residential apartments will not escape being indicted as an anti-research outfit.
The federal authority has pursued this objective — which sounds as outrageous as somebody seeking allotment of London’s St James Park or the Oval cricket ground for estate development — since the 1990s with a passion that is worthy of a more noble cause. Indeed, a case can be made for making a higher allocation for research at all the agricultural universities and research centres in the country.
No effort at making the agriculture sector more efficient will be credible unless it attempts a reversal of the trend towards an increase in the area commanded by bigger landowners, which means the owners of small tracts are being squeezed out of their traditional vocation and are being thrown at the mercy of a stagnant labour market. Nor is it possible to discuss the interest of the 43.5pc of the population that is still dependent on agriculture without a radical revision of the pattern of land utilisation.
The federal government seems to have found in the 18th Amendment an excuse for abandoning its responsibilities in the sphere of agriculture, which is important not only for its economic output but also as the sector on which the social development of a large chunk of the population depends.
It is time the federal government convened a meeting with all the provincial agriculture departments for settling issues related to land reform, tenancy laws, wages for agricultural workers, bonded labour on farms and agricultural income tax. Perhaps a five-year plan for an agricultural uplift has become overdue.
Published in Dawn October 1st, 2015