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If finance ministers continue to do what they have been doing the last 58 years, the fate of the farmer and his son may be like that of the match-girl of the fable, who froze to death, hungry and forlorn. With farmer suicides rampant in certain parts of the country, Sharad Joshi reconstructs what their last wishes would have been.

COME FEBRUARY, and scribes start playing the guessing game. What could be going on in the mind of the Finance Minister? Under what kind of pressures must he be from the Left and the Right? More important, would he like to go down in history as a liberal ushering in economic reforms? Or, would he rather be remembered as the Messiah of the masses? What importance does he attach to being honoured as the best Finance Minister? And what importance does he give to the advice of the various people he consulted before starting to work out the Budget?

In this guessing game, every scribe's conclusion is largely coloured by his personal and class interests. I have visited the families of so many farmers who committed suicide in Vidarbha recently and thought so often about what their last thoughts might have been that I am reminded of the fable of the match-girl.

A little girl sells matchboxes for the livelihood of herself and her grandmother. One day, she is caught in a snowstorm. All frozen and hungry, she tries to keep herself warm by lighting matches, one after another. As she lights each stick, each of her most ardent wishes come true. First, a warm shelter, then some hot food and then the presence of her beloved mother, who is no more.

This column is devoted to some of the dreams the dying farmers must have had at the end and hoping they will have some place in what the Finance Minister, Mr P. Chidambaram, has termed would be a "Sweet Dream Budget".

This year, the Finance Minister did not consider it worthwhile meeting the representatives of farmers and left the work to the Ministry Secretary.

The UPA leaders like to believe that their coalition represents an alliance of the proletariat and the salaried middle-class, that is, the Aam Admi — a politically astute posture that pays rich dividends at the hustings. The National Democratic Alliance over-highlighted the role of the employer and the producer and was rebuffed in 2004. The UPA Government is now trying to placate the unproductive and the inefficient, hoping that this will get them votes, if not performance and prosperity for the country.

There has been a major change in definitions since the days of Indira Gandhi. Then the poor were identified by economic criteria and by the nature of their economic activity. The slum dwellers in the cities, the landless labourers in villages and the small and marginal farmers constituted the bulk of the BPL (below poverty line) masses then.

Now, things have changed. The BPL is no more a secular concept; it has become caste- and creed-based. The poor are those born into certain communities.

The priority list of beneficiaries includes the Scheduled Castes, the Scheduled Tribes, Other Backward Castes and the minority communities. In UPA economics, all help is to be targeted at SCs STs, OBCs and minorities under the slogan of Alliance Against Communalism (read, Hindutva).

Note that this four-fold definition of poverty is like the Hindu caste system, based on birth. It does not include the farmers who are driven to suicide in their thousands.

Co-operative credit, the serial killer

The years 2004 and 2005 will be known for farmer suicides. After much prevarication and obfuscation, the experts and the State governments concerned have admitted that most of the suicides were motivated by despair about being able ever to repay the loans and the humiliation heaped on them by the recovery officials of the co-operative banks.

It has also been established that the high incidence of suicide among the cotton farmers is because the product-specific negative Aggregate Measure of Support — an indicator of the level of negative subsidies — has been worst over the last 30 years.

The cooperative banking system is said to be responsible for driving the farmers to suicide in two ways. First, these banks apparently flout the Supreme Court directive — partially endorsed by the directives of the Reserve Bank of India — that the farmers should be charged interest only once a year and that they should not be charged compound rates except in the case of overdue repayments. Second, while the commercial banks as also the private moneylenders have limits on the degree of coercion they practice in the recovery of loans, the cooperative banks have no such restraint.

For too long, the formal credit sector has been the preferred mode. The village moneylender has been despised as a latter-day Shylock and sought to be replaced by the formal banking institutions. However, experience shows that none of the formal credit institutions has the flexibility that is essential to serving the farm sector with all its vicissitudes and uncertainties.

While there is some truth to the stories about the cruelty of the money-lenders and their rates of interest, these were not really outrageous considering the high incidence of their NPAs. But the Government of Maharashtra has declared all their loans void.

This appears aimed at eliminating all competition for the politically strong co-operative sector. But it is necessary that the private moneylenders be allowed to operate rather than being treated as outcasts.

The predecessor NDA Government, as also the present UPA regime, announced that the rate of interest on the farmers' loan will not exceed 9 per cent. In reality, no lender abides by this limit.

Under these circumstances a farmer driven to suicide would want — if he had the match-girl's matchbox — from the "Sweet Dream Budget" of Mr Chidambaram:

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Cotton's problem of plenty

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