Indian Agrarian Crisis now moved to www.agrariancrisis.in

Farmer-the most endangered species

Less for farmers, more for votes

Posted by Ramoo on April 9, 2008


NSS data and other studies have shown that the income of farmers have been low and stagnant due to several problems viz. increasing risk and uncertainty in cultivation, absence of a proper crop insurance scheme, spurious seeds and pesticide serious water problems, lack of extension services particularly for commercial crops, lack of proper marketing, remunerative prices for their crops, lack of irrigation facilities, lack of non-farm activities in rural areas and lack of health facilities. Finance Minister is non-attentive to these problems.

As this huge amounts were not written off, banks have to keep it as their assets and have to bear the consequent burden of it. These assets are called “Non-performing Assets” i.e. the assets which are actually not in existence. Virtually under the pressure of banking sector, the Finance Minister has shifted his treachery to the state treasury. How and wherefrom will the huge money come? Will he take resort to his new economic guru Keynes’ panacea of printing money? Definitely it will raise the inflation, concomitant effect of which will be felt in commodity market as well.

As a result of this lavish subsidies, the US and EU countries are flooding our market with artificially cheap agri-products with the help of their export subsidies, domestic supports and our free-market access policies.

UPA government is doing nothing to protect the agriculture sector besides appeasing a few farmers for voting purposes. Farm loan waiver scheme is nothing but a political agenda to woo the few gullible and credulous farmers. UPA government has actually buckled down the US and EU countries by agreeing to their conditional ties to harm our agriculture sector.

Shri P. Chidambaram, the ardent follower of Friedman brand of market-driven economy and critic of Keynes’ brand of state- controlled economy, has now taken the Keynesian panacea of using state exchequer to the tune of Rs. 60,000 crore to write off farm loans.
The Finance Minister has announced a complete loan waiver for marginal farmers with land holdings of up to two hectares and for other categories of farmers, he has proposed One Time Settlement (OTS), with the government giving a rebate of 25 per cent if a farmer pays 75 per cent of the loan overdue. Total burden on the exchequer will be Rs 60,000 crore. Definitely private banks will not be affected with this waiver because they have very little direct loans exposure to farmers.

Now the question which invariably arises in the minds of the common people is what will it actually benefit the target agriculturist and the agriculture sector of the country as a whole? How far it will provide respite to the small and marginal farmers? At present half of the farmers are in the small and marginal category i.e. more than four crore. As per budget speech of 2006, out of the total number of cultivator households only 27 per cent receive credit from formal sources and 22 per cent from informal sources. The remaining households, mainly small and marginal farmers, have virtually no access to credit.

The same Finance Minister is announcing respite to small and marginal farmers from bank farm loans. Is it not statistical jugglery? Or a mere paper adjustment? During earlier Congress regime it was the practice of the Government to write-off bank loans, as a result of which banks became moribund and the state-controlled bank capital converted to political capital. The amount of outstanding bank credit swelled from Rs 7,04,087 crore in 2003 to Rs. 21,82,311 crore in 2008, up to January.

As these huge amounts were not written off, banks have to keep it as their assets and have to bear the consequent burden of it. These assets are called “Non-performing assets” i.e. the assets which are actually not in existence. Virtually under the pressure of banking sector, the Finance Minister has shifted his treachery to the state treasury. How and wherefrom the huge money will come? Will he take resort to his new economic guru Keynes’ panacea of printing money? Definitely it will raise the inflation, concomitant effect of which will be felt in commodity market as well. There will be artificial scarcity of essential commodities and consequential spiraling of prices.

Now let us see whether the Finance Minister of Congress Communist-led UPA Government has actually taken honest endeavour to improve our agriculture. In the foregoing paragraph I have shown that 73 per cent farmers have no access to formal sources of credit. Quite evidently they are easily vulnerable to local money tenders. It is therefore, quite understandably true that this farm loan waiver scheme will have no tangible effect on the agricultural sector of India.

