In his budget for the year 2008-09, the Finance Minister P. Chidambaram announced a complete waiver of all farm loans, that became overdue on December 31, 2007, and which remained unpaid till February 27, 2008, taken by three crore marginal and one crore small farmers from nationalised banks, rural cooperatives and credit schemes. According to him, the banks have to complete all formalities by June 30, 2008. He also talked of making provision of Rs. 50,000 crore to meet the value of overdue loans and of Rs. 10,000 crore to provide one-time relief to medium and big farmers.
This announcement has raised different types of questions. In 1990, V.P. Singh'sgovernment had waived loans amounting to Rs.10,000 given to all categories of farmers. At that time, the financial policy planners of today had expressed their resentment loud and clear. They had said that the banking infrastructure would collapse and borrowers of loans would evade repayment of debts. The current announcement and its commendation by the same persons only displays the double-talk of these intellectuals.
A major shortcoming of this announcement is that the farmers have been divided into categories. Moreover the population figures of small and marginal farmers is open to contradictions. Despite reading the full details of the budget, it is not clear from where the government will provide Rs. 60,000 crore. The government has promised to keep the financial deficit within the interest rate of 4 per cent of the national plan. By increasing the financial deficit and printing currency in larger quantities, the financial situation may improve at a faster speed but such a policy leads to increase in household expenditure, adding to the woes of the common man. The cost of living has already shot up because of this announcement, particularly of foodgrains whose direct impact is borne by the poverty-ridden population which includes the farmers. The marginal and poor farmers are unable to fulfil their daily needs of the year and even if they are able to do so, they have to initially sell off their farm produce and subsequently buy foodgrains from the market to feed their household.
To enquire into the reasons for increase in incidents of farmers? suicides, the government appointed a National Commission on Farmers under the chairmanship of eminent agricultural scientist Dr M.S. Swaminathan. This Commission conducted an indepth survey of the farmers? problems. The findings revealed that nearly 1,40,000 farmers had committed suicide in the past 10 years due to their inability to cope with their problems in different parts of the country. Among the many reasons cited, one main cause was the rise in debt in the farmers? families. After setting up this Commission a committee of experts was constituted under the chairmanship of Dr Radhakrishnan in 2006 to provide relief from debt to the farmer.
On studying the reports of the two Commissions, it was found that both suggested adoption of a multi-pronged policy on war footing to solve the farmers? problems. Swaminathan Commission supported the need for granting loans at the interest rate of 4 per cent and purchase of the farm produce at one-and-a-half times higher prices. The Radhakrishnan Committee described the suicides as a sign of stagnation in the agricultural sector. The rate of farm produce ranges between 1 and 2.5 per cent and to feed the vast population of the country, food grains and cooking oil are being imported on a large scale. The quantity of farm produce is declining. Only 30 per cent water is left in the ground and the groundwater used for irrigation of fields is polluted, while the river sources are becoming dry. Due to unplanned exploitation of soil, the fertility of the soil has reduced; the cost of farming has increased. Because of the land policy, the farmers? piece of land is fast disappearing. Often national calamities and fear of not obtaining the right prices for their farm produce is destroying the farmers? enthusiasm, because of which the economic growth of the country has become unstable.
The price of foodgrains in the market is influenced by the rates in international markets. Thus in a country like India, where the population of marginal and small farmers is decreasing in comparison to the entire farmers? community, the population of big farmers is 11.8 per cent. The area of arable land is also declining. In comparison to 133 million hectares in 1960-61, only 108 million hectares of land is being used for farming. Due to their poverty-ridden condition, the farmers are forced to sell their precious land. Rapid urbanisation is eating away into the agricultural land. The speed with which the agricultural land is decreasing is matched by the speed, with which the population of farm labour is increasing, but of the total population of the country, 71.4 per cent constitutes the conscientious labour community which resides in villages and 56.4 per cent of the rural workers are engaged in farming. In 1972, the contribution of agriculture was 41 per cent in the country'seconomic growth and this fell to 19.7 per cent in 2005. Opportunities for employment in the agriculture sector shrunk and due to reduced earnings of the farmers, the rural economic condition began to move towards poverty. Engulfed by such problems, farmers began to commit suicide and the farm labour became victims of untimely death due to starvation. For the uplift of the farmers? community, an extensive rural policy has to be adopted on a war footing.
