FARM BILLS – for citizens as consumers

We know what the law says, we know what the PM says and yet we are witnessing the farmers on the roads. Bhakts are calling it freedom for farmers. Farmers are saying we don’t want freedom. Please keep us under the safety of APMC. A lot of other people, don’t have an opinion on it. Freedom to farmer was always available. A farmer was not forced to sell to Govt. He had a choice, he exercised it happily. Whosoever says it’s the freedom of farmers, I would say Farm Bills are actually taking away the options available to farmers. A lot of people living in small towns or cities procure their own wheat from the farmer directly. There was no law, which aided or barred the farmer from selling their produce to consumers.

Every Indian needs to have an opinion on the Farm Bills, because everybody does eat, irrespective of the fact if they are rich or poor. Every human being born has to eat. Particularly for Indians, who eat and subsist on wheat, rice, onion, potato and pulses. Vegetables are also beyond the reach of a lot of poor. The reason nobody shouts or makes noise, if cauliflower is Rs. 80/Kg but all hell breaks loose if onion crosses Rs. 60/Kg.

The most important aspect is, how can every Indian have an opinion on it. To understand the Farm Bills as a consumer or as a human being, who eats food every day, we need to understand the grocery bag of our household. We are getting to the basics, not for farmers but for every Indian, who eats. I am sure our PM has skipped the basics, like always, because he never had to buy grocery for a family.

What does the grocery bag entail? For millennials or people living in big cities, they can easily look at the items to order on www.bigbasket.com.

What does a lower middle class family of 4 to 6 members order every month from their grocery merchant.

10 Kgs Atta (Wheat)

2 Kgs Rice

2 Kgs Pulses (Beans)

2 L Oil

½ Kg Besan

200 gms of Condiments (Spices)

1 Kg Salt

1 Kg Sugar

½ Kg Tea or 100 gms Coffee (Both)

Vegetables as per requirement, easily like half a kg for every day. 

You can keep adding the discretionary items to your list which are readily available in our kitchen for pasta, pizza, baking, cross cultural cuisines. But this remains the basic of the largest number of households in India. For the people, who can read or understand, this is what your house help needs in a month at his/her home or perhaps they may replace few kgs of wheat with rice as rice (not basmati) is cheaper than wheat on pocket. The basic essentials don’t add up more than Rs. 1000 bucks. Along with vegetables of season, basic easily reaches Rs. 2000.

Wheat is the only essential commodity, which is bought in bulk and also the most expensive on the item (in whole terms). In coastal India or for poor Indians, rice is bought like wheat, wheat like rice.

Ask any daily migrant labourer, what he cooks for food at night for dinner and next day for which he buys daily from his daily needs merchant after hard day’s work.

Rs. 10 on oil

Rs. 10 on pulses/vegetables (ideally potatoes)

Rs. 10 on onion

Rs. 10 on Atta/Rice

Rs. 10 on Condiments (Spices) or may be not

Salt is always available with them. Ideally the budget is Rs. 30 for every day.

Here on the labourer’s shopping list, we need to consider the quantity of every item purchased in every ten bucks. 

We all know the brouhaha on onions whenever the price escalates and the Govt. pitches in to control prices or imports onions to ensure the prices do not escalate beyond the reach of common Indian (poor). Cold storage warehouses are largely engaged in storage of potatoes to ensure round the year availability.

Imagine the price of wheat (rice) rises by 50%, what would be the impact on the budget of grocery basket. What if there is shortage of wheat in the market? India has always been surplus on wheat and rice ever since Green Revolution. Except for one time, when the Govt. of India experimented with free market economies for wheat and rice in 2004 after amending the laws in 2003, the resultant of which, there was wheat shortage in India, Govt. of India had to import 80 Lakh Tonnes of wheat at twice the price.

Currently we have flourishing Atta Chakkis in every neighbourhood, who ground the wheat for us, which is 30% plus the MSP. They are able to sell at 30% because the warehouse and bulk of packaging and logistics cost is borne by the Govt. of India (read FCI). Branded wheat price goes up by 60% for better packaging, logistics and concentrated procurement and storage to some extent. Here the Company is taking all the costs on their heads, except for bulk packing to some extent. Govt. of India should be looking at gradually passing on the costs of packaging and logistics on to the consumers instead of loading it onto tax paying citizens.

Take the case of pulses, the prices of which fluctuates due to its trading on Commodities Exchange but largely it remains range bound. Right now before the harvest, there is slight uncertainty of crop output plus replenishment of stored crops, hence prices become jittery during that phase. Although, when there is shortage sensed, the prices go up and the Govt. is pressured to control the prices of one or two types of dal, so the essential remains affordable for the poor.

The quantity or the budget, which goes into wheat/rice is substantial for every household in India. Freedom of wheat and rice is not only detrimental to farmers but also the consumers, which unfortunately in our case, the number is 135+ Crores. I am sure, our PM like always would not have thought how the new Farm Bill impact the poor people who eat. Just in case, PM does not know or remember the number of poor in the country, I hope he saw the images of poor walking back to their villages due to lockdown, which was announced with 4 hours notice.