The whole scheme is just statistical jugglery.
The huge amount of state capital will be turned into bureaucratic political capital. It is not correct that this fact is not known to the Finance Minister. In July, 2007 the expert group on agriculture indebtedness submitted their report to the Finance Ministry and noted that most marginal farmers were highly dependent on private money lenders. The formal banking institutions account for only two-fifth of the total outstanding loans in the country. About 77.4 per cent of the farmers own only 0.01 hectare of land whereas the Finance Minister’s present magic scheme is meant for farmers owing less than two hectares of land.
As per expert group’s study it is therefore clear that 77.4 per cent of Indian farmers who own less than two hectares of land but are miserably stuck with money lenders, are out of the purview of Prime Minister’s onerous scheme. For this vulnerable section the expert group suggested the creation of Money Lender Debt Redemption Fund. But the Finance Minister did not pay any heed to this suggestion in this budget. Rather he walked through the easiest way of winning our age-old credulous villagers. To him, target voters precious than the Indian agriculture.

NSS data and other studies have shown that income of farmers have been low and stagnant due to several problems viz. increasing risk and uncertainty in cultivation: absence of a proper crop insurance scheme: spurious seeds and pesticides; serious water problems; lack of extension services particularly for commercial crops; lack of proper marketing; remunerative prices for their crops; lack of irrigation facilities; lack of non farm activities in rural areas and lack of health facilities.

Finance Minister is non-attentive to these problems. Farmers are not getting minimum prices, not to speak of profitable prices.
Commission for Agriculture Cost and Prices (CACP) has recommended substantial increase in Minimum Support Price (MSP) for all crops. Swaminathan Commission has suggested a formula of calculating MSP as cost of production plus an additional 50 per cent. Communist supported UPA Government is very much averse to all these recommendations and suggestions.

But why aversion? When it was clearly revealed in New York Times that developed world funnels nearly $ 1 billion a day in subsidies to encourage over-production and drive down prices; Oxfam, and internationally famed NGO, accuses the rich countries of giving more than $ 300 billion annually as subsides towards agribusiness. Even World Bank President, Paul Walfowitz admitted that the developed countries are spending $ 280 billion to support agricultural producers.

Our Indian Government allocates a bare minimum amount in agricultural research. The expenditure on agriculture research is only around 0.3 per cent of the Gross Domestic Product (GDP). This is much lower than the level of one per cent GDP for developing countries.

As a result of this lavish subsidies, the US and EU countries are flooding our market with artificially cheap agri-products with the help of their export subsidies, domestic supports and our free-market access policies.

Under South Asia Free Trade Agreement (SAFTA), Government of India has reduced the duty to zero per cent on meat, fish, milk, dairy products and dry fruits from Bangladesh, Nepal, Bhutan and Maldives and drastically reduced the duty on such goods imported from Pakistan and Sri Lanka.
Indian markets have become the dumping ground of foreign cheap products.
Indian farmers, in absence of domestics subsidies on geographical, environmental and natural hazards, export subsidies, remunerative Government supported price, proper exploitation of free market and honest research work, are now languishing under severe hunger and debt-trap of money lenders leading to thousands of cases of farmer suicides all over the country.

The greatest problem of Indian agriculture is the lack of proper marketing. Our Government had never tried to create a strong marketing infrastructure for all the crops.

As a result, some experts say, that there is a huge influx of cheap imported agricultural products. The subsequent bumper crops in some states of India, led to several cases of farmer suicides from 2006 on wards as farmers had to sell their farm produce very cheaply. Government did nothing to buy and conserve or find market for the produce by giving export subsidy.

UPA Government is doing nothing to protect the agriculture sector. It is only appeasing few farmers for voting purposes.

Farm loan waiver scheme is nothing but a political agenda to woo the few gullible and credulous farmers. UPA Government has actually buckled down the US and EU countries by agreeing to their conditional ties to harm our agriculture sector.

Our farmers are only born to die on expectations and disappointments year after years of budgets.

(The author, senior trade union leader can be contacted at B-35/4, Kalindi Housing Society, Lake Town, Kolkata-700 089.)

One Response to “Less for farmers, more for votes”

  1. The better and real way to help out farmers is to provide agriculture a private business sector status and let the farmers and the farmers organisations to decide the price for farmer’s hard work and its product.

    Subsidies are actualy like a two-ay swords which will keep cutting heads on both sides.

    The sucking socialistic statism of Indian politics and economy is burdening the poor more than anything else can, the only solution for such gimmicks is striving for free-market economy with no hold of politics on economy.

    Laissez-faire principle alone can provide a relief for the hard workers.

    India needs to forget the bufoonery of keynese and adapt the wisdom of Ludwig Von Mises and Rothbard.

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