The Finance Minister presented the Union Budget for 2008-09 on February 29, 2008 with several populist announcements. The moot question is what actually the voluminous budget documents mean. Are they reflecting only the balancing of government revenue and expenditure?an exercise which any sarkari babu can perform?or do they also indicate some direction in which country'slong-term and short-term policies should move in order to transform the society towards better socio-economic health?
Let us have a look at the Constitution of India. In its very preamble it says, ?We the people of India having solemnly resolved to constitute India into a sovereign, socialist, secular, democratic republic and to secure to all its citizens:
?Justice, social, economic and political;
Equality of status and of opportunity; and to Promote among them all;
Fraternity assuring the dignity of the individual; and the unity and integrity of the Nation.?
Does the Budget faithfully or even partially reflect these noble ideals?
The most important announcement which has been tom-tommed by various UPA leaders is the loan waiver of farmers. Let us see what does it mean in essence, who are the beneficiaries of this scheme and whether it is really a solution for improving their lot in the long run. First, one has to understand why the farmers are perpetually under debt and what is the magnitude of their indebtedness and second, what ails the Indian agriculture.
The Finance Minister announced in his budget speech the debt waiver and debt relief scheme. No doubt a large number of farmers would get relief and that nobody would oppose. For the last couple of years the farmers of Vidarbha and Andhra Pradesh were in great distress. The demand for loan waiver arose from this distress. Farmers not only in these two regions but in many other states were committing suicide because they were not able to repay the loans from banks, money-lenders and even relatives. According to government estimates in 2001, out of every 100,000 farmers, 13 to 16 committed suicide. The trend has gone upwards during past seven years. According to some estimates every 40 minutes a farmer commits suicide. It may be recalled that 2/3 to 3/4 of Vidarbha farmers are indebted to private lenders. Unfortunately this waiver scheme does not touch them at all.
Let us analyse what are the implications of the waiver scheme. In many rain-fed regions the holdings are large because of the low productivity. In Bundelkhand (UP), Vidarbha, various places in Andhra Pradesh and also in other states the holdings in low productivity areas vary from 3 to 10 or more acres. The average holdings in Vidarbha are 7.5 acres. In Vidarbha alone about 50 per cent farmers are above the limit of loan waiver scheme. In all such locations of low productivity a large number of farmers?though holding 10 acres but being extremely poor?will be left out from the coverage of this scheme. As P. Sainath has pointed out that by contrast in West Maharashtra the land is highly productive, well irrigated and farmers even with less than two hectares but cultivating say grapes are rich and receive a loan of Rs 80,000 per acre. They also receive loan for drip irrigation. The sugarcane growers have an average crop loan of Rs 13,000 per acre while the cotton growers in Vidarbha get loans at a rate of Rs 4,400 per acre. Obviously the richer farmers will get much larger amount waived off while the poor ones will either be out of the scheme or receive a very small loan amount waived.
Sainath goes on to ask, ?Is the waiver ?unprecedented?? Each year, nationalised banks write off thousands of crores of rupees as bad debt. Mostly money owed by small numbers of rich businessmen. And theirs is not a ?one-time waiver.? It is a write-off that recurs every year.?
He further argues, ?And all this is apart from the annual
Rs. 40,000 crore ?giveaway? to the rich, mainly corporate India. That has been the average in the budget every single year for over a decade. Then there are the straight handouts. No one knows how many thousands of crores are lost by handing out spectrum the way it'sbeing done. But we know it'sa staggering amount. Top up the ?tax holidays,? exemptions and the rest of it and you?re looking at sums that make the ?unprecedented? one-time farm loan waiver look like loose change.
The waiver does bring great relief to large numbers of farmers. But it is no solution to even the immediate crisis let alone long-term agrarian problems. Nothing in this budget will raise farm incomes. Which means farmers will be back in debt within two years. Their incomes have long been much lower on average than those in other sectors. And they fall further behind each year. Worse, fresh credit will not come cheap. Pleas for ?low-interest or no-interest loans? have been ignored. There is no mention of a price stabilisation fund to shield farmers from the volatility of corporate-rigged global prices. Besides, the idea of a five-year repayment cycle has not been touched. And the highly unjust crop insurance rules that dog regions like Anantapur remain unchanged.