The larger the quantity required, the cheaper it should be, for Govt. to look at inflation and more money is available for people to spend on discretionary (tax paying) items, the farmers, they are only looking for MSP not MRP of their produce; and for consumers, given the population size of India and record number of poor population in India.

Our PM is a man possessed, who is obsessed to make a better India for every Indian. PM has always reiterated to doubling the income of the farmer. His wild conjecture remains, the bills aim to double the income of farmer. Free market economies for farmers. Though free market economics is a paradox in the new India, which is still under construction by our PM. We need to look at the policies of the Govt. for industry for different sectors. Industry is burdened with plethora of laws, with notifications which change every week. 

Govt. of India has banned so many products, the musical chair of ban/not ban is a continuous process throughout the year. For agricultural purposes, take the case of onions, how many Govt. lifted the ban to export and how many times it was imposed every year, couple it with import ban and open imports. The duty structure of every commodity changes with every season (especially for export purposes). The capping of prices of commodities and products is again a drum beat for PM to play, whenever he is bored with politics in India. Industry is also asking, not too loudly, give us a sense, of what you wish to achieve. Industry lobby does not mind the over arching laws, but now they are requesting to Govt., at least stick to it, don’t change it, let me adapt to this vileness, you are so bent on imposing on me.

Govt. is aiming to bring the farmers (especially the poor and the uneducated) to be part of this musical chairs competition or drum beats system. Farmers are requesting, implement Swaminathan commission, which says, Cost of Production plus 50% should be payable to farmer. Cost of Production moves with the trend of inflation. Here, if the Govt. is determined to double the farmers income, it means the price of human consumption will go up. Or otherwise, Govt. is asking farmers to move away from two cropping pattern, grow something else in the intermediate period of 2 months or perhaps move at least one crop away from wheat or paddy, which again can put supply pressures for food security, to jack up the price of human consumption. Majority of farmers are not depending on wheat – rice cropping pattern. 90% of the wheat production comes from 6 States – UP, MP, Punjab, Haryana, Rajasthan and Bihar (in that order). Late Mr. Jaitley had announced in 2016 Budget that the Govt. has complied with the recommendations of Swaminathan Commission Report; by tinkering with the formula of Cost of Production. 

Doubling of farmers with a law is a myth, innovated by the PM behind his teleprompter. Doubling of farmers income cannot be achieved by corporatization of farms. It is a collective effort of various Govt. agencies by working hand to hand with a number of farmer associations and organizations and large corporates. Like ITC is working with a lot of farmers under its e-chaupal initiative but only for their sustenance and not for prosperity of the farmer. ITC efforts are definitely laudable.

Now, we only have to look at the manner in which Farm Bills were passed in the Parliament. I don’t doubt the intent of the Modi Govt. The Govt. is always doing for the best of the people. But unfortunately the results of our Govt. prove that only good intentions are not sufficient to make it success.

I am again saying, it is not about the farmers. It is about the consumers (not citizens). Consumers indicate fair price, no loss to any concerned party. Citizen can mean, it’s a welfare scheme from the Govt. (where Govt. certainly is losing money like PDS). It is only about the consumers. Our Govt’s approach is a joke, the bill (law) which touches the food bill of every person was justified by less than 280 characters tweets of our Modi, he delivered total of 5 tweets.

The Constitution of India, has laid the procedure for electing MPs, wherein they are to voice concerns of their Constituents in the Parliament. Good or bad, right or wrong, logical or illogical, all are welcome and the Govt. (irrespective of party) tries and makes an effort to explain and justify. Needless to say, every Opposition is always unsatisfied but the discussion allows the Govt. to make it better. 

Our Govt. knows they will remain unchallenged in Lok Sabha due to majority of their party but Rajya Sabha is always a battle, which seems like war to Modi Govt. after Lok Sabha. Farm Bills protesting and passage will remain biggest blot on Indian Parliament’s history. Opposition members protesting in the well of the House and the tearing up the Rule book of Rajya Sabha in front of the Chair. Doesn’t matter, who is sitting, which party he belongs to, which post he holds, the Chair is the Chair, it has to be respected irrespective. 

Needless to say, we need to stand with the Chair in suspension of 8 Opposition members, who were literally on the verge of violence while protesting in Parliament. Yet the Chair for its designation, should have allowed voting after suspension of 8 MPs. But the Chair in tearing hurry passed the Bills by voice vote without listening or looking at the voices or the show of hands. The seconds he took before announcing the Bills as passed to vote. As if the Chair is SBI’s officer, who is getting late for lunch. 

Farm Bills which affects every citizen of India. Farm Bills which affect the livelihoods of half the population of India, more than 70 Crs people (farmers and their families) did not warrant a separate Parliament session to show and explain the vision of our PM and great future of the farmers. Modi Govt. is working on reforms for farmers since 2014. Every scheme, even if flawed has targeted at improvement of farming and farmers in India. Be it Digital India.  

It’s just that the Govt. of India could have taken time to explain and although Opposition would have taken a hell lot time to understand. We can agree, pandemic does not warrant such lengthy discussion. But pandemic should not be an excuse which can hurt food consumption of every Indian. Engaging in dialogue with farmer unions/societies was the most important part of the legislation but we didn’t know if that is even so. 

