 The agricultural situation is in a state which is, in many ways, probably worse than ever. And by worse than ever, what I mean most importantly is, I think there is a... On the one hand there are these tall claims that will double farmers' incomes in three or four years. Claims which are, at best, you know, optimism at its height. And at worst, what they are is a slogan substituting for anything happening really on the ground. It's a promise in the future rather than efforts essentially on the ground. Now, what is this crisis at the moment? Well, there are several ways of looking at it, but suppose we go by the official statistics. What we have is that since 2014, and the government and this particular regime started with bad luck. They had two drought years right at the beginning, 2014 and 1516. But it's been now three years since then. And normally you should actually rebound back and starting from a low base actually do much better than in the past. What we do have is that crop agriculture has been growing at only about half a percent per annum. Overall agricultural growth is much higher, slightly less than three percent per annum, which is the long-run Indian average. But much of that is made up of items whose statistics is a bit dicey. That is, there are good areas in which our statistics is good. And this is what I call the forecast crops. And there are two sets of items on which our statistics is not so good. These are livestock and horticulture. And it is precisely in the horticulture and the livestock sectors that you have fairly high rates of growth in the last. But the forecast crops for which we have hard data, that rate of growth is only half a percent per annum. So there is relatively slow growth of output in those sectors where we can be reasonably confident of data and which still involves almost 70 percent of total area and where something like about half of the total value of output comes from. And certainly involves most farmers growing those crops which are not growing. So that's the first sign of what's going wrong because I don't think we've had after independence a stretch like this with maybe a stretch like this there was in the early 70s, but a stretch like this of relatively sustained low growth. The second, which is official data, but an official data which has not yet been released and may not be released at all, is that the consumption expenditure survey, which is normally carried out every five years and which was carried out in 1718, which the government has for one reason or the other decided not to release, but which has been leaked out through various means so that you can read more or less a lot about it in the business standard if you go back to where it got leaked. What that shows is something incredible. It shows that rural consumption, I'm not talking about incomes because this doesn't measure incomes, rural consumption declined in real terms by about 10 percentage between 2012 and 2018. So that 11, 12 and 17, 18, there was in this six year period 10% decline in the overall rural per capita consumption. Now that's never happened. That sort of decline over a six year period has never happened. It is pointing at something much worse than even half a percent rate of growth of agricultural output, because normally we expect non-agriculture activities in rural areas to do even better than agriculture. It has been doing so. And it points to two or three things. In favor of government, it probably points to the fact that there are certain things with this consumption surveys and catching and there might be some problems with the data. That's what the argument for non-release of the data is. And to back that up is one thing which might surprise everyone, which is that this drop in rural consumption is largest in the relatively rich part of the rural population. So the income distribution in the rural areas or the consumption distribution in the rural areas looks much better in the latest survey than in the past surveys, and that's because the rich do worse than the poor. Now whether this is correct or not, I don't know, but if it is correct, it points to a fact that what we are seeing in rural areas is not something which is confined to distributive issues, but it has to do with the sector as a whole. That it's not actually even, it's something that even the rich aren't being able to tide over. So looked at that way the situation becomes somewhat worse because like in any other country the rich in rural India tend usually to do better than the poor, especially when things are bad. Now this particular period, that is the period from 1112 to 1718 is a period which follows a previous period of roughly seven years again from 2004 to 2011-12 when agricultural performance was relatively good, not just relatively good but relatively good to our post-independence performance as a whole. So it's a big climb down from a direction that we seem to have been getting to, and there are many reasons for it, and I won't elaborate on all of those reasons. Some of it has to do with government policy, others have to do with the way international trade has moved against agriculture, but to concentrate on the second, this period looks, if anything, a bit like the period 1997 or 1998 to about 2002-2003. That is the period shortly after when we got fully into the cycle of what the WTO was all about, including the removal of quantitative restrictions. That period was a period that period I just mentioned, that's the late 90s and the very early 2000s. World prices were moving against agriculture and that's precisely what happened now, and that was a period when for the first time in India you saw the media and academia get into the whole thing about farmer suicides. Now obviously farmers had been committing suicides ever since there have been farmers. Some farmers will always commit suicides like suicides is a, but as a phenomenon to be talked about and focused upon, it is in fact after the mid-1990s that that matter started. So if you take that index, which I don't think is a very good index, but it's an index that a lot of people use in terms of a gradient distress, then roughly that was the period when we actually think of a gradient distress in those terms, and that