While gasping at the size of the ?write-off? it'sworth asking why the loan waiver comes up now? Why not in 2005, when the demand was already being made? Or in 2006 when the Prime Minister visited Vidarbha and was shaken by the widespread distress? Mr. Pawar has outsmarted his rivals. Had the step been taken then, the credit would have gone entirely to the Congress. No prizes for guessing who opposed it then (when it would have cost much less).
Why is the Indian farmer in such a bad condition? Almost 65 per cent of them are under debt. Even farmers in Punjab?where first green revolution made history?are under heavy debt. The average debt on a farmer family was about Rs. 12,000 a couple of years ago. The trend of increasing indebtedness has not slowed. The contribution of agriculture to the GDP is continuously declining but the number depending upon farming has not come down. The farm income is steadily sliding downhill. Agriculture is neither profitable nor respectable. Nearly forty per cent farmers want to abandon agriculture. Their main grouse is that agricultural produce do not yield income sufficient to make ends meet. Unemployment in rural India is rising. In rural India most of which depends upon agriculture 9.5 per cent population was unemployed in 1993-94 which rose to about 15 per cent or more in which now stands at about 16 per cent. The decade and a half of reforms, instead of producing wealth in rural India has left it with massive unemployment, indebtedness, hunger and mounting numbers of suicide. It is high time to enquire the consequences of these market-driven reforms. No doubt we have four of the ten wealthiest persons of the world as Indians, but we also have millions of hungry and suicide committing farmers. This situation can never be and should never be acceptable. The market has failed to address the problem of equity particularly for the Indian farmer and in fact has created unimaginable disparity between the common man and the beneficiaries of ?reforms?. Even the IMF is asking whether as a result of the reforms rich in India are becoming richer and poor the poorer. What an innocent question? Reforms the way they have been implemented have completely destroyed the Indian farmer, Indian agriculture and have endangered our food security.
What is more disturbing is the falling global food stocks and rising food prices. Between 2000 and 2007, wheat prices have changed from 114.1 US$/MT to 369.0 US$/MT and that of rice have gone up to 360.7 US$/MT from 202 US$/MT. Global wheat stocks have come down from 197 million MT in 2001 to 107 million MT in 2007. Compared to 136 million MT in 2001 the global rice stock today stands at 71 million MT. With rising population and falling production the international wheat and rice prices have already shot up. Remember, as soon as India purchased some 795,000 MT of wheat at a record price of around US$ 390 in 2007, the wheat futures in Europe rose by 70 per cent. The corn prices have also risen because US corn production is going in producing ethanol. Reports are that these rising food prices have compelled the poor in Haiti to eat cookies made of mud. Angry BPL crowds had stormed the PDS shops in Kolkata and food riots have been reported in Namibia, Zimbabwe, Uzbekistan, Austria, Hungary and Mexico. Under this global scenario how will the Indian Finance Minister improve the lot of Indian farmers. Remember Pt. Nehru had said that everything can wait but agriculture cannot. Mr. Chidambaram do you hear this? Do you also hear what the former US Secretary of Agriculture Earl Butz, had said? ?Food is a weapon. It is one of the principal tools in our negotiating kit.? Please Mr. Chidambaram do not play with the security of the nation. Save the farmer. Don'tforce him to commit suicide, restore his self confidence give him dignity, remuneration prices, social security and permanent freedom from indebtedness and do not force a fresh disaster in the name of second green revolution. Assure the farmer of a minimum sustainable income and he will assure you and I the security and prosperity. Listen Mr. Chidambaram listen to the call of the farmer.
(The writer is a senior BJP leader, Member Rajya Sabha and former Union HRD Minister and can be contacted at [email protected].)