The hurry with which PM wishes to implement vision is always the reason, why we have doomed policies in India. Will Indians be paying more for wheat and rice in future? If there is no shortage, our food bill, the heaviest items will also be the most costliest (not because of weight) and RBI would definitely be mentioning the Inflation targeting due to wheat and rice in FY 23 if not in FY22. If there is food shortage in India like 2004, the Govt. of India will end up spending a lot more.

The Govt. should be generous in spending on health, education and defence. Our Govt. has no toehold on the most important segments. Rather, clean air, clean water and food are the most important essentials for an average Indian, for which every Indian will be deprived with the Farm Bills. Naysayers may not agree but air and water issue can be sorted with Turbine Theory of our PM.

It is high time, every Indian should have an opinion on Farm Bill rather than repeating the PMs tweets, which are absent from truth (which are even further away from reality). The food is necessity of every human being, irrespective of class, religion or political affinity.

Aapda mein Afsar

There are many qualities of great leaders with which normal people cannot relate and a large number of their personality traits are debatable. The one thing, that makes a leader great is his power within himself to deliver speeches, to deliver speeches which moves people, which inspires people. For some, it is the words they use, for others, it is their sheer voice, which delivers. Modi, as a great leader, chooses his words for his speeches wisely and mostly his power to connect with his audience. I am in awe of those speeches, when he is so controlled even with his tears, how much heaviness, should be laced in his voice.

 

Just when he realized there is not much for Govt. to do, there is not much Govt. can do, in a lockdown. People were getting tired and restless of sitting at home, PM Modi addresses the nation to inspire the people, that what lies for the country on the other side of lockdown, looking at the positive, with what we can build for our future. Let past be in the past.

 

To all the media people or some citizens like me, who feel PM does not address the Press Conference, this is the reason why PM chooses teleprompter instead of Press Conference. Media would have barraged him with the range of questions and would have killed all the excitement and energy from his uplifting message.

 

As PM, he is aware of the circumstances, he understands the problems, but as a politician, he knows his limitations to deliver on ground, yet he provides the words, which can offer comfort to his voters. PM Modi knew the economy will definitely go for a toss with lockdown, but he was determined to extract the health dividend from this investment, yet the economics tells us, there can never be dividend from the loss in investments. Initially the battle was projected to be won in 21 days but the war took 68 days to be fought with everything and everybody emerging out as a loser or everything was ravaged in the process.

 

When the pandemic gathers momentum and how, will be taken up when the time comes. But in the meantime, let’s try to seek direction for the economy. Everybody was demanding from Govt. to deliver package for the industry and the economy. The Govt. of India was already jostling with GDP growth contraction for last 7 quarters, the Govt. is totally unaware for how to make up (because it has been dwindling because of Govt.) the increase in GDP or its own income. All the opportunity that was hoped and hyped to be encashed with GST was the loss of the Govt., industry, economy and the nation. The complexity of paperwork of GST meant GST is also a tribute to its previous legacy, which it wore in the garb of 16 different tax laws.

 

Modiji, like the greatest leaders, had to deliver an impeccable speech to bolster the morale of the people. Gave the thunderous and eye popping figure of Rs. 20 Lakh Crores for the economic package for India. Most of the Indian population was displaced even to know, the number of zeros, which make this figure. For the large poor population, who have never even seen Rs. 20 Lakhs, couldn’t even comprehend this figure. Naturally the expectation of every Indian is fulfilled with such large figure, which they have never ever heard before and nor will in the future.

 

Aapda ko avsar, crisis as an opportunity, was what PM quoted, especially in terms of building on inclusive economy in terms of production for domestic consumption. The reality is not lost on PM; PM knows all the big bang reforms in their previous budget or first budget of Modi 2.0, were rolled back within 90 days of announcement. Second Budget of his tenure was also lackluster. Before the onset of the Budget, the ground realities have shifted like tectonic movements, so Govt. has to re-allocate all the resources, meant for development to be reallocated in the pandemic world.

 

Aapda ko avsar for our Govt. was reallocation of the Budget. Rs. 20 Lakh Crores was not optimistic or great or thunderous, but it was realistic, the Govt. knew, the economy will shrink, the Govt.’s income will shrink. This figure is simply the Govt.’s figure available from earnings for expenditure. The Govt. just negated the whole Budget, its such a gargantuan exercise on its own. Modiji, as a great leader, just announced the total earnings of Govt. as economic package and also re-adjusted the whole Budget of the Govt. of India. Which global leader can deliver with such poise and elan, and the public does not even realize, they have been fooled at en masse in broad day light.

 

In Budget 2020, the Govt. was planning to spend Rs. 30.42 Lakh Crores ($ 430 Billion) after taking debt of Rs. 8 Lakh Crores ($110 billion). Barely 2^nd month into the financial year, the Govt. knows its compulsions and its weaknesses and the loss of revenue, which hampers the glaring development of India. The Income Tax from Corporates, the biggest source of revenue will take maximum hit, not to mention the flat GST collection of 2 months. PM is far sighted, he can visualize the problems after announcement of decision, hence Aapda mein Avsar is called Atmanirbhar Bharat.