Such is the plight of farmers in the country that 31 districts in four rich states?Andhra Pradesh, Maharashtra, Karnataka and Kerala reported the largest number of suicides. According to official figures, in the past four years till March 31, 2007, nearly 2,100 farmers in Andhra Pradesh, 1,400 in Karnataka, 4,000 in Maharashtra and 1,000 in Kerala had committed suicide. If the figures quoted by the Radhakrishnan Committee are reliable, then 30 per cent of the total debt of the country was dispersed in the south zone while 35 per cent of the loans were dispersed in the northern, eastern and central zones. This is because branches of rural banks are not present in all rural areas of states like Uttar Pradesh, Bihar, Jharkhand, Madhya Pradesh, Uttarakhand and Chhattisgarh. Even if these are present, the farmer finds it a tedious task to obtain a loan. As a result, only the rich states are becoming greater debtors and hence report a greater number of suicides due to the burden of debt. In Andhra Pradesh, 82 per cent of farmers are reeling under debt, followed by 74 per cent in Tamil Nadu, 65 per cent in Punjab, more than 60 per cent in Karnataka and Kerala, with 40 per cent in Uttar Pradesh and 33 per cent in Bihar. Hence the leaders of the southern states are worried because waiving of loans in the election year is an easy formula to adopt but where is the time for Mr. Chidambaram to chalk out an extensive policy for eradicating poverty?
Strangely enough, neither the Swaminathan Commission nor the Radhakrishnan Committee suggests waiving of farm loans. Dr Radhakrishnan said that till 2003 debt on the farmers was to the extent of Rs. 1,12,000 crore which has no doubt increased since then. According to him, the reason for incurring debt was the interest rate charged by the moneylender whose interest rate is 30 per cent per annum. To provide relief from the moneylender'sgrip, the government needs to constitute a Rs.100 crore- Moneylenders and Debt Redemption Fund through NGOs and government agencies. At the same time, a one-time relief programme should be launched to facilitate repayment of debt to banks and financial institutions. Instead of adopting such a path, the government has resorted to election-time concessions. If the Commission'sreport is to be believed, then the average farmer household in the country is under a debt of Rs. 26,000. Will the provision of Rs. 50,000 crore free every farmer from debt and with this, will all the agriculture-related problems of the farmers be solved?
The government has accepted in this year'seconomic findings that subsidy above Rs. 52,000 crore was given for providing fertilisers but this subsidy directly reached the factories which submitted false balance sheets in the name of agricultural subsidy to swallow huge amounts. Why was not agricultural subsidy given directed to the farmers as per their needs? The government says that it gave a subsidy to the tune of Rs. 35,000 crore in the name of food security. Why wasn'tthis amount diverted towards agriculture to purchase farm produce directly from the farmer at a lower rate? The government in reply to my query in Parliament conceded that it received the last instalment of wheat import from Canada at a price equivalent to Rs 2,100 per quintal. Wheat at the rate of Rs. 1400-2100 per quintal was imported. Had half of this amount been paid to the Indian producer on time, Indian wheat would not have been distributed through the hands of the middlemen. Wheat produced by the Indian farmer reaches abroad while expensive wheat purchased from foreign farmer is sold to the consumer in India. A new limit has to be imposed on agriculture and a legislation passed on forcible occupation and purchase of small farm holdings.
