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Rural Distress

Rural Distress

There is nothing new about rural distress. Be it the Congress-led UPA government or the BJP-led NDA government, one sector that has registered very low progress in terms of real-time wages during the last two decades is none other than the rural sector.

Political leaders have been using farmers as their vote-bank, applying bandages like an increase in minimum support price (MSP) or by announcing farm loan waivers, without any real concern for their problems. The Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA), aimed at providing 100 days of employment, has also been gasping for breath.

A recent study published in a leading national daily revealed that rural wages for both the farm and the non-farm sectors has grown only by 0.5% in real terms over the last five years. The study was based on the data released by an official bureau.  

The year-wise growth in rural wages has been only 3.8% in December 2018 while it was 4.5% in December 2014. During the last five years, the highest it could reach was 6.07% in December 2016. This figure has been arrived at after taking into account different jobs like ploughing, sowing, harvesting etc. in the agricultural sector and rural jobs requiring certain skills like masonry, plumbing, electrical work etc. in the non-farming sector. 

In other words, the data is comprehensive and has little scope for including more activities. And it shows that the crisis is not about farming income alone. It has extended to the non-farming sector as well.  

Of course, the drought-like conditions were also responsible for the low wage-growth during the initial two years of the Narendra Modi government. But the fact that it did not see any considerable change after June 2016, when drought subsided, shows that the rural sector needs to be reformed completely.

The government may have set an ambitious target of doubling the farmer’s income by 2022 but the fact is that farm revenues have shown a huge dip largely due to the fall in crop prices. The government has been announcing schemes to woo the farmers but to no avail. The recently announced Pradhan Mantri Annadata Aay Sanrakshan Abhiyan (PM-AASHA), aimed at giving remunerative prices to the farmers for their produce, too, failed to produce much result. Anything done in complete haste and without a long-term vision would certainly not produce the desired results.

The quick-fix solution that the government thought for winning elections was Pradhan Mantri Samman Nidhi in February this year. The scheme intends to transfer Rs. 6000 to the farmers holding less than five acres of land. That’s how the government intends to double their income by 2022!

The government announced an increase in the minimum support price (MSP) of 22 major crops as well. Many experts have also raised questions on the calculation of the MSP. 

While the government pretends to follow the recommendations of the Swaminathan committee, many have refuted such claims. But the point is that had the MSP been a solution, the farmers’ income would have actually increased or doubled long back when the concept was introduced.

Does this actually lead to an increase in the average farm revenue? The recent data published by the national statistics survey office (NSSO) reveals that less than 10% of the farmers sold their produce at the MSP for crops other than sugarcane, wheat and rice during 2012-13. 

If one takes into account the procurement of pulses and oilseeds during the last two financial years, even then the benefit could stretch only up to 20% of the farmers in the country. In other words, a large majority of the farmers do not get any benefit from the MSP. Simply put, the half-hearted approach of increasing the MSP is nothing but a paper tiger, to show that the government is doing its bit to support the farmers, whose income it intends to double!

So is the case with crop loans. The reach is limited. Those who are really in distress hardly get any benefit. Data shows that farmers possessing large landholdings take loan from the cooperative banks or other banks. The small farmers are still dependent on money lenders, who charge exorbitant interest rates. In many cases, the interest is many times higher than the principal. 

In other words, when the government announces a crop loan waiver, the benefit is usually for those who avail of loans from banks or cooperative banks, excluding the larger chunk comprising around 70 per cent of the farmers as per the NSSO data.  And in most of these cases, these farmers would have repaid the loans.

Had the government actually calculated the real benefit or the net social impact of such schemes, the focus could have not been on the MSP or crop loans but floating reforms in the agricultural sector – beginning with the very initial processes till the transaction is closed. Measures like crop loans or direct income transfer could give temporary relief but do not offer permanent solace. Also, the results that such schemes produce are counter-productive as they promote dependency, instead of self-sufficiency.

And what happened to the MNREGA? The scheme has been gasping for funds for the last seven years. Every year, when the budget allocations happen, terms like “the highest-allocation-ever” are used to describe the monumental task that the government has been doing for making the scheme functional. No one sheds light as to what kind of allocation it should have to produce results. No one asks whether the allocated budget was put to use or was just a number for the finance minister to speak about.

It is not about funds alone but the attitude as well. Within a year of coming to power, the prime minister attacked the scheme and labelled it as one of the biggest failures of the UPA government. However, it has proven to be a good solution to deal with rural distress. 

For instance, Rajasthan started the “Kaam Mango Abhiyan” during the early years of the scheme. In 2009-10, the MNREGA generated 45 crore person days of work. However, as funds started depleting, this figure showed a sharp decline of around 50 per cent from 2013 to 2018. The number of people who completed 100 days of work fell from 25 lakh in 2008-09 to 2.2 lakh in 2017-18.

In other words, if implemented properly, the MNREGA can not only help the non-farming income to grow but also support rural development initiatives. And if the government links it with building and other construction workers Acts, it can provide real social security to the people residing in rural areas. The benefits under the MNREGA can be supplemented with pension and insurance to support landless labourers and small farmers, besides adding on women to the workforce.

The next government has the uphill task of reviving both farming and non-farming sectors to bring a large section of the people out from rural distress. But more than schemes, or numbers, it needs a vision and an effective strategy to make that happen. 

(The writer, a company secretary, can be reached at

(Published on 18th March 2019, Volume XXXI, Issue 12)