With an eye on state polls, Rajasthan and MP announce sops for farmers

Madhya Pradesh brings back bonus for wheat, paddy over MSP

Rajasthan and Madhya Pradesh, which are ruled by the BJP and supposed to go to the polls by December, on Monday announced sops with an eye on farmers and the rural population.

In Rajasthan, Chief Minister Vasundhara Raje, in her last Budget in this term, announced a farm loan waiver of up to Rs 50,000 for small and marginal farmers in the state, while in Madhya Pradesh Chief Minister Shivraj Singh Chouhan gave a bonus of Rs 200 per quintal over the minimum support price (MSP) for wheat and paddy farmers in the state.

The MSP of wheat for the 2017-18 crop season is Rs 1,735 per quintal while that of common paddy Rs 1,550 per quintal. 

Rajasthan and Madhya Pradesh were rocked by strong farmer protests last year over falling prices of farm produce. Six farmers were killed in police firing during farmer agitations in Mandsaur district, Madhya Pradesh, in June last year.

Chouhan, at a gathering of farmers, also announced the extension of the Bhawaanatar Bhugtan Yojana (Price Deficit Financing Scheme) to cover the rabi crops of gram, masoor, and mustard, and onions.

He also said farmers who did not want to sell their produce under the Price Deficit Scheme would be able to store their produce in licensed godowns free for four months.

Meanwhile, Raje, who has been resisting pressure from the farming community for the past one year following farm loan waivers by other BJP-ruled states of Maharashtra and Uttar Pradesh, allocated Rs 80 billion in the Budget for loan waiver. 

The announcement is likely to benefit around 2 million small and marginal farmers who have dues and outstanding short-term crop loans of up to Rs 50,000 till September 30, 2017.   

Incidentally, the Central government, after taking office in June 2014, had decided that Food Corporation of India (FCI) would limit its procurement of foodgrain for the central pool in states that declared a bonus over the MSP from the 2014-15 rice and 2015-16 wheat procurement seasons. The Centre’s move then had been strongly opposed by Madhya Pradesh and Rajasthan, the two states which have declared hefty bonuses in the past few years over and above the MSP set by the Centre. 

Sources said Raje, who was reluctant to give a farm loan waiver because of the government’s fiscal health, was forced to announce the waiver after the by-election debacles of the BJP.

The state government is expecting a fiscal deficit of around Rs 280 billion in 2018-19.

Besides the farm loan waiver, the Rajasthan government announced creating a permanent farm commission, Rs 5 billion interest-free loans to the Rajasthan State Co-operative Marketing Federation for procuring mustard and gram, Rs 400 million for storing urea and DAP, and Rs 3.5 billion for creating an additional storage capacity of 500,000 tonnes. 

In Madhya Pradesh, Rajesh Rajora, principal secretary at the department of agriculture, told Business Standard that around 1 million farmers growing wheat and paddy would benefit from the bonus while the expenditure for the state exchequer would be around Rs 16 billion.

So far, among big states, Uttar Pradesh, Karnataka, Maharashtra, Punjab, and Tamil Nadu have declared farm loan waivers in some form or the other.

Experts say if all states follow the UP model of farm loan waiver (where the state pays on behalf of farmers), the all-India expenditure could be Rs 2.2-2.7 trillion.