had abated during 2004 to 2012 and it has again gone up, although again on that the data is not being released with the regularity and comparability that it showed. So 1.1 ought to note is that the nature of a gradient crisis for this period, that's from the mid-90s at least onwards, has much to do with our linkage with the world economy and the openness of agriculture to the vicissitudes of the world economy. Why? Well, one very simple reason for this is the following. Suppose you are a closed economy and agricultural output for some reason falls, and it falls every now and then because every third year is a bad monsoon, roughly, and you can't do a damn thing about it. But if agricultural output falls in a closed economy what tends to happen is agricultural prices rise. And when agricultural prices rise, at least for the farmer, the rise in prices compensates to some extent for the fall in output. On the other hand, if you are an open economy you might have a situation in which agricultural output falls, world prices are in a bad shape and you get the double whammy. And I think what we've been seeing consistently over time is that this is happening. Now, this is something which is bound to happen simply because that's the way agriculture or any trade would operate, it would be to actually even out prices across geographies. But it does have impact for the way trade operates for or against the farmers, against the consumer. And I think we've seen that change. The second change we've seen, and I'm now moving towards the marketing issue, is that this period in particular, since the late 90s, and that's a period during which I was in and out of government for a very long time and in this particular area, I was in 97 in the commission for agricultural costs and prices. Then Vajpayee Ji had got a thing to look at agricultural at WTO under Sharad Joshi. I was in that committee. Then I joined the planning commission in 2004. And I've watched the way a certain discourse has developed till the mid 90s. It was taken as a given that the constitutional division of responsibilities of the states versus the center put agriculture, including agricultural marketing, very firmly, clearly in the state domain. The only exception to this was the operation of the food distribution system, that is the PDS. Since then, we've had a whole discourse which has built up that this entire area calls for such huge reforms and it is full of such large distortions that those distortions can only be met if there is a single market. And that single market means that the states lose responsibility over this particular area and therefore there have been persistent demands for either that this become a central area in the constitution or at least a concurrent area in the constitution. It has not yet happened but this demand has consistently come from the interest which saw the future of agriculture as linked to the development of national players and a national market linked directly by the same players from picking it up from the farmers to selling it in the retail. So all of this was to do with the whole retail market liberalization, marketing liberalization at the farmer's end and all of that. And if we look at the last 20 years, this is the basic discourse which is built up and there is a lot in it because there are two main focuses of this discourse. The first one was the one I've just said which is try and move agricultural marketing from the state list towards the centralist. The second was that get rid of the APMCs or the rather the acts which govern the agricultural produce markets. Now what are these agriculture produce markets? These came up during the 50s and the 60s as regulated markets offering some minimum infrastructure as well as some regulation in terms of weights, measures and trading practices in exchange for which the markets themselves got two things. One trade outside these markets became in some cases even illegal but in any case the effort was that the markets would have a source of revenue because other trade would become more difficult so trade things would have to come to the markets. Now as a result what happened over time and that the markets would set up infrastructure. Over time what happened is that some of these markets because of the prevention of entry that was there to allow to prevent new players from coming in some of these markets became very oligopolistic so that few traders control those markets and could obviously squeeze out. They could obviously squeeze the sellers and made money even on the taxes. The second thing which happened is that because there were rents being collected in the markets and rents are bound to be collected in agricultural markets because the agricultural markets are where cash transactions are taking place, where previous loans are being settled when you get the money. So when you have an economy which operates on the basis of connected markets a lot of activity takes place in the markets, a lot of rents are shared and gathered and when rents are shared and gathered these are also places which finance politicians. So agricultural produce markets were places in which political parties irrespective of the party itself all across India were sources for local politicians and their election funds and all of that. Now as a result right from the beginning from this and this the tone of what we should do about reform of the APMCs hasn't changed very much. It's exactly the same thing starting in about 1997 and we've now gone 22 years into it and it's almost the same song which is sung but very little has been done on the ground. What has happened over time is from 2002 onwards the central government has come out with model reform acts. It has tried to say that if you do your reforms you will get some extra central money all of that has happened. We've got a lot of states which have enacted things but have not in fact implemented them so that you have acts without the notifications and much of this has to do with the position of the state and the center state politics coming up again and again with again this political issue of how to deal with the traders. Now during this period big business especially in the early 2000s had for example then reliance bought