Diesel subsidy scheme for drought affected farmers

Agriculture in India has not got due attention from the policy makers and also the media. When big industries are hit by the economic downturn, they receive stimulus packages in front of the TV cameras. The news of alarming agrarian scenario in the country got buried under the dreaded swine flu outbreak and not many in the country was updated on the fate of the millions of the poor farmers residing in the rural areas. It was only on the July 30, 2009, that the agriculture minister of the country, Mr. Sharad Pawar announced a diesel subsidy policy worth Rs. 1000 crores for the draught affected farmers of the country.

This policy would be applicable to those districts where the rainfall deficit is more than 50 percent as on July 15 or to such talukas or districts, which have been declared drought affected by the respective state governments. The farmers in these regions would be provided 50 per cent subsidy on the cost of diesel for up to three protective irrigations between July 15, 2009 and September 30 of the Kharif season.

Background: 75 % of the India’s annual rainfall occurs during the southwest monsoon, between June and September. Thus, this period is crucial for India’s food production, as 60 percent of the country’s farms depend on rain. However, according to the latest estimates of the Indian meteorological department, the cumulative seasonal rainfall during this year’s monsoon has so far been 43 percent below the long term average. As a result, several districts of the different states in India faced drought situations. The political ‘interest groups’ which draw their huge vote bank from the farmers made a ‘policy demand’ to thier respective state governments and also the central government to declare drought in their respective areas and also formulate policy to save the farmers from the consequences of drought. Thus between June and July, as many as 10 different states had declared 246 districts as drought affected. Consequently, on 30 July 2009, the Agriculture minister Mr. Sharad Pawar declared the diesel subsidy policy for the drought affected farmers as a short term measure. The ‘policy statement’ was, ‘the drought affected farmers would get a maximum total subsidy of Rs. 1000 per hectare and total of two hectares per farmer.’ The diesel subsidy to the farmers would be shared between the central and state governments on 50:50 basis, it would be subject to the state government taking the initiative to start the scheme and bear its share of the burden.

The policy model in this case, could be considered as the ‘rational model’ given the fact that 246 districts which amounts to 46-47 percent of the total districts in the country was reeling under drought. The drought could result in 10 percent decline in the rice production and sharp decline in the production of sugarcane and oilseeds. This could mean steep rice in the prices of rice and other essential food items which could have a bearing on not only on the poor farmers’ lives, but also on the million others. Besides these, the food subsidy scheme which the government runs for the people below poverty line could be under threat due to non availability of stocks. Various development schemes like the mid day meal scheme and the ICDS also could be hampered.

The expected ‘policy output’ depends to a large extent on the state government taking the initiative to start the scheme and bear its share of the burden as it is based on 50:50 sharing of costs. To analyze the ‘consequences of policy’, I personally feel that the scheme is not going to benefit the farmers of most of the regions where the farms are not mechanised especially the north eastern states where three states namely Assam, Manipur and Nagaland have declared parts of their states as drought hit. Farmers in these regions do not have the required diesel pumps. Besides, these the scheme was basically introduced for the paddy growers who are drought hit. However, the scheme has come late and the paddy growing season starts mainly in June and July. Also, the macro issues related to draught can be managed. But, when the drought comes, micro-management food security of small farmers and poor people who are dependent on farms are challenging. In the absence of rains, food security of families is affected. Even when an alternate crop is produced, the income level goes down. However, given the severity of the condition, the scheme could help in minimizing the severe consequences of the drought when implemented properly.