Is Farmers agitation ‘too much democracy’?

India recently introduced a major farm reform with aim of achieving the Farm Revolution 2.0. Major reforms included:

a.      Giving full freedom to farmers to sell their produce anywhere in the country (one nation one market) and free them of shackles of selling it to monopolistic State controlled mandis or APMC (Agricultural Produce Marketing Committees) after paying 2-8% fees.

b.      Allowing corporate sector to engage in contract farming so that sector can become more organized and is able to attract more capital, technology, and modern management

c.      Remove outdated Essential Commodities Act which leads to licence raj and over control and harassment of farmers by government, bureaucrats and politicians.

These were long awaited reforms and most political parties have promised these reforms in their manifestos for years. However, when the reform was brought in by the government it led to farmers agitation mainly in Punjab. Farmers are on the street blocking important roads, rail, and highway. Lot of common people are made to suffer heavily due to these agitation and blockage. The country is held to ransom. Niti Aayog Chief Shri Amitabh Kant in context of farmers agitation said that India suffers from too much democracy and opposition and media latched on to it and made fun of his comment. I would like to stick my neck out and agree with him that farm agitation is more about vote bank politics and resultant blackmail then protecting interest of poor farmers. The agitators are Arthiyas, brokers, money lenders, middlemen, large farmers and landlords who are fearing losing their control on the sector and the new laws are God gift to small and poor farmers.

Before I get into the details of the new law, let me ask a basic question - why we allow one section of population to block the streets and blackmail us to give preferential treatment and why not all Indians are treated with ‘equity’ as our constitution promises.

Why should we provide the following to farmers and not to people in other professions?

1.      Income tax exemption: We all agree that poor should be taxed lower and rich should be tax higher. And hence progressive system of income tax is there to ensure that people with lower income are taxed nil or lower and people earning higher level of income is taxed higher.

Why should that be different for farmers. Why should rich farmers not pay tax and why should poor salaried people, landless labour, manual workers’ pay tax?

Anybody who is earning less than 5 lakh per annum is anyway not taxed. So even if Agriculture income become taxable, poor farmers would not have to pay tax. This special exemption is only benefiting landlords / rich farmers and so-called* farmers like Shri Sharad Pawar and Smt Supriya Sule. This exemption is in no way benefiting any poor farmer. It is creation of crafty politicians to convert their black money looted from public into tax free white money.

As per Firstpost article “there are 8 lakh declarants who had declared exorbitant amounts of income as agricultural incomes during FY 2011 and FY2012. The income declared was eight times the cumulative GDP for those two years”.

2.      GST / Sales tax exemption: Business with turnover of upto Rs. 40 lakhs are exempt from GST. Which poor farmer has turnover in excess of Rs. 40 lakhs? Why are farmers with turnover of more than 40 lakhs not required to pay GST?

Yes, food is a basic requirement and hence we want to keep it cheap. But there are many other basic requirements like education, fuel, housing, clothing which is still taxed. Why should services of doctor not be exempt from GST with the same logic? Anyway, by keeping food items away from GST, farmers are being denied GST credit on inputs.

Why not treat agriculture goods like all other goods and service? We can always have lower GST for agriculture goods. By keeping agricultural products completely out of tax net politicians are ensuring there is no accounting or reporting requirement and hence its easy for them to show their corruption money as agricultural income. If agricultural sector is also required to make GST filings like all other sector, government with have enough paper trail to catch the black money that is being converted into white money via agricultural income route.

3.      Tax exemption on capital gains on sale of Agricultural land: Why should windfall profits made by farmers by selling agricultural land be tax exempt? Like in other cases, law can provide set off benefits when a person is selling one agricultural land to buy another agricultural land for purpose of consolidating holding etc. Why should there be total exemption?

Anybody can convert large amount of money from black to white by just selling one land parcel in circles among themselves and at each stage making huge amount of white money. So, Robert can sell his farmland bought at Rs. 1 lakh to Priyanka at 1 Crore and then Priyanka can sell that to Rahul at 10 crore and Rahul can sell that to Sonia at Rs. 100 crore and Sonia can sell it to a real estate company at Rs. 1000 crore. In the process Robert, Priyanka, Rahul and Sonia will be able to create 1000 crore of tax-free white money, while the real estate company would be able to pay off the politicians for the favours and also save tax.

4.      Subsidized electricity, fertilizers, seeds, water etc – Huge subsidy is provided on all agricultural inputs by the government. Government does not restrict the subsidy to poor farmers, it is given to all – even farmers who are millionaires. Why not give similar subsidy to hospitals, schools, manual labours, daily wage earners, maids, drivers etc. Why schools and hospital get subsidy on case-to-case basis, but agriculture sector get subsidy without limit?

To quote India Today cover story – Why Punjab is Angry - “Well known agricultural economist Ashok Gulati reports that each farm household in Punjab got about Rs 1.22 lakh as subsidies in 2019-20, the highest in India.” Please note, per capita income of in India is Rs. 1.35 lakhs per annum. And this Rs. 1.22 Lakhs does not include indirect subsidy due to MSP.

