Further, on June 18, a new credit policy for agriculture was announced, and on June 24, the Prime Minister, Dr Manmohan Singh, promised a `new deal' for the farmers. All this had heightened the expectations in the agricultural community about the UPA Government's first Budget. Unfortunately, the Finance Minister, Mr P. Chidambaram's Budget came as an anti-climax for the farm sector.

If in Andhra Pradesh, the Congress-led alliance scored in the elections by promising free power supply to farmers, in Tamil Nadu, the ruling AIADMK did the same to contain the hit the party had taken in the polls. The all-India Kisan Coordination Committee (KCC) made a radical change in its traditional anti-subsidies position and demanded free supply of power across the country.

This year the monsoon showed great promise only to deceive. In early June, the Meteorological Department forecast early and abundant monsoons. The rains did arrive early but in fits and starts. In several States, the first sowing did not even reach the germination stage. In many others, even the second sowing was wasted.. The farmers need new seeds to replace those wasted.

All this together brought farmers to the brink and drove many to suicide. It was expected that the United Progressive Alliance (UPA) Government would come up with a massive and comprehensive package to help farmers in despair.

The Finance Minister has promised an initial expenditure of Rs 100 crore this year for the maintenance of traditional water sources. This is to be followed with an annual expenditure of Rs 3,000 crore for the next five years. This is both "too small" and "too slow". The farmers need immediate relief — by way of supply of water and seeds.

The National Common Minimum Programme made promises on these aspects. But the Budget has done little on them.

Post-Independence, successive governments followed policies that tended to depress agricultural prices. These policies resulted in the imposition of negative subsidies on the farmers of the order of 87 per cent.

Japan ensures that its farmers get in the market 90 per cent more than the cost of production. The European Union provides its farmers an income 65 per cent higher than their cost of production. In the US, the positive subsidy to the farmers is of the order of 35 per cent.

In 1989, the then Minister for Commerce, Mr Pranab Mukherjee, submitted a statement to the World Trade Organisation that Indian farmers actually had a negative subsidy. According to one calculation, the extent of negative subsidy was as high as 87 per cent in 1996-97. While after that the government did take some measures to lower the negative subsidy, much remains to be done.

After the promises of the National Common Minimum Programme, it was hoped that the UPA Government would abolish the Essential Commodities Act and introduce farmer- and consumer-friendly marketing and warehousing systems.

Some of Mr Chidambaram's predecessors had initiated some measures in this direction. But the latest Budget has no mention of steps to abolish measures that depress agricultural prices. This militates against the National Common Minimum Programme.

Further, while the Finance Minister has claimed a large increase in the funds made available for extending credit to farmers, he has completely overlooked the fact that merely supplying additional funds to the commercial, regional rural and cooperative banks does not help the farmers, most of whom have become, over time, ineligible to get loans on account of their inability to repay loans.

Credit availability makes no sense unless agriculture becomes remunerative enough. This is possible if, and only if, the farmers are assured remunerative prices for their produce. The Budget fails to provide any solace in this vital matter.

The Finance Minister has categorically rejected any possibility of a "write-off of agricultural loans". He appears to have a mistaken notion of what constitutes agricultural indebtedness. Farmers have neither a contractual obligation nor a moral responsibility to repay the loans taken from public sector institutions. Government policies that depressed agricultural prices all but ensured that farmers were unable to perform their part of the contract — of repaying loans.

In fact, if one were to draw up a balance-sheet of what the farmers owe the government and vice-versa, the farmers will emerge net creditors; particularly, if one takes into account the incomes lost on account of state policies, both in agriculture and commodity markets, and the amounts held by farmers as shares and deposits in various cooperative societies.

According to an expert committee, the loss in income caused to the farmers on account of governmental policies alone could total Rs 300,000 crore over the last 20 years. Compared with this colossal sum, the amounts owed by farmers by way of loans and electricity bills are insignificant.

The Finance Minister relies on such schemes as the Employment Guarantee Scheme (EGS) for providing employment for 100 days in a year to at least one member in every family. He has cited the example of Maharashtra for the success of the EGS. But the reality may be otherwise. The scheme does not seem to have created any tangible asset. There are allegations that muster rolls are tampered with for claiming wages, and that most workers get wages at half the rates without working at all. In fact, in Maharashtra the EGS is derisively described: "EGS — half you, half us".

The Finance Minister has cited the success of the Anand cooperative model, and plans to create similar State cooperative societies for the development of horticulture and fruit crops. But the success of the Anand model, which incidentally is not a State-wide cooperative society, is due to a combination of factors, including the liberal supply initially of milk powder and butter oil from the European Community.

Mr Chidambaram earns quite a few Brownie points on economic reforms, but none on the agriculture front, which was crying for attention.

(The author, Founder, Shetkari Sanghatana, is a Rajya Sabha MP. He can be contacted at sharad@mah.nic.in)

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