If they had done the maths, representatives of the 200 farmers’ unions participating in the protests would have realised that GoI cannot meet their list of demands without risking a severe fiscal crisis, sabotaging rural banks, and disincentivising and disrupting migration, which is the bedrock of farming in the three states. Giving in to farmers’ demands would be most irresponsible.
Take the demand that daily wages under MGNREGA be increased to Rs 700 a day with 200 days of guaranteed employment a year, against the present 100 days. The wage demanded is almost twice the MGNREGA wage in Haryana, and more than three times the rate in Bihar, UP and Odisha, the three states that send most migrant workers to Punjab and Haryana.
Farmers should pray that the Modi government rejects this demand. If this demand is accepted, farm workers in Bihar, Odisha and UP could get six times that maximum they currently receive under MGNREGA annually. Their daily earnings under MGNREGA would be at least 50% more than the average skilled wage in Punjab or Haryana. So, there would be little incentive to migrate to distant states that often involves living in shanties away from their families. Without economic migrants – bhaiyes – most economic activity in farm as well as non-farm sectors in these states could come to a halt.
There is also the fiscal effect of an expanded MGNREGA. Budget estimate of MGNREGA allocation in 2024-25 is Rs 86,000 crore. Farmers’ demand is to increase the size of the programme six-fold (three-fold increase in daily wage times two-fold increase in guaranteed employment days). But because it is a guaranteed programme, many more workers would prefer to work in the expanded MGNREGA instead of working in the private sector.
An expanded MGNREGA that the farmers’ unions are demanding would cost the exchequer between Rs 5 lakh crore and Rs 8 lakh crore. That’s just the cost of one of the several demands.Unions are asking for a pension of Rs 10,000 a month, or Rs 1.2 lakh a year, to all farmers and farm labour aged 60 or older. Compare this to the existing public pension scheme for the poor (non-contributory scheme): those aged 60-79 get a pension of Rs 300 a month, and 80-plus, a pension of Rs 500. There are valid arguments for raising public pension for the poor as the current levels are small and demeaning. But that’s a topic for another column.Here, the issue is why should GoI create a public pension scheme for farmers that is 30 times the existing non-contributory public pension scheme for the poor? India has 15 crore people aged 60 or older, and 71% of them, or around 11 crore, live in rural areas. Thus, the annual total cost of the pension scheme the farmers are demanding would be close to ₹12 lakh crore.
Just these two demands will dig a hole of Rs 20 lakh crore in the Union budget. To put this number in context, in 2023-24, GoI’s total expenditure was Rs 48 lakh crore, and total revenue receipts Rs 31 lakh crore (other than borrowing).
It is difficult to put a tag on all the other demands. But the list is long. Farmers’ unions are demanding full loan waivers for farmers and labourers. Cost on the exchequer will depend on what is covered under ‘full’. Would it be limited to current loans, or for all future loans? Just for their loans, or future loans of farmers and their children and grandchildren?
Other demands include:
- Enactment of a law that guarantees MSP and open-ended procurement of the 23 crops under MSP.
- Nationwide implementation of land acquisition Act of 2013.
- India’s withdrawal from WTO and freeze of all FTAs – even those that may be helpful to farmers.
Clearly, unions have cobbled together a set of demands without any concern about their consequences on Indian agriculture, fellow farmers across the country, and the economy overall.
Farmers in India, as in other parts of the world, are politically very powerful. Unions representing farmers in northern India have been emboldened after their year-long protest two years ago when they forced the Modi government to withdraw three farm Bills. They appear to be under the impression that they can ask anything, and GoI will kneel down to please them.
Their timing is perfect – just a couple of months before the general elections. The last thing GoI wants is images on social media showing Delhi under siege, or farmers pelting stones at the police, or police hitting protesting farmers. What is missing is a serious set of demands that will help modernise Indian agriculture and bring prosperity to rural India.
The writer is professor of social policy, Columbia University, US