5.      Farm loan waiver: Has anybody heard of Education loan waiver or housing loan waiver or small business loan waiver. Why farmers are given loan waiver on regular basis? Which poor farmer is able to get lakhs and crores of loan from banks? And if poor farmer is not able to get loan, then why farm loan waiver is being given and being given to whom?

The benefit of farm loan waiver is going to Arthiyas, landlords, big farmers, traders, middlemen, brokers and politicians. It is not going to small farmers who is committing suicide. Small farmers borrow from these Arthiyas and they do not get loans from banks. Why politicians only force banks and do not force Arthiyas to wave off the loans of small farmers?

6.      Minimum Support Price: Farmers are provided Minimum Support Price (MSP) for their produce which is set much above the market price. Why nobody else is given MSP? Why not give doctors, hawkers, teachers, labours minimum support price? Let us do away with market determined price for everything and let government guarantee Minimum Support Price for everything.

As per India Today’s cover story, “With over 80 per cent of their yield being bought by central agencies such as the Food Corporation of India (FCI), the farmers of Punjab, more than of any other state, are deeply dependent on the MSP regime. In the last rabi and kharif season, the central and state agencies spent Rs 52,000 crore purchasing produce from Punjab’s farmers.”

Where is this Rs. 52000 crores coming from? Rest of the population of India is paying tax to government so that Arthiyas, landlords, rich farmers, brokers, middlemen, traders can be paid MSP.

Let me be clear, I am not arguing that farmers should not get any of the above. My argument is if, one section of the population (farmers) is getting the above benefit then give it to everybody else also. Do not discriminate against others.

Now you might argue that it does not make economic sense to give these benefits to everybody as money cannot be printed and distributed. Then, I would like to know why it makes economic sense to give it to all farmers, even the rich farmers? All government benefits should be restricted to poor – whether farmer or not.

Too much democracy

Farmers are getting this and other are not getting this because of following reasons:

a.      Large percentage of population is engaged in agriculture and hence it forms a big vote bank

b.      They know how to organize themselves, get on the streets and blackmail

c.      They have managed to create these two myths with help from the politicians:

a)      all farmers are poor

b)     they are our ‘anndata’ and no other good or service is as important (not even services of doctors, soldiers etc). If they go on strike, rest of country will die of hunger

d.      Who will bell the cat? When the constitution and tax laws were written originally, they provided such benefits to agricultural sector as majority of population was into farming and they have been exploited during British Rule. Things have changed, but no politician worth his salt has guts to take away something from such a large vote bank. It is similar to removing caste-based reservations.

The level of vote bank politics and blackmail is perfect proof of “too much democracy”.

Agitators and their demand

Let us now look as what the agitators are demanding:

 (Also refer: https://in.news.yahoo.com/6-demands-farmers-seem-unreasonable-160826116.html):

Demand 1: Make Minimum Support Price (MSP) And State Procurement Of All Crops A Legal Right

Why not for all goods and services? If government has endless money, there should be MSP on everything (clothing, medicine, books, electronics etc). Let government procure everything and let it rot in warehouses of Food Corporation of India (FCI)

When we provide MSP, there is no incentive for produces to produce what is required by customers. This has led to over production of agricultural goods like Rice and Wheat which rots in warehouses of FCI. Can a poor country like India afford such wastage?

Today MSP is restricted to few states like Punjab and few crops like wheat and rice. Has anybody done a calculation how much it would cost to extend it to all states and to all crops? Where will the money come from? Wheat and rice have long life, many agricultural produces like vegetables have very short life. Can these crops survive the long process of government procurement and distribution?

Demand 2: Accept Recommendations of The Swaminathan Committee On MSP increase by 50%

Why only 50%, why not 5000%. Why not for all goods and services?

If government has endless money lets have MSP on everything and let us increase it 10 times for everything. All producers of textile, houses, service people like teachers, doctors, military personnel etc will all be very happy. But do we have endless money which can be printed and distributed?

Demand 3: Repeal Commission On Air Quality Management In NCR And The Adjoining Ordinance 2020

Yes, they should be given right to kill people with guns also why only with pollution. Our Anndatas have given us life and hence they have right to take our lives also.

Please note: Pollution is behind 18% of all deaths in India!! (Source: Time of India)

Demand 4: Slash Diesel Price For Agricultural Use By 50%

Why only 50%, why not 100%? Why not for others? Let us make it free for all. Let us import crude oil from gulf countries against precious foreign exchange and distribute it free to all citizens of India. We have endless foreign exchange to import crude and other petroleum products. Why should we not give it free to all?

Demand 5: Withdrawal of Cases Against Farmer Leaders All Over India. Poets, Intellectuals, Lawyers, Writers And Human & Democratic Rights Activists, Those Who Have Been Jailed In False Cases Should Be Released

Yes, please free every farmer leader from jail even if they are murderers and rapists.