 

The reality of all the schemes is never lost on the politician Modi is. He knows, he has to blow his own trumpet at elections, so he needs one word to market his schemes. Always the inspiring slogan with the catchy rustic name, which especially communicates with the poor and the illiterate. Aapda ko Avsar was the caption, of the great scheme that PM announced as Atamnirbhar Bharat (Self Reliant India).

 

From the nationalistic point of view, without using the words, PM was inspiring Indians to produce as much as possible at least for India and look at covering the areas, product and components, which we were importing. May be it is his way of laal aankh (red eye) to Chinese.

 

Atmanirbhar Bharat, is in itself an Aapda mein avsar; wherein the Govt. is trying to relaunch the Make in India scheme, which again PM had launched with much fanfare, addressing business Conferences across the country, with the lion as logo built from mechanized components of machines to indicate the lion is ready to unleash under the new PM with new policies.

 

The Govt. of India knows they have unleased the lion but it went back to the jungles where he is comfortable in his surroundings, which recognizes which belong to him.. I mean there were stray incidents of investment here and there, which is more or less in line with his predecessor, or may be always better but certainly the results were not worth the hype. Atamnnirbhar Bharat, just spread the earlier version, from Make in India to Make in India, Make for the World.

 

Make in India can be launched in India every quarter with a different name, but when the whole world has been questioned for how it shaped itself under WTO for last 3 decades is put to test. We know for the fact, PM himself is aware, we cannot take away the piece of pie, which is seen as advantage, due to negative sentiment against China, globally.

 

The Govt. of India has demonstrated to the world, that we change any law arbitrarily without any thought, without consultation, without warning, the thinking and changing of rules every day is how the Govt. of India functions. There is no predictability in our words or our actions. Demonetisation can be the example, when businesses didn’t know, how to run their business for more than a month. A month’s disruption in business without planning, without notice can be the recipe for disaster.

 

GST, the lopsided quandary of paperwork, which gave a fitting nightmare to the whole of business community of India. All the businesses which were dealing in cash, are still operating in cash, the difference, earlier they were part of the system, now they are totally out of the system. The black market for purchasing and selling GST bills is thriving more and is more open and transparent in its operations.

 

Now the lockdown, again pet peeve of Modi administration of announcing a decision with zero planning, zero warning, zero consultation. Modi hugging the world business leaders is good for the country’s image or perfect posse for him to be used in elections. What is the signal, the Govt. is sending to the world with the new play book, they have invented of making rules, which change every hour. The laws and the rules are subject to change, when the need arises, not when the industry wants it.

 

Atamnirbhar Bharat is inspiring, it is Aapda mein Avsar, especially for the political career of our PM, to bolster his image in a pandemic. What is different this time from the previous time? The industry wanted to know, the package or the support, the Govt. of India is willing to offer to the industry, for which everybody was returned empty handed. MSMEs with existing banking exposure were given more money in their hands, which again comes from the books of the Banks and not from Govt.

 

What is Atamnirbhar Bharat, trying to do, to ensure that the factory, industry, which are facing closure, due to lockdown (not due to pandemic) can survive? Atamnirbhar Bharat is an Govt.’s message for them to strike it out on their own from this crisis and also remember it for future. Does Atamnirbhar Bharat, ensure the consumption cycle, especially for the poor, which has been cut in the middle with the little that they had, will start or be tied together. What is Govt. doing in the process for poor to sew it together?

 

Standing ovation for our PM to deliver an aspiring message amidst the pandemic for the people, also Aapda mein Avsar to remind the citizens of their duty towards themselves and the nation. Though I was expecting a line from his side on the migrant workers walking back home or dying on the roads/railway tracks. Perhaps the reality of the Atmanirbhar Bharat is lost on people, where it is the warning of the Govt. for the people to strike our on its own to earn their livelihood by whatever means.

Farmers dependent on Loan Waiver

Our tenant is a farmer, the husband – wife also work as teacher in Govt. school. I got to spend some time with him in my home town at Amritsar due to lockdown. His farm and his ancestral village was hardly 20 kilometres from the city. He would visit his farm often. Though he would spend days and nights together at village only during sowing and harvesting season.

 

I was intrigued, with his attachment to farms and also living in city with safe and secure Govt. job. He said, he can live at village as well but for his children’s education and future, he is living in city. As husband-wife were posted also in rural schools and not in Amritsar Urban. I casually asked him, why doesn’t he use his education and exposure to city to grow crops other than wheat and paddy.

 

He started with his background and the reality of experiments. He had 27 acre farm, fairly big by Indian standards, which was tilled by him and his 2 brothers. He had travelled to Ludhiana to meet professors at Punjab Agricultural University to understand crop diversity. If he can plant some other crops on 9 acres of land, which can offer more productivity (read income). He had travelled to Maharashtra to learn about horticulture crops and undertook trainings as well.

 

He explained for instance, they had planted sunflower in 6 acres to see if it gives better realization and perhaps they could expand this crop next year in terms of acreage. He said, we were mocked at the Village Panchayat by the Sarpanch with questions demanding answers, that what are you doing. You are destroying all the values of the village. Needless to say, his father felt humiliated.

 

He said, our sunflower crop was visible from highway shining and glowing under the sun. The village marveled at the crop. And then one day, parrots attacked the crop and all the petals of sunflower were eaten in few hours before sun down. The output from 6 acres was totally wasted. To avoid further humiliation in the village Panchayat, we three brothers drove tractors with hull cultivator to flatten that piece of land at night.

