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Maharashtra to announce Rs 5,000 cr farm loan waiver

Posted by Ramoo on December 23, 2008

http://www.business-standard.com/india/news/maharashtra-to-announce-rs-5000-cr-farm-loan-waiver/00/36/344103/

Makarand Gadgil / Mumbai December 23, 2008, 0:27 IST

With the Lok Sabha elections around the corner, the Maharashtra government is set to announce another farm loan waiver package to cover all those who were excluded by the central government’s waiver package. The latest package is likely to cost between Rs 5,000 crore and Rs 7,000 crore, and benefit 2.7 million farmers. A senior minister in the state cabinet said: “During the monsoon session of the state Assembly, the government had promised a loan waiver package for those not covered by the central government’s Rs 71,000 crore loan waiver scheme. We will be announcing this during the winter session.” However, he refused to divulge the details of the loan waiver package.

The discussion on the Opposition sponsored debate on agriculture distress in the state began today and Chief Minister Ashok Chavan is expected to reply to the discussion on Tuesday. In the course of his reply, he is likely to announce the package, sources said. The high number of farmer suicides from the six cotton growing districts of the Vidarbha region was one of the major reasons that compelled the central government to announce the loan waiver package. However, majority of the farmers from Vidarbha got no benefit from the package as it was given to farmers having less than 5 acres or 2 hectares of land.

Traditionally, Vidarbha has a higher number of landholdings compared with the Western Maharashtra or Konkan regions. Since Vidarbha’s farming is mostly dryland farming, landholding remained large even after the implementation of the Land Ceiling Act. According to the government’s own estimates, out of the 4.5 million farmers in Vidarbha, only 40 per cent received the benefit of farm loan waiver package.

Taking advantage of the resentment among the Vidarbha farmers, Opposition parties Shiv Sena and BJP had organised protests over the last six months, demanding that all farmers should be given benefit of the loan waiver.

The government was put on the back foot by the aggressive posturing of the Opposition.

Many farmers who had paid their dues by taking loans from money lenders or by selling ornaments, were also feeling cheated. “There was a feeling among them that if you default on your loan, instead of punishing you, the government rewards you. So it was necessary that these farmers also get some benefit of their honesty,” said a senior government official.

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Govt modifies rehab package for suicide-prone districts

Posted by Ramoo on October 9, 2008

CABINET DECIDES

BS Reporter / New Delhi October 09, 2008, 1:25 IST

The government today modified the rehabilitation package for the farmers in suicide prone districts of Andhra Pradesh, Karnataka, Kerala and Maharashtra.

The government had earlier announced a rehabilitation package on September 29, 2006 for 31 identified districts in Andhra Pradesh, Karnataka, Kerala and Maharashtra, involving a total amount of Rs 16,978 crore.

After the feedback from implementing agencies, the Union Cabinet today decided to extend the period for implementation of the non-credit component of the package by two more years or up to September 30, 2011.

It has also given in-principle approval for provision of need-based additional financial support to the concerned ministries and departments of the Government of India for implementation of the programmes.

The rehabilitation package aims at establishing a sustainable and viable farming and livelihood support system through debt relief to farmers, complete institutional credit coverage, crop-centric approach to agriculture and assured irrigation facilities.

Other modifications in the scheme include increase in per farmer area limit under the Seed Replacement Programme from 1 hectare to 2 hectares, adoption of ‘Cafeteria Approach’ for participatory Watershed Development Programmes, and inclusion of ‘Women Farmers’ Empowerment Programme’ under extension services.

The Union Cabinet today also approved new legislation that seeks to set up a National Judicial Council (NJC) to conduct inquiries into allegations of incapacity or misbehaviour by judges of the High Court and Supreme Court. “The provisions of the new Bill would bring in transparency in the functioning of the judiciary and would also enhance its prestige,’’ an official handout said.

The proposed Bill would incorporate recommendations of the parliamentary standing committee that had looked into an earlier Bill — Judges (Inquiry) Bill, 2006.

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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.)

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4,750 rural bank branches closed down in 15 years

Posted by Ramoo on March 28, 2008

P. Sainath

In the same period, scheduled commercial bank branches in metros doubled


The figures muddy claims of massive increases in rural credit

More farmers being pushed towards moneylenders



MUMBAI: India has seen the closure on average of one rural branch of a scheduled commercial bank (SCB) every single working day for the last 15 years. In the same period, bank branches in urban metros doubled, opening at a rate of more than one every day. The figures muddy government claims of massive increases in rural credit and plans to boost it.

The Reserve Bank of India’s Handbook of Statistics on the Indian Economy (2006-07) shows there were 30,639 rural branches of SCBs in 2007. That is, 4750 less than there were in 1993. In other words, an average of 26 bank branches shut down each month, or one every working day.

However, branches in metros shot up from 5,753 to 11,826 in the same period. In other urban centres, the numbers climbed from 8,562 to 12,792 in this period, while also going up in semi-urban locations from 11,356 to 16,214.

Bankers and RBI officials argue these are not all closures but “consolidation,” or “mergers” or the creation of satellite offices. The fact remains, though, that there were 4,750 rural branches less in 2007 than at the start of the reforms period. The trend holds through most UPA years. Indeed, 2006 saw the sharpest drop, with 1,503 branches shutting shop at a rate of one every six hours, on average. The rapid decline has pushed more farmers towards moneylenders.

“If you ‘merge’ a couple of banks 200 kilometres apart,” says Devidas Tuljapurkar of the All-India Bank Employees Association, “how does this make life easier for villagers already journeying far to their banks? It just rules them out. And it is absurd to say that more ATMs have opened to fill the need. ATMs are mostly in cities.” Also, loans are not given at ATMs.

The share of rural credit as a percentage of total credit disbursed by all SCBs (including Regional Rural Banks) stood at just around 7.93 per cent in March 2007. Less than the previous year’s 8.39 per cent. Much less than the 10 per cent it stood at in 2001. And farmers account for only a part of it. ‘Rural credit’ includes many sectors beyond agriculture. The 2001 Census says 72 per cent of Indians live in rural areas. However, the share of urban and metro regions in total credit went up to 82.32 per cent in the same period as the closures.

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