over a lot of property in urban areas hoping to have a whole set of you know supermarkets and they also tried to get into agricultural marketing they couldn't and the reliance wasn't the only one. There was a lot of activity but somehow when prices fell they just like the reliance petrol banks which had shot up during at one place had actually then shut down and now if you look elsewhere reliance petrol is coming back. Similarly those went down and things are again coming up but the players are roughly the similar players and the demand continuously became can we bypass the state mechanism and all these problems which create with that creates by one means or the other and several things did take place from almost nonexistent I mean we've always had futures trading but for some time it was banned for most of the time to hugely controlled and you got this huge increase in futures trading after 2003 taking us to about the fourth largest futures trade markets in the world. You got this huge increase in the money being exchanged there yet with no link almost to actual trading on the ground. Link to this was the idea that futures is something which is governed which is actually a central topic. Can't we tweak the futures market laws to actually allow for spot trading. So use the future market laws to have trading across borders linked to the laws of the futures markets rather than to the APMC laws. Well some attempts and the enam is the latest attempt at that but these attempts have been there in the past and so far it's been one step forward two steps back I mean basically very little again has been achieved although whenever it's achieved it said we've achieved a great deal I mean this is true of the past this is true of the present. How long do I have five minutes ten minutes. Okay now that's the situation that you're in which is an agricultural economy which in part because of weather in part because of policy in part because of the way world markets have worked themselves through is doing badly and that doing badly is something which is sector as a whole including the rich and the prosperous those who could invest in a situation where the demand for opening up these markets for letting the larger trade replace the relatively smaller but local monopolist APMC operators that demand which was there earlier had subdued a little bit is growing again but on top of all this something else has happened in the last three or four years and that is we have I think probably for the first time objectives of government policy which are impacting the rural markets rural markets all markets but rural markets especially and impacting them fairly strongly and these are these policies are digitization as well as the attempt to shift towards a cashless economy. Rural markets have by and large been cash economies. Yes there were attempts and there's still those attempts continue some places they've gone further some places they haven't gone very far which is try and put money directly into farmers accounts rather than have earthy hours collecting the cash and then giving it to the farmer. Some of that has happened but these markets are basically cash markets they have been. Now two things demonetization and GST possibly GST even more than demonetization but demonetization certainly also had the effect hit this cash economy very very badly not unexpectedly and continued restrictions on cash transactions is obviously forcing these markets to actually try and adopt other ways of doing it and to the extent they can't the markets themselves don't do very well. And in this period what has happened is and especially after in especially during 2017 and in the early parts of 2018 what you got was a whole system which operated on cash and operated in an informal marketing networks. So I am selling to you a thousand miles away. We do it over the telephone. Cash deliveries come to me through all sorts of other networks. Many of these networks simply broke down and contracts which had been contracted couldn't be carried out. And in any such situation what you get is a breakdown of trust and something which works by informal contracts and by trust cannot easily be replaced by paper saying you know this has to be delivered here there or everywhere. And I fear that much of the disruption which was caused continues. One thing you might notice if you look at agricultural prices at the moment for the last two and a half years is the extent to which divergences are occurring in many crops for most regions between the way rural prices are moving and urban prices are moving. By and large what we are observing is a much larger incidence of the rural prices of agricultural commodities coming down and urban prices going up. What does that mean? It means that the markets are actually being much more inefficient at what they should be. They should actually be able to take things from where prices are falling and put it where prices are rising because that's what makes you a profit and that's what markets are supposed to do. Now that is obviously not happening to the extent that it was happening even three years ago. And that is very clear thing that we see in the last two or three years and it's still not gone away. Even at this moment all this talk about onion prices and things and all the talk about a lot of other commodities you will find that the movements and prices are tilted rather than being smooth. So we have probably by trying to chase the idea of let's become more formal we are pushing an agenda without enough in terms of what it means and what replacements what should come in its place being there in practice. And one of the objectives behind this from what I've said is that bigger players want to actually get into where the smaller players are that process is yet to be complete also. Okay so we are in a situation where there are tensions go low and there are inefficiencies which have come in as a result and that's on top of as I said an agricultural system which has been battered a little bit by weather, battered somewhat by international prices, battered also by this movement towards the cash economy because the farmers too were actually a part of the cash economy theirs moving into things have involved some costs.