False cases – so people who are not farmers but in jail due to false cases should remain in jail?

Demand 6: Repeal the Three Laws

Now let us discuss, the three new laws and objection to them:

a.      Corporates being allowed in agricultural sector via contract farming – What is wrong with that when we are not restricting large farmers or politicians. US multinational Pepsi, Bharti group, ITC and many other groups are already doing contract farming in states like Punjab. Supriya Sule is anyway running Sula Vineyards, what is new about it? Do we want to stop concentration of wealth, are we saying that no one should be allowed to own more than 5 acres of land and if anybody has more than 5 acres of land than it would be taken away and distributed to poor? Anyway, contract farming does not mean that land of the farmers needs to be sold to corporates. It only means that corporates can sign up contracts with farmers in advance for their produce and provide them with much needed inputs like capital, advanced machinery seed, fertilizers at the start of the season. Corporates gain from assured supply of goods and farmers gain from assured market for their produce at pre-determined prices and also availability of capital and other inputs. Farmers would not have to borrow from money lenders at exorbitant rates. It is win – win for both farmers and corporates. The people who lose are money lenders and Arhtiyas and hence they are agitating against this reform.

b.     MSP – Government has clarified that MSP will not be removed. But, as mentioned above, I would like to argue why MSP to farmers and not to others. Should we be wasting valuable tax payers money to buy goods which has no demand and will rot in warehouses of FCI.

c.      APMC (Agriculture Produce Marketing Committees - Mandis)– Government has clarified that mandis would remain and farmers would have the choice to sell to mandi or sell to others giving higher price. They are not abolishing APMC, they are just abolishing monopoly of APMCs. So, what is wrong with it. We want to make sure that monopoly of Arthiyas (large farmers / traders / middlemen / politicians) should continue so that small farmers have no choice but to sell their produce to people controlling the AMC?

Today, the small and poor farmers are forced to sell their produce to these Arthiyas at a price much lower than MSP as they have control over APMC and they also act as money lenders. Then these Arthiyas sell it the same produce without any value addition at MSP to government and make huge margin at the cost of small farmers and taxpayers.

As per India Today’s cover story – “The new Act also prohibits levying market fees, cesses or levies outside the APMC area and permits traders to operate without licences, with only PAN card as proof. Central officials said the legislation would benefit farmers and buyers who now pay between 2 to 8 per cent as market fees and will help break the stranglehold the traders’ cartel have over the sale of produce. It would also free farmers to get the best price for their produce by offering it anywhere in the country rather than be confined to their district or state. Punjab chief minister Captain Amarinder Singh, however, sees only red. By setting up a parallel mandi system, the Centre, he says, will undermine and dismantle the existing state-run APMCs. He points out that by not levying fees on sales outside the APMC, it will give undue advantage to private traders and deprive the state of revenue needed to develop and maintain agricultural infrastructure in the state. (Punjab earns around Rs 3,900 crore annually from APMC levies). He also points out that the ‘arthiyas’ who, for over the past decades, had developed close relationships with farmers and helped them in times of need would be out in the cold.”

Real objective behind the agitation and real beneficiaries

The real objective behind the agitation is that the real beneficiaries of current system – the Arthiyas (who are majorly large farmers, traders, brokers, middleman and politicians) continue to maintain their total control over agriculture sector, and they continue to exploit small farmers and landless workers.

This is why the agitation is limited to small geography of the country or mainly one state and is led by Arthiyas, big farmers, landlords, brokers, middlemen and politicians and not by small farmers and landless labours.

We need to think about poor farmers and landless labours and all exemptions and benefits to farmers should be restricted to farmers and landless labours who:

a.       Earn less than Rs. 5 lakh a year

b.      Turnover is less than Rs. 40 lakhs a year

c.      Own agricultural land of less than 2 acres

 There is no logic to give blanket benefit to the sector, as most of the benefits are being cornered by the Arthiyas, landlords, big farmers, middlemen, brokers and traders.

References:

1.      Firstpost - https://www.firstpost.com/business/the-great-indian-irony-farmers-starve-while-politicians-agriculture-income-continue-to-rise-3360212.html

2.      Economic times: https://economictimes.indiatimes.com/news/politics-and-nation/prominent-people-concealing-taxable-income-as-agricultural-earning-government/articleshow/51407237.cms

3.      https://in.news.yahoo.com/6-demands-farmers-seem-unreasonable-160826116.html

4.      India Today’s cover story – Why Punjab is Angry: https://www.indiatoday.in/magazine/cover-story/story/20201221-why-punjab-is-angry-1748594-2020-12-11

5.      Time of India: https://timesofindia.indiatimes.com/home/environment/pollution-deaths-in-india-rose-to-1-67-million-in-2019-lancet/articleshow/79872184.cms#:~:text=NEW%20DELHI%3A%20Air%20pollution%20killed,that%20include%20ICMR%20has%20said.