 

Couple of other experiments with horticulture crops but due to lack of knowledge and without proper guidance, they were not able to make much money from those crops. After wasting few years and few lakhs of rupees, we realized there is a reason why everybody farms wheat and rice, because it is secure system, it is supported by Govt., it is protected by Govt. You cannot operate in isolation, the system which does not possess the blessing of Govt. is most likely not to be a success.

 

Other instance, which is known to every farmer in Amritsar District was an experiment with Nijjer Agro. Nijjer Agro has now defunct plant but in the past decade, they were the largest tomato puree suppliers to Nestle for Maggi Tomato Ketchup. Nijjer Agro needed farmers to grow tomatoes for them. He was offering wholesale price with the produce weighed directly at factory warehouse and payment made in cash.

 

Tomato is horticulture crop. My tenants eyes lit up, a tomato plant grows tomato every week. Once the shrub grows, you keep plucking the tomatoes for next 2 – 4 months, throughout the season. Unlike wheat and paddy, which take 3 – 4 months to grow and ripen and then crop is harvested along with the plant. But tomatoes need care in tilling the soil, pesticides, insecticides on regular basis to uproot plant which are past their life and plant new seeds.

 

Eventually there was so much tomato in Amritsar District that we had to wait for our turn for 12 hours to dump the loaded trolley at the Agro plant. Tomato prices at the agro plant dropped to Rs. 1/kg. Supply exceeded the demand many times over. Farmers stopped growing tomatoes for the agro plant and the plant also closed eventually.

 

He explained, when there are so many farmers dumping their produce, how can one private plant owner suffice the need. It has to be regulated or controlled by the Govt. to balance the demand and supply to ensure the sustenance of farmer, even if it is not highly profitable but slightly more profitable.

 

Another time, he reminded me, a farmer’s life is the toughest. Every business operator keeps his goods under lock and key in safe environment, my produce is standing in the field. There is not way to protect it. Farmers are very fickle to weather.

 

Like we would complain when the weather gets too cold from Christmas to Lohri, he would be smiling, the harsher the winter, better is the thickness of the grain in wheat. After Holi, he would be happy if the summer is hot quickly, he would pray for more harsher sun, my crops will dry properly before harvesting. One heavy sand storm or dust storm, and the farmer is done. It blows away the grain from the plant to the ground.

 

Rain is something a farmer fears in late March, early April, it can damage the ripen crop before harvesting. Accuweather is the most used App by farmers. India’s MET department is always making weather predictions, which are always off target. They never realize, the farmers which feed on this information for their livelihood. Similar is their pattern for rain, they plant the paddy a fortnight in advance before the rainfall. Yet the rainfall cannot get so intense during those time lapses that the dead crop falls flat on the field.

 

What is the insurance of realization I have of roughing it out in the mud to produce the food, if my own family cannot reap some benefits from it? The only flexibility he possesses is in terms of choosing his mandi within the district of Amritsar. He cannot choose a Mandi, outside the district of Amritsar to sell his produce. To be more precise, not the district, but the Market Committee, Amritsar has 100s of Mandis (Grain Markets) and 8 Market Committees. But anybody can contact him from anywhere and he can deliver his produce within 100 – 200 kilometres, because his family is not dependent on only agricultural income. Anybody can collect his produce from his farms at the price they agreed too. Now he is asking me, what is new in this new law, which was not prevalent earlier?

 

Earlier as well, I was free to sell to anybody outside Mandi, with or without the help of middleman or Govt., whether to Corporate or end user. In fact, we also bought small quantity from him. He says, why can’t the Govt. (sub contract to an agency) take the onus of packing and shipping the wheat for us? Arhtiya is also sub contract work, he is taking his fixed commission, so that lakhs of farmers are not exploited.

 

I am assigned a date during which I take leave from my Govt. job and dump my tractor – trolley filled with wheat from my farm to Mandi. I have three tractors and one trolley. The village panchayat gets together and distributes the days for sharing of trolleys amongst villagers. We start dumping my wheat with 80 trips of trolleys. For efficiency, we make 20 trips to mandi with four trolleys filled each time. My designated arhtiya (dealer), weighs the wheat and packs the wheat for the Govt. Arhtiya ensures, I get the Govt. receipt for the tonnage of wheat, I had dumped in mandi. Whether he packs it in 2 days or 20 days, it is upto him and Mandi Board, they have to coordinate, plan and execute that aspect of food grain.

 

He delivers the caveat here, why are we talking about wheat and not paddy? Paddy is also regulated by the Mandi Board but the produce never reaches Mandi. Here I inserted my anecdote, I remember playing hide seek with the sacks of wheat at Dana Mandi (Grain Market) in my ancestral home, my grandfather’s tea merchant business was next to the Mandi, during summer holidays. For rice, even I didn’t know as there used to no holidays during kharif crop. Rice travels from farm to rice processing unit; from processing unit to FCI warehouse. Paddy yields 2/3rds of produce from the crop. Rice processing unit makes money from by products of rice, like Rice Bran Oil which is extracted from the rind, Animal Feed is extracted from the by product of Oil and further by product can be used for generation of electricity.

