Agriculture is the backbone of our economy and about two-third population is dependent on this sector for livelihood. But the budget exercise does not recognise this. We have brought the budget preparation exercise from the industrialised nations, more specifically from the United Kingdom. It is therefore natural to have industrial growth at the centre of the exercise. Today all the developed nations are suffering from excessive industrialisation resulting in huge surplus installed capacity for almost all the industrial products across the globe. As a result, a gap between rich and poor is constantly widening in all the countries married to capitalism. Poverty is still being seen in these countries. As such their economic model cannot simply be copied by us in solving our complex problems. Agriculture is having a most important position in our economy, which is not so in developed nations. Budgets of past five decades have ignored this important sector and never addressed its issues seriously. Without making agriculture sector self-sustaining it would be a futile exercise to only take care of industry and urban economic needs.
There are some major issues before us for making agriculture sector financially sustainable and absorbing major unemployed crowd, which is presently rushing to urban areas for livelihood and making local administration there most difficult. Cities are overcrowded and suffer from minimum civic requirements. Centralisation of economic powers in the hands of a few is the main objective of capitalistic economic system. We are blindly following the same system as if it is the most ideal for the human civilisation. NDA had a golden chance during its regime of six years to reverse the system brought in by the then Finance Minister and present Prime Minister. Its government miserably failed in doing this. Right from Pandit Nehru all the Prime Ministers had followed the same principle of keeping industry in the centre of the economic growth. It is understandable for the economy like the USA where only four-five per cent people depend on agriculture activity.
Input vs. output costs: There is no control on rising costs of industrial products used by farming community for farm production as well as its family consumption. Today farming activity has been made dependent on industry to a large extent by making farmers to use non-organic inputs and factory-made industrial products. Profits on industrial products are huge. Government cannot show its ignorance of this. Shri Atal Behari Vajpayee and many others including some from the Left parties had raised this issue in Parliament on many occasions when Shri Vajpayee was the Leader of Opposition before becoming Prime Minister. But he did not follow up this thereafter.
Selling farm-products at loss: Most of the marginal farmers, who are about 80 per cent of the total, do not receive enough income from sale of farm products to cover even the input costs. Recently we have witnessed that onion prices crashed to 50 paise per kilo and grapes were selling at Rs. 5 a kilo in Maharashtra. This is due to two reasons: One, farm products? prices are decided by purchasers rather than by the sellers, due to sudden glut in harvest season. This happens as the farmers are made to face free competition unlike the industry where monopoly protection is granted under monopoly laws like trademarks, patents, brands, joint stock companies with limited liabilities, etc. Two, additive method is used for deciding prices of industrial products and deductive method is applied for prices of farm products by purchasers. From Pandit Nehru'stime a fear was created that prices based on cost of production plus 20 per cent profits for farm products would stoke inflation. It was proved the other way round by Cotton Growers? Sangh in Nagpur in early 1970s. The government should place full details for the knowledge of farmers.
Indebtedness for ever: Banking system prevailing in the economy is meant for industrial and not farming growth. National-level finance is intentionally diverted to industry due to strong belief that only it can take the country to the path of progress. Banking system is accordingly designed for this purpose, thus giving industry a direct access to banking credits unlike that in agriculture sector where farmers have to cross five-six layers (local level co-op. banks to NABARD) to obtain a small loan for productive purpose. Due to this, farmers depend on ?any-time-loan? and at ?door-step? system of local money-lenders. Farmers have been committing suicides not because of want of loans, but because of inability to repay the loans to many agencies including government banks and money-lenders. Interest charges of money-lenders vary from 3 to 20 per cent per month. We were taught in our college days about 45 years ago that Indian farmer is born in debts, lives in debts and dies in debts. It is unfortunately still true. A recent survey shows that about 80 per cent farmers do not have access to formal banking loans. Machinery to provide such loans is ineffective. Seventy per cent farmers who committed suicides have been indebted to local money-lenders. What is then the point in providing more funds in budgets for offering loans to farmers?
Crop insurance: It is not farmer-friendly. The attitude of insurance agencies is found to be always negative. ?How-not-to-compensate? attitude is more visible while handling insurance claims.
Spurious seeds: Crops are ruined due to supply of spurious seeds by industry as well as traders. There is no remedy for loss suffered on this account by farmers. ?Buyer beware? policy is wrong in practice. Rather ?seller beware? is what is needed to safeguard the interest of farmers.
Farmers and politicians talk opposite: Small farmers have been asking for cost of production-based prices for their products for over 35 years. They have never demanded free power or free water or subsidies or loans from the government. Politicians on their own offer these free facilities by keeping an eye on elections. Chief Minister of Maharashtra has gone on record by saying that such promises are meant for elections and farmers should not read too much in these statements.
