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HindustanTimes Thu,25 Dec 2014

Why fiscal fanaticism against farmers?

Harcharan Bains, Hindustan Times   October 21, 2013
First Published: 09:13 IST(21/10/2013) | Last Updated: 09:18 IST(21/10/2013)

One sector of  the US economy has defied the unprecedented American fiscal crisis and even the shutdown. Incredibly for some, the only sector on which the Democrats and Republicans put their differences aside to vote together was neither defence nor technology, nor health, nor even the war on terror. It is - rather boringly -  agriculture subsidies. Senators and lawmakers cut across party lines recently to vote over $20 billion as direct payment in subsidies to farmers, even amid lay-offs and shutdowns.

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And farmers constitute a mere 2% non-vocal electorate.

But what has this got to do with the ongoing debate on Punjab finances here? Everything, if we remember that subsidies to farm sector (not to farmers, I may add, as farmers enjoy no subsidies as a social group) are the principal spoken and unspoken intent behind the assault on Badalonomics in Punjab and that's what the debate has centred around. On all other issues - debt, devolution of central funds to states, concessions to neighbouring states, Centre's less-than-fair dispensation to Punjab - there is a broad agreement; there is nothing except farm subsidies on which the debating parties differ with one another.

Throughout the debate, chief minister Parkash Singh Badal has been the target of some sustained hostility, moving from ridicule to rage, for his free-power regime for farming as a sector.

"Advanced countries manage their economies very differently," he is told. Do they?

US subsidies

The US government on an average pays up to $20 billion (Rs 1,22,000 crore) annually as direct cash to its farmers and it can go up to $ 0 billion. The total visible and invisible government support to farmers is an estimated $50 billion, (Rs 3.05 lakh crore) annually. This is a whopping 84% of the total federal subsidies bill. In 2005, the WTO had to tell the US to "rationalise" these subsidies. It didn't listen.

And to think America is not even an agrarian society unlike India!

According to a Washington Post report, between 1995 and 2005, the leanest years, the federal
government paid $250 billion or Rs. 15.25 lakh crore in farm subsidies. This is in addition to what farmers get from their state governments. These direct payment subsidies are given without regard to the financial status of the farmer - and at a time when economy is under severe strain.

And if  this looks too shocking, consider the far more staggering  $120 billion that the US pays as Green Box and $18 billion as Amber and Blue box subsidies to farmers, which they will never have to reduce. And America is not alone in this.

Europe not behind

In 2010, the EU spent €57 billion on agricultural development. Of this, €40 billion went into direct subsidies. Agricultural and fisheries subsidies form over 40% of the EU budget.

And most of Europe, too, is not predominantly an agrarian region.

There is a tell-tale difference in mindsets too. They call it "income stabilisation"; we call it "subsidy", making it sound like a dole to a beggar. Only Badal calls it "investment in national food security".

The average US farmer earns close to Rs. 42 lakh a year and 20% above the national average. His Indian counterpart earns a monthly Rs. 2,115 per family, or Rs. 423 per head? And what is a peon's salary here, by the way?

And the US policies are not about pro-farmer sentimentalism. These are about hardcore fiscal commonsense and international diplomacy. The world can survive without cars, phones, planes, air-conditioners etc; it just cannot do without food - so they believe. Therefore, the way to global super-stardom lies through global stomach. The target is not internal food security: they can import food cheaper than they get through subsidised farming. The aim is to destroy competition from agrarian countries like India, kill their agriculture - consequently their economy - through a cold-blooded undersell, and monopolise global economy. Our economists are yet to see the diplomatic potential of food as a " weapon of mass destruction" in reverse: depress world prices
through subsidies and drive developing world farmers out of competition and kill their economy.

Agrarian societies like India, which cannot survive without their farmers, are sitting ducks for such belly-blows.

A beginning in Punjab

How do you counter this? You cannot ask America to un-subsidise their farmers. You can merely subsidise your way out. That is not a tall order. And a beginning has to be made. And a beginning has been made - in Punjab. Twenty five years from now, this country, far from ridiculing Badal and Sukhbir for free power or atta daal, will rue why it didn't allow them to do more, and replicate their example at the national level, like atta daal in the Food Security Act.

And people who ridicule subsidies to farmers with high principles on fiscal discipline must answer their silence on unproductive "bail-outs" and "packages" of the Government of India. Since 2004-05, the "poor India Inc", including the Mallayas,  have been handed a 'beggarly' Rs. 32 lakh crore by way of tax exemptions, without any concomitant benefits in employment, industrial growth or exports. Why this fiscal fanaticism against the farmers?

To me,  two issues will compel focus in the long term: the way we treat our farmers and the way we treat our states. In India, both are ill-treated. In America,  both are placed on a high pedestal. 

In a debate as serious as this, I think I must overlook a personal allegation that in 30 years of my association with Badal - 18 of these toiling in the Opposition - I once made a request for an official car. How relieved I am that the other allegation - of my being "weak and sidelined" - might now appear a trifle exaggerated.

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