This year'sUnion Budget brought two bonanzas for two different sections of India. The Finance Minister offered to waive agricultural loans to the extent of 60 thousand crore rupees, benefiting about 4 crore cultivators. And, he offered unexpectedly deep cuts in the income tax rates, hugely benefiting about 3 crore tax-payers belonging largely to the urban middle classes. A smaller section of this latter class, comprising about 45 lakh employees of the central government and another about 1.5 crore employees of the state governments, were also promised an additional bonanza in the form of substantially enhanced pay-packets to be offered according to the recommendations of the sixth pay commission.
While the agriculturists are going to get a one-time waiver of about Rs.15,000 on the average; every income tax payer gets a regular annual benefit of at least Rs.4,000, those earning higher salaries get to save much more on this account, an upper middle class salary earner, getting about 5 lakhs per annum, benefits to the extent of Rs.4,000 per month if not more. The details of the pay-packet bonanza have now been announced, and it seems all government employees can happily expect a raise of at least 40 per cent in their current incomes. The total annual cost to the exchequer on account of the income tax foregone because of the new rates, and the enhanced salary payments, are likely to be of the same order as that of the one-time waiver offered to the agriculturists.
It is our response to these two kinds of bonanzas offered to two distinctly different sections of Indian people that gives an idea of the place of agriculture in our economic order. Because of the compulsions of an election year for all players in the election game, the criticism of the agricultural loan waiver has been muted. But most analysts are convinced that it is a regressive measure that at the best shall fail to benefit the really deserving, and at the worst shall weaken the moral fibre of our peasants, making them believe that loans raised do not have to be always repaid. The income tax and pay packet bonanza, on the other hand, have been seen as positive signals that shall boost consumption and give a fillip to the economy. Many commentators have even pointed out that the great raise in the pay packets of the higher government officers still keeps them several notches below the managers in the private sector.
The salaries being paid in the private sector to a small section of fresh managers and information technologists have already greatly distorted the awards system in our economy. Those going into managerial and software-related professions get disproportionately more than those at the corresponding levels in other sectors of the economy. Consequently, hard-core engineering and science disciplines that are essential to a healthy national economy have got greatly de-emphasised. This distortion of the award system is fast becoming a problem of the same intensity as the distortion in the relative place of agriculture and other sectors of the economy that has long persisted in India. But, for the present let us focus on the latter distortion, that between agriculture and others, alone.
Agriculture and cultivators have had a peculiar place in Indian polity since Independence. Given their large numbers, they have been politically important; and, with the passage of time, their political clout has only been rising. Economically, however, agriculture has been considered more or less as an unwelcome necessity. We have to grow food, at least the bare minimum required to keep the people fed without having to undertake heavy imports; and we have to keep the large numbers dependent on agriculture occupied, at least until we can find better employment for them in the industry and services sectors. That sense of an unattractive but necessary activity, to be transcended as soon as possible, seems to have informed our economic thinking and planning about agriculture since Independence.
Consequently, all our efforts in agriculture, even the highly over-rated so-called ?Green Revolution?, have been aimed at assuring production of no more than 200 kg per capita of food-grains per year. That figure of 200 kg per capita per year is derived from a late nineteenth century report of the famine commission, which had determined that you need to ensure the availability of at least that much of food-grains in a region to forestall the calamity of famine-deaths. We have taken that figure of famine rations to be our national limit of food production. We produce just about 200 kg per capita per year of food-grains; the actual supply is somewhat less than that figure because a certain percentage has necessarily to be taken out for seed and waste, etc. In the world, average supply of about 300 kg per capita per annum of food-grains is taken to be essential; most functioning economies produce above 600 kg per capita.
Our level of production of food-grains implies two things. One, since our average supply of food-grains equals the bare minimum required for human survival, large numbers who fall on the lower side of the average remain malnourished; all data on the health status of Indian people point to the prevalence of large-scale hunger and malnourishment, even more so among women and children. Two, since the total amount of food-grains we produce is less than sufficient for human needs, there is little left for animals. This has led to almost the complete exclusion of animals from agriculture, especially in those parts of India where agriculture is doing relatively well. In India, we used to have a pair of bullocks for every couple of hectares of cultivation. Today, one can see this number of cattle only in some tribal areas of the country where animals still remain an important part of life and economy of the people.
Our economic policies have de-emphasised agriculture, and within agriculture, our policies have de-emphasised both food-grains and animals. Agriculture economist and scientists have been convinced that cultivation of food-grains is lower form of agriculture and it should be replaced by commercial crops as soon as a certain amount of prosperity is achieved in a region; if possible even in the poorer areas, as has been done in regions like Vidarbha, where such shift invariably proves to be a sure recipe for disaster. Of the many causes of suicide deaths in Vidarbha, one of the most important is the shift from cultivation of Jowar to that of cotton and soybean. The agricultural economists and scientists have been equally convinced that cattle, especially indigenous Indian cattle, are an economic burden that needs to be lessened drastically. Once again, the experience of the Vidarbha cultivator is the exact opposite; he knows that the one who has a cow or a pair of bullocks in his homestead is hardly ever driven to suicide.
The Indian insistence on declaring self-sufficiency in food-grains production at the ridiculously low level of 200 kg per capita per annum, promoting diversification away from food-grains at this level of production, and recommending agriculture without animals is an international joke among both leaders and experts who know something about agriculture. This is indeed sad. Because, India'sclassical literature teaches a great deal about the core importance of an abundance of food in a well-functioning society. This literature also teaches with great insistence that production of food and rearing of animals are the core economic activities in any society. These have to be promoted and preserved in all possible ways, at all costs.
The issue of agricultural loan-waiver should be looked at in this perspective. Agriculture, like any other productive activity, requires running capital; that often has to be provided in the form of crop loans. When the cultivators fail to repay the loans, the banking system gets stuck, further loaning stops. This drives the cultivators to informal and often usurious channels. It therefore becomes essential to unclog the banking system, and re-establish the flow.
Let me recount another story from Vidarbha. The data shows that in that unfortunate region, the cultivators have been shifting from cotton to soybean over the last several years. This was surprising to me; because, soybean yields in the region are also not particularly good. I asked several farmers why they were shifting to soybean. They wouldn'treply. Finally, a marginally better off cultivator, a police patel of his small village, said that he would tell me the reason. He said that the previous year when the time came to sow cotton, he had no money to buy the seed; the local cooperative wouldn'tadvance any seed because he had not repaid his loans. So, he said, he went to the market, bought a few kilograms of soybean and broadcast in his field, hoping that at least something would grow. That is what the clogging of formal loan-channels does to agriculture. It makes cultivators forego cultivation.
Loan waiver, of course, is not a remedy for our skewed economic priorities. Remedying the situation would require rethinking almost all our priorities, rethinking what kind of nation we want to build for ourselves, and how we want to go about this urgent task. But, an occasional waiver of loans in agriculture does help in tiding over the immediate crisis and help the cultivators continue on the land for a while longer. And, it gives us time to look at the condition of India and especially of our agriculture today, perhaps learn from what our classical literature teaches, and recover our priorities and our anchorage in the fundamental economic activity of mankind.
(The writer is director, Centre for Policy Studies and can be contacted at [email protected])
