Sugar barons in the private and cooperative sectors have always been the favourites of successive Congress governments, who always came to their rescue over their arrears. It was refreshing, therefore, to see that the Narendra Modi government has decided to pump in Rs 6,000 crore to bail out the industry by paying farmers their arrears directly into their accounts. Banks have been asked to verify the farmers who are owed arrears so that the money can be credited directly into their bank accounts, opened under the Jan Dhan Yojna scheme. It is not surprising that the sugar barons are not too pleased even though the government has waived the Rs 600-crore interest of the first year. Their grouse is that since farmers are being paid directly, they should not be asked to pay the interest. They owe the cane growers over Rs 21,000 crore.
The government should use this opportunity to look into the functioning of the industry, because most of them are inefficient and need to cut costs. They have never bothered to bring down the cost of converting cane to sugar because they were pampered and always got the price their lobbies lobby for. The Uttar Pradesh government, particularly, always gives them higher state-administered cost prices than the minimum support price fixed by the commission for agricultural costs and prices, so they have never felt the need to be efficient. Also, because such high prices are given for sugarcane crops, all farmers use their irrigated lands to grow only the water-guzzling sugarcane instead of crops that are always in short supply, like groundnuts, pulses, tur, paddy, potatoes, etc. Why, for instance, should the government have to import 30 lakh tonnes of pulses annually at huge foreign exchange outgo? The MSP for sugarcane has grown two and a half times since 2002-03 and 2011-12 whilst MSPs for other crops have increased by two times.
The government needs to change its policy in fixing the MSP only for some crops. The urgent need is to fix MSP for a basket of 10-12 crops, especially for crops grown in rain-fed areas, like pulses, jowar, bajra, millet, etc. Sixty per cent of farmers have rain-fed lands. Even RBI governor Raghuram Rajan has recommended MSP for a larger number of crops so that there is more variety and balance in the food crops produced.
It is unfortunate that the agriculture minister is dilly-dallying in implementing something so reasonable. Maybe Prime Minister Modi and his chief economic adviser, Arvind Subramanian of the Niti Aayog, need to look into this urgently. The farm distress is not something that should be treated through meaningless pro-farmer slogans. Action is needed on the ground and they need to talk to those who farm non-irrigated lands.
