Madhya Pradesh polls: Farm stress, poor finance cast a shadow over BJP

CM Chouhan might have checked farmer agitation through sops, but poor implementation has hit state's finance

Madhya Pradesh Chief Minister (CM) Shivraj Singh Chouhan and the ruling Bharatiya Janata Party (BJP) will fight not only anti-incumbency but also farmer distress and the ill effects of a struggling economy as the state goes to polls on Wednesday.

According to the Reserve Bank of India (RBI) data, Madhya Pradesh’s (MP’s) gross state domestic product grew faster than the national average in 2016-17 (FY17) and 2017-18 (FY18); but for three years before that, it was lacklustre.

Agriculture is the primary occupation of the state’s residents, but this too is contracting, leading to farmer unrest.

Trouble at farms

In three of the past five years, agriculture and allied activities have contracted in MP, according to the RBI data.

The sector was reeling from drought in 2014 and 2015; these years also highlighted how the state had mishandled its water resources. When it bounced back in FY17, prices of all key commodities — soybean, pulses, oilseeds, onions, and garlic — crashed.

Worst hit were pulses; their prices plunged 15-20 per cent below the minimum support price. With demonetisation and the implementation of the goods and services tax, farmer stress became acute, leading to protests and strikes across the state.

At Mandsaur, the protesting farmers clashed with the police on June 6, 2017. When the latter opened fire, five protesters were killed.

The continuing protests, especially in the Malwa-Nimar region, affected CM Chouhan’s popularity, said experts.

High ambition, low execution

Facing agitation, Chouhan announced massive procurement of onion and pulses at state-determined prices, and launched one of MP’s most ambitious schemes, Bhavantar Bhugtan Yojana. It was aimed to compensate farmers directly in the 2017 kharif season.  

In the 2018 rabi season, the state also introduced a special incentive for wheat cultivators.

According to state Budget documents, MP doubled its outlay on agriculture and farmer welfare in 2018-19 (FY19) to Rs 92 billion. In FY18, it was Rs 49 billion and Rs 45 billion in FY17.

Critics, however, allege corruption has affected the effectiveness of these schemes.

A source in the state said traders managed to push down prices when a commodity was allowed to be sold under the Bhavantar scheme. Those products being directly procured also suffered from graft. Sources said the same produce was sold to multiple state agencies in connivance with mandi (wholesale market) officials.

Those tracking agriculture in MP claim the state has focused more on production and less on storage and food processing. This is particularly the case with horticulture.

Former agriculture secretary Shiraz Hussain said in the case of perishable crops, MP hardly made an effort to create infrastructure.

The state had a cold storage capacity of 1.26 million metric tonnes in March 2017 — about 9 per cent of the cold storage capacity of Uttar Pradesh. Of the 238 cold-chain projects sanctioned by the Ministry of Food Processing Industries till end-April this year, MP bagged only six. Maharashtra got 55. 

Hole in the purse

Chouhan’s attempt to pacify farmers with largesse also took a toll on the state’s finance. In FY17, MP’s fiscal deficit hit a high of 4.3 per cent. For FY19, it has targeted to bring it down to 3.2 per cent of its GSDP.

Read our full coverage on Madhya Pradesh Assembly Elections 2018

But, with more sops being announced in the run-up to the Assembly elections, this seems like a difficult target. MP’s revenue stream is also under pressure. Both, tax and non-tax revenue are lower than the budgeted targets for FY18.

With straitened circumstances, the state has been forced to curb capital expenditure.

Data from PRS Legislative Research shows as against a budgeted capital expenditure of Rs 354 billion in FY18, the government only spent Rs 297 billion. In FY17, it was Rs 322 billion.

As a result, highway construction in the state has gone into the slow lane. Not everything is dark, though — MP has done well in power generation and per capital availability of power has also risen.

The Congress will be betting on the aggrieved rural population to vote for it.