 

Here I added, we have to be extremely cautious while driving in winters amidst in fog, because of the trolleys which are five times (or hell even ten times) loaded beyond their capacity to transport rice waste to oil extraction companies. Wheat is sieved at the farm with the help of reaper.

 

He questions me, how will I make these 20 trips to where and how or who will come to my farm to collect my produce of 50 tonnes. He said his is large number as compared to other sampler in the State. Leave apart me, even the Sarpanch cannot negotiate for whole village with maximum capacity of 2000 tonnes. An arhtiya himself deals with at least 5000 tonnes of wheat. A small corporate would want to deal with at least ten times wheat of arhtiya to make any business of wheat.

 

He states facts, Mine is 25 acres of farm. There is one crore acres of farm land in Punjab itself. More than a million farmers. How will the Govt. ensure parity of the system across the State?

 

The designated dealer may keep some wheat for his own sale, outside the Govt. channel for which he issues me separate slip or hands over cash. I can ask for cash upfront from my dealer against the Mandi receipt, which he never does. I wait for my payment from the Govt. (FCI) This receipt can be discounted by Bank as well. I do know, my designated dealer does theft of 1% of my wheat during the process of weighing.

 

Mandi Board delivers the wheat to FCI. In lieu of which FCI, issues the Mandi Board the warehouse receipt. During the harvesting season, the work in Mandi goes on for 24 hours. The labour is even packing wheat at night. FCI is taking the cash for payment from the Bank. The Govt. is free to sell the wheat at premium to whosoever they wish to. The Govt. does not carry all its business on its own, it always hands over the work to contractor. Like FCI is one agency, why can’t Govt. appoint one big corporate (or perhaps number of contractors) of its choice to handle this business of procuring, packing, storage and selling wheat, domestic or export.

 

FCI is efficient or inefficient is beyond the purview of farmer. If the Govt. is committed for reforms in farming sector, perhaps they can start with bringing efficiency and overhauling the working of FCI. FCI officers make smooth money from commission for rice processing units to help them procure a little beyond the designated capacity of their unit or fudging the data of the productivity of crop. Similarly they have their own tricks to make commissions from wheat.

 

He further adds, every farmer knows about the leakages in the system. How can Govt. (Centre or State) say, they are not aware of the leakages in the system? If the Govt. cannot rectify the system, which lies in their total control; who else can. How come Govt. expects crores of farmers to operate in free market? Who will ensure the freedom of free market? What is the system to ensure that the farmer will not be manhandled by the system or the corporate? To the level of 2%, we are exploited by Arhtiya/Mandi Board/FCI, the farmer has adjusted to that process.

 

Arhtiya exploited the farmer for decades. After 25 years, Govt. realized it cannot manage all the farmers and all the needs and all the risks of the farmers. Hence they have formalized the arhtiya, who is the Banker of the farmer, who always give money to the farmer, without fail, without security, without collateral.  

 

Today as well, arhtiya takes advantage of those farmers, who don’t save, who run to him for every emergency or use the money for show-off. Arhtiyas stands for more than half of population of Punjab (for all farm families). Now with the corporate system, who will support the farmer in emergency for wedding, for hospital bills. He said, villagers also learnt the tricks of the exploitive arhtiya, if he comes for recovery from farmer in village, he ends up badly beaten up by the villagers. Police have no option and to not take cognizance against the whole village.

 

Mandi (the market) can exist at the source only. He cites the example of steel prices in Punjab, originate from Mandi Gobindgarh. The industry can be concentrated at one location. Yet the same rates are prevailing across the Northern India for retail prices. The product remains the same, its steel.

 

Farming cannot be concentrated at one place. There cannot be one market for wheat. When the farm land is spread across the State. He asks me, name one industry, which is spread across the State. Industry is always concentrated at the source or as per the convenience. Farming cannot be concentrated. Govt. had to set up markets at the source. Paddy is delivered to the closest rice processing unit, logistically, it will be unviable for farmer and rice processing unit to travel long distances.

 

Unviability of delivering the crop across the districts is known to every farmer. How come Govt. doesn’t understand the fact? All through this discussion, the hardened super tanned layer is always visible on the face of my tenant, which is the case with every farmer, due to the time, they spend on the fields under harsh sun.

 

He gave another instance, of an IAS officer dating back to last decade, who had spent a lot of time building the plan and convincing the Govt. to move the farmers of Punjab from wheat – rice cropping pattern, to corn in place of water guzzling rice crop. Corn is the staple food in America. Here the master plan included, ten strategic placed corn processing plant for processing corn crop to packaged food. All the plants would be run by the private company. Govt. would only ensure fair price to farmer and fair distribution of crop amongst the processors. Corn’s market price is four times of wheat/rice. It would result in better realization for farmer. Currently corn is sold at five times (Rs. 100) the MSP (Rs. 20) in retail market and the farmer is realizing 50% (Rs. 9) of the MSP in open market.

 

Needless to say, his proposal did not move an inch, as it would mean Govt. would lose the grip on farmer and farmer would operate independent of Govt. in a decade. Rice Millers (some owned by politicians or political patronage) were wary of the proposal. Arhtiyas were wary of the proposal. Arhtiya (middleman) will always stay relevant in Indian agriculture. Only his form or role/responsibilities may increase/decrease, along with the capital he invests in the process.