Dry farming is suffering: Many irrigation schemes are still remaining on papers despite huge allocation of funds. The funds have been diverted to favourite projects of politicians. Water conservation is good for debates in seminars and meetings. The talk of linking rivers is good pastime for politicians. Farmers have no hopes to see results of this project during their next few generations. A recent survey shows that backlog on irrigation project for Yavatmal and Amravati districts of Maharashtra is 90,000 (nine projects) and 1,59,000 hectares (16 projects) involving Rs. 1700 crore and Rs. 2,700 crore. One can easily imagine what a pitiable position must be for the entire country.
What is expected from Budget? There has to be a separate budget for agriculture sector due to (a) dependence of 70 per cent population, (b) it being the main activity of the country, (c) requiring better accountability for funds allocated and used for the sector.
Cost of all major farm products must be scientifically carried out by independent experts for determining their selling prices with at least 20 per cent profit. The government must develop appropriate mechanism to ensure farmers receive income as per these prices. The budget, if found necessary, must provide necessary financial support for this. Additional purchasing capacity created on this account in farmers? hands would solve many of today'sproblems. Over time loans may not be required by them. They on the other hand would like to be good partners in nation building.
Banking system needs total revamping and restructuring by creating a two-layer system to reach the doors of farmers. This only can eliminate the most exploitative force in the present systems, i.e. local money-lenders. Grameen Bank of Bangladesh was started almost 35 years ago by a private person. It had rightly built up the system from the bottom instead of top-down approach like in India. The bank is owned by the loan-receivers. This could be a model for our farmers for avoiding money-lenders and non-co-operative banks.
The government must create level-playing grounds for both the sectors to make them to face the free competition or allow agriculture sector also to enjoy monopoly protection like that in industry.
Indebtedness of farmers has, as a part of one-time-exercise, to be removed once and for all through provisions in the annual budgets of the government. The government should not feel shy or awkward to write off such loans since it has been favouring the industry to avoid paying taxes and also to avoid repaying loans of various banks. Recent frauds at stock exchanges have been at the cost of exchequer and general investors. NPAs as reported are worth more than one crore lakh rupees. Business Line (1.3.06), based on its research bureau, says, ?Actual payable taxes having no disputes of any kind for the last year ended on 31st March 2005 were Rs. 42,917 crore. Taxes relating to earlier years worked out to Rs. 2,843 crore. In addition to this, taxes in dispute totaled to Rs. 65,300 crore. If the amount of taxes that the government tried to recover, but did not, crossed Rs. 1,10,000 crore, the size of the revenue foregone was even higher. Value of direct tax benefits provided to the corporate sector worked out to Rs. 57,900 crore. Provisions in the Income Tax Act relating to depreciation were the biggest source of incentive. Similarly, the value of giveaways to individuals in the form of tax rebates worked out to Rs. 11,697 crore.? Compared to these huge losses for the government, the writing off of farmers? loans would be a very small affair but covering a huge population of farmers.
Crop insurance has to be comprehensive one. The government has to take a holistic approach in this regard and establish funds through budgets to compensate farmers for all kinds of natural as well as man-made disasters and damages. The agriculture sector has been facing severe natural disasters once in three/four years. The government cannot be a silent spectator in this regard. Farmers have been crying for such an insurance cover for more than 50 years. Crop insurance cost should be borne by the government through budgets for next 10 years to start with.
The government'sRural Employment Guarantee Scheme would only make provision for larger corruption and diversion of funds for purposes dear to politicians. Maharashtra'ssimilar scheme has been exposed for the same reasons notwithstanding comparatively more efficient administrative machinery of the state. Similarly such schemes cannot be permanent solutions to provide sustainable annual income to millions of poor people across the country, more specifically in rural areas. Instead of intending distribution of doles through this and such other schemes, the government must provide facilities and training for starting self-employment activities for all the unemployed people. This could then be supported with cheap loans, necessary infrastructure, tax-concessions, knowledge banks, etc. at nil or very small costs, Once higher income is passed on to the farmers through guaranteed prices based on cost of production with some profits (say 20 per cent), the farming community itself would be in a position to offer many jobs to the unemployed people who are presently rushing to cities and creating all kinds of administrative problems for the local authorities.
Agriculture sector uses very small percentage of power as compared to industry and city-dwellers. However, the sector suffers as it is clubbed with industry and city-dwellers whenever load-shedding is imposed on consumers. To remove this hindrance and allow it to improve farm output, it would be appropriate to provide a separate grid exclusively for the sector. This will insulate the sector from the vagaries and pressure tactics of the industrial lobby in such a situation. Power shortage is bound to continue for many years to come. Budget must make sufficient provisions for creation of such a grid.
As long as the budget exercise is not radically modified, on the lines explained above, the farming community would keep suffering and committing suicides in large numbers. The gap between rich and poor will also keep widening by each such capitalist budget. Such budgets would only make a strong division between India and Bharat. Riots and morchas as seen in the recent past in France and Argentina could soon be witnessed by us in this country too, if the present structures of budgets are not radically changed, making them more farmer and aam aadami-friendly.
(The writer can be contacted at C-507 Shilpa Housing Society, (Near MIT College), Paud Road, Pune-411 038.)