Who will take charge of the loan of Rs. 2,80,000 crore which the government has decided to give to farmers in this year'sbudget? This loan will be disbursed at the rate of 7 per cent. Since the past many days the government has been saying that banks will give 18 per cent of its loans for agricultural activities, so that wheat flour is easily available, so that rice is easily available, so that the food supplies and traders in southern states who under the garb of farmers use the farmer'sland on rent for cultivating and distributing fruits like strawberries and grapes for manufacturing wine and beer for sale in the market. The benefits of bank loans and loan waiver are reaped not by the marginal farmers. Under the pretext of agriculture, a large proportion of the government subsidy and benefits of loan waiver is enjoyed by traders acting as farmers and indulging in industrial activities. The government has to identify the genuine farmer whose only means of livelihood is farming so that the government subsidy reaches him directly. Granted that the government has at last directed its attention to the farmers? problems due to its own economic policies, but it is necessary to study both the reports of the Swaminathan Commission and the Radhakrishnan Committee so that steps to implement the suggestions are taken in right earnest.
Announcements made for gaining political mileage in elections do not necessarily produce the desired election results. According to the Indian tradition, donations made before death are the greatest gifts but the benefits of donations are reaped only in the next life. To benefit in this life, one has to lead a life of toil and labour. Political advantages cannot be obtained by making magical announcements prior to elections. Only after studying the government'sachievement in its entire tenure does the public give its vote to a party. The government itself is aware that the resettlement package was announced on July 1, 2006 for Maharashtra. The Prime Minister personally visited the Vidharbha region with a package of Rs. 8,000 crore for the affected farmers, but subsequently the incidents of suicide showed a marked increase in the region. The agriculture-related problems of the farmers are more serious than merely influenced by debts and loan repayment and thus adequate steps have to be taken to solve them.
Any government concerned about solving the farmers? problems has to chalk out a well-planned extensive strategy. The population of India is constantly on the rise. The overpopulated countries of the world would not be able to feed their populace by producing their own farm produce. Countries like USA, Canada and Australia have reduced their reliance on production of food-grains because they have more land than population and where government subsidy to agriculture is much more. Thus, to feed a population of two billion hungry mouths of the world, they do not waste their country'ssavings. Even China has brought its increase in population to zero. The intake of food grains per person is one-and-a-half times more in China than that in India and its production of foodgrains is twice per hectare in comparison to India?s. In case of certain food grains, it is even thrice than that in India. As agricultural land is not completely privately owned, but is under the control of a cooperative, partnership or commune, there is no dearth of money for increasing food production.
In India there is a larger population of small and marginal farmers. The Indian farmer is both a producer and a consumer. A farmer is able to produce foodgrains to meet the needs of his household for not more than four to six months. The farmer from Canada, USA and Australia is both an industrialist and a trader. He is owner of agriculture-based industries; he is lord of activities ranging from dairy-farming to foodgrain distribution. Hence he is free from incurring any losses. Even if he does suffer any loss, then the insurance companies come to his rescue.
The problems faced by our farmers are connected to the consumers also where the purchase of foodgrains at profitable prices is not possible and to make foodgrains available at cheaper prices to the consumer through government subsidy is bound to put pressure on government exchequer. Hence a balance has to be struck between the grain procurement price and the market-selling price. Such a policy will benefit farmers of all categories. It would be advisable to formulate a five-year plan for cultivating the available arable land and not requiring irrigation. Land, which is not fully cultivable, should not be kept under government control and electricity free of charge should be supplied by the government to farmers dependent on farming.
Small farm implements should be made tax-free and prices of all farm implements should be kept under check so that the farmer can easily purchase what he desires. Use of chemical fertilisers should be restricted and encourage greater use of natural manure which is to be provided by the government. Dry farming in which cultivation of fruits, flowers, vegetables is given importance should be practiced Food security should be extended to all those who do not pay income tax. A preliminary estimate should be made of the foodgrain requirements and provision should be made for storing the surplus for export.
(The writer is a senior parliamentarian and Chief Whip, Samajwadi Party. He has written many books on the subject and can be contacted at II-A, B.R. Mehta Lane, New Delhi.)
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