 

He further explains the farmers market vis-à-vis industrial products. He takes the case of RIL, the most successful and productive refinery in the world. He says, RIL’s refinery complex is built on 10,000 acres. He doesn’t know, he say let’s assume it is built on 1,00,00 lakh acres. RIL’s refinery turnover is Rs. 3 – 4 Lakh Crores. No doubt, it is industry so complex set of machinery is installed on the land with investment of lakhs of crores. Machinery which is fixed in nature. No matter what, that machinery cannot be uprooted. His acre of land with investment is delivering Rs. 3 – 4 Crs output.

 

Which is that unique factor about farmer’s land, if he can extract 1/10^th of output (in terms of value) from one acre as compared to industrial unit. He said take any crop. Invest any amount of money on that land. My output cannot exceed beyond Rs. 3 lakhs/acre, no matter what I do or Govt. does it for me. Crores of crores of farmers are undertaking the same activity, which cannot be concentrated. It will always be spread. You simply cannot create One Market for even agricultural crop.

 

ITC, Britannia were earlier also collaborating with farmers as they want to offer consistency in their packaged food products to consumers. So hence they were working with farmers in educating them with their input and offtaking output. The new laws offer corporates more flexibility with farmers. But how many companies will collaborate with how many farmers, when there are more than 14 Crs farmers in India producing 60 Crs Tonnes (agriculture plus horticulture) of output.

 

He poses me question, if corporates will help the farming sector, why are tobacco farmers, not able to manage a good lifestyle? Tobacco is a sin product, Govt. collects the maximum profits from this product. A concentrated industry, a product with few lakhs tonnes of output. Why couldn’t Govt. test its “One Market” theory on tobacco. It is not an essential commodity. Tobacco is prohibited in Sikhism, so I have never tried to understand the crop even.

 

Finally he comes to Loan Waiver scheme, before for every State’s election, loan waiver is an election issue, for every farmer’s vote. It is waived to some extent. Farmers waiver is a fraction of the loan waiver’s given to Corporates. Lakhs of farmers take benefit of loan waivers. All these waivers are taken by the farmers, who are already part of the open system of free market. Or outside the MSP system.

 

Govt. (neither Congress nor BJP) brought any policy to bring the sustenance of farmer under any system. Only MSP was the way, under which farmer is assured of security for his produce. Our PM announced cash dole of Rs. 75,000 Crs to 12.5 Crs farmers of Rs. 6,000/- each under Pradhan Mantri Kissan Samman Siddhi, he said, what does it mean, it only means, Govt. is buying the farmers vote for Rs. 6,000. He said, it is gentle reminder, BJP introduced it, Congress will follow it up. Cheap way to wash your hands to find the tenable solution to the farmers. He questions, what is Samman in giving free cash hand outs to farmers.

 

Three laws are a humble attempt of the Govt. to gobble up the votes of farmers for farm loan waiver. It will be regular fair of every 5 years in every State. The only benefit which will accrue from these farm laws, that farmers will now be borrowing more from Bank than Arhtiya, to allow them to avail farm waiver to his maximum capacity. My income will go down, there cannot be One Market for agriculture/horticulture. The house is open for all political parties, whosoever offers the higher bidding of farm loan waivers and markets it well, will emerge as winner. Farm output will go down. The cycle of economy which begins from the crops harvested by the farmer from the earth has been hit on the head with his own hull.

8PM – Showdown

Kill or Murder (YES Bank)

YES Bank drama unfolding is a pure packed action for India is staring at its Lehmann like crisis. The US Govt. had the option to save Lehman Brothers or get it down under, and Govt. let it slide and that was the biggest mistake of the Govt. A lot of names were called to Lehman Brothers CEO for his arrogance, but ultimately companies can die any day, but a bank cannot die, it shakes the economic system to its bone. The bloodbath of 2008 crisis could have been saved had Lehman not collapsed but the US Fed still had lent its support to other strong players.

India as an economy, is doing fairly well, considering the fiasco and scam of IL & FS (AAA) rated financial institution NBFC with book size above Rs. 1 Lakh Crs and so is the case with DHFL. The cloud of crisis, these two have engulfed on the whole shadow lending business. It literally translates to vanishing of more than Rs. 2 Lakh Crores from the system with expected recoveries of 50%, which is good scenario under the crisis. But how it hurts the system and disrupts the economic pattern to govern the growth of developing economy like India.

YES Bank has failed? Clearly so. Will it fall with a thud? The Govt. of India and RBI are working overtime to ensure, it does not die. The Govt. of India has already given a bailout to PSU Banks between 2014 to 2019, now the turn comes of private banks. PSU Banks carry sovereign guarantee, irrespective, how poor they perform, their depositors will stay with them, come what may.

Moving away from YES Bank and the plan, RBI is proposing. We are discussing the other issue of Telecom AGR dues, wherein Vodafone Idea LTD. (VIL) is in soup for its dues of Rs. 55000 Crores and clearly company lacks the capability to raise funds from market and cash flows certainly cannot help. Mr. Kumarmangalam Birla, the owner of Aditya Birla Group, which owns Vodafone Idea has made it clear that VIL will shut its shop, rather pay the whole dues or roughly saying not to take support from other Group entities.

