UP is primarily a rural and agri-dominated state. More than 77 per cent of its population resides in rural areas; about 60 per cent of its work force is engaged in agriculture as the 2011 Census shows. It is blessed with one of the most fertile plains in the world, with almost 80 per cent of its cropped area having irrigation, although Bundelkhand has just 40 per cent irrigation cover. UP supports almost 17 per cent of all India’s population with roughly 13 per cent of India’s gross cropped area (GCA) and 7.4 per cent of geographical area.
Almost 80 per cent of its cropped area is under foodgrains with yields that are lower than all-India averages. During 2005-06 to 2014-15, UP’s agri-GDP growth has been 3.2 per cent per annum, somewhat below the all-India average of 3.6 per cent, but almost one-third of the growth rate experienced by neighbouring Madhya Pradesh (9.7 per cent), and less than half of Chhattisgarh (6.6 per cent). Even Bihar scored a better agri-GDP growth of 4.6 per cent during the same period. No wonder UP’s per capita income remains less than half of the all-India average, and almost 30 per cent of its population is poor, against 22 per cent at an all-India level, as based on the Tendulkar poverty line in 2011.
Both BJP and SP manifestos promise goodies for farmers. For example, BJP’s manifesto promises a waiver of crop loans for small and marginal farmers, interest-free crop loans and a Chief Minister’s Irrigation Fund. SP promises 75 per cent of the state budget committed for farmers and agriculture, boosting investment in cold chains and extending an interest subsidy to Kisan Credit Card (KCC) holders. Congress’s manifesto pitches for safety nets through MGNREGA and the National Food Security Act, essentially a dole model. Conspicuously, BSP is silent so far on farmers’ issues.
But all parties seem to have missed the basic problems of UP’s peasantry: If there is one thing about which UP farmers are dismayed, it is low prices for their major crops. Even though UP is the largest producer of wheat in the country (30 million tonnes (mt) in 2016-17), it procured just 0.8 mt in 2016-17, compared to 10.6 mt by Punjab,
6.7 mt by Haryana and 4 mt by MP. With rice too, the situation is only marginally better, but way below Punjab, Andhra Pradesh, even Chhattisgarh. As a result, paddy and wheat farmers often sell their crops even at 10-25 per cent below minimum support prices (MSP). And this happens, ironically, even in Varanasi mandal which happens to be the constituency of our prime minister.
In the case of sugarcane, another important crop, the State Advised Prices (SAP) are generally higher than the Fair and Remunerative Prices (FRP) announced by the Centre. But over the last three years, when sugar prices ruled low, factories could not pay the SAP for cane; as a result, massive cane arrears accumulated, crossing Rs 9,700 crore by March-end, 2015, leading to farmers’ distress. This issue is not fully resolved and keeps popping up in election campaigns. Many farmers are still selling cane to khandsari units at Rs 250/quintal, despite the SAP being Rs 305/quintal.
Any political party that can ensure payment of the MSP for wheat and paddy, and the SAP for sugarcane, can boost UP’s agri-growth and reduce poverty, hunger and malnutrition. Interestingly, such a move can give political dividends too. An idea can be gauged by looking at neighbouring MP and Chhattisgarh; both states erected
effective procurement systems for wheat and paddy, and also gave some bonus to farmers. This, among other things, surely contributed to their chief ministers returning to office thrice in a row.
A similar opportunity arises in the case of pulses in UP, especially in Bundelkhand and eastern UP, when tur and moong prices went below the MSP during 2016’s kharif crop. UP could have procured pulses, contributing to building 2 mt buffer stocks for the Centre. But no such action taken in UP hit its farmers adversely. If UP isn’t procuring foodgrains effectively, it can still help its farmers realise better prices by linking them to electronic portals like the Centre’s eNAM initiative, after grading their agri-produce. According to latest information, while Haryana achieved a turnover of Rs 6,110 crore on this platform, UP, which is a much bigger state,achieved a turnover of only about Rs 480 crore through e-NAM.
The sugar price muddle can be easily sorted out by linking the cane price to the sugar price (about 75 per cent, as recommended by the Rangarajan Committee). And if the SAP is higher than this formula price, the state can give a bonus from its budget (as Chhattisgarh and MP did for paddy and wheat) or from sugarcane price stabilisation funds. All these are low-hanging fruits but all major political parties have missed this in their manifestos. Maybe this will be taken up by the incoming party, if that party wants to serve the largest constituency of the state — farmers. That could be good economics and good politics.
Gulati is Infosys Chair Professor for Agriculture and Hussain is former Secretary of Agriculture and Farmers’ Welfare (GoI) and currently Visiting Senior Fellow at ICRIER
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