He certainly understands, why ADAG Group, Vijay Mallya went bankrupt, because they continued to pump money in their failing businesses from their thriving businesses. Whatever fails due to market conditions (competition) or Govt. policies or perhaps poor management to some extent, we need not resuscitate by artificial means. A business should be independent in terms of raising capital (equity) or arranging funds from Banks. As usual as our amazing nation is running, without any clear policy or guidelines from the Govt. but every matter is discussed thread and bare as per the whims and fancies of the Govt. So hence, VIL exists currently and they are trying to work out a formula with the Govt. if the Supreme Court allows. Why we are talking Mr. Birla amongst YES Bank is coming up right now?

For YES Bank failing, the question looms large on the regulator of the Indian banking and financial system, that why did they not step in, during the previous quarter. When the time given to YES Bank for raising capital had clearly passed and the management of the Bank failed to generate enough resources to tide over the crisis. Now when the water is almost into the nose, RBI steps in with moratorium on withdrawal of deposits, much needed, otherwise it could have led to Bank Run. No economy can ever afford a bank run, like we saw recently in Greece.

The news of mass level corporate frauds are flooding the newspapers for last two years in bulk, with companies failing with banking exposure of Rs. 500 Crs to Rs. 1.25 Lakh Crs. Only on the basis of those news reports and fact checking with MCA data, we know the hole which is screaming from the YES Bank’s balance sheet. For the bank of its size, the amount of exposure YES Bank had taken in corporates laced with fraud is clear as a whistle. The minimum estimated size of the hole must be exceeding 20% of the advances, we don’t need a genius to suggest that it literally suggests to washing away of half the deposits. Who will put money in YES Bank, who will buy their financial instruments? Bank is managed only by maintaining a high level of churning in their financial instruments.

Now RBI is running pillar to post, working over time to ensure the dooms day does not fall upon the Indian economy and it will not, even if they have to freeze the whole banking infrastructure. But the question remains, why so late? RBI’s current actions also suggest, that they are trying to put the handle on the situation, when it should have been in its grip.

I am amazed why the merger of YES Bank is not announced, it is done, it is evident, there is no way to protect the Bank. A Bank is built on deposits which only emanate from trust. The word ‘Bank’ literal meaning is TRUST. A Bank cannot function without its fundamental. YES Bank does not have left any trust for its deposit holders to keep its money in the Bank, even if SBI is there for the rescue and all the marquee bank names are lined up by RBI. If given the freedom to address the issue, private banks will say, they are putting money in YES Bank out of their CSR fund, it is not an investment. It is charity we are doing with our head stuck to the barrel.

Which depositor will keep its money with YES Bank? They may as well can go to SBI for their bank account instead of sticking with YES Bank, which is hand held by SBI. Of course, customers with fixed instruments have no choice but to stay stuck in YES Bank but not for others, it’s a free world. SBI is made leader of the Consortium, sounded fishy from the day it was announced, though a lot of days have still not passed. Under which false pretense is RBI acting to ensure they can get a good grip on the impending issues with the Bank and which can rip apart the whole Banking system.

The leader of the Consortium, who will participate in this Consortium, LIC or PSUs. RBI is forcing private sector banks to also participate. In the times of crisis, when the water enters the nose, this is what we do in panic. The slam dunk case of one big bank like SBI taking over YES Bank, is scattered and to be played in open field with the best of the private banks also have to sink their money in protecting the Indian banking system. Why can’t RBI takes notes from Mr. Birla? He is acting in the interest of his whole group, not for today but for tomorrow. Ultimately if his other group companies survive one is killed, it only benefits our nation.

On the other hand, we have our banking regulator, whose job is to protect the banking system is after the whole system, which it has built. Killing the YES Bank is the wisest choice and the only choice left at the hands of the RBI with SBI merging the YES Bank with itself. But regulator who has to manage the system is hell bent on murdering the banking and financial system of our great nation. Kotak Mahindra Bank is still advertising Savings Accounts rate at 7%, Kotak Mahindra Bank, the most valued Bank in India (by PE ratio) is struggling to shore up its deposits, after more than 15 years of operations and spent his life time, building his name.

I don’t know, if RBI is following the Govt. or using its independent mind. But the Governor of the RBI is MA History, so I fail to understand if he has not read that how depositors money was saved in previous half a dozen instances. PNB had saved a bank back in mid 90s, which was 8% its book size. SBI should single handedly save YES Bank as YES Bank’s book size is 8% of SBI. Though parallels cannot be drawn right away, but still there is a lesson somewhere there for us to do it right and better than the previous time. What is the use of Governor’s History degree, if he cannot read history of the Organization, he is working in?

SBI’s stock is already tanking because of this additional liability of mess. Let’s see how much other private banking stocks tank when they are made to shell few hundreds or thousands of Crores for bailing out the RBI, which has stepped into the shoes, which are perhaps too big for the regulator.

Killing YES Bank is the only survival strategy but we are working other way round, wherein we are murdering the system (banking and financial) of India.