The Hindu Business Line : A harvest of platitudes for farmers

In the backdrop of the increasing number of farmer suicides, the discontent among the community against the acquisition of its land for the special economic zones (SEZs), and the niggardly rate of agricultural growth, the people at large expected the Finance Minister, Mr P. Chidambaram's Budget 2007-2008 to take path-breaking and innovative steps to make farming at least marginally remunerative if not an attractive investment destination.

The conclusions of the Economic Survey 2006-2007 had led to expectations that it would be followed by an agriculture-centric, if not farmer-centric, Budget.

This expectation lasted till the Finance Minister went through the first couple of paragraphs. First, with the statement that, "... Agriculture must be top priority of the policymakers and must hold the first charge on our resources," and then with a Nehru quote, "Everything else can wait, but not agriculture," followed by a verse from Tamil poet Tiruvalluvar that translates, "Even the sages claiming renunciation cannot find salvation if ploughmen keep their hands folded," Mr Chidambaram raised hopes, only to disappoint..

What, then, is there in this Budget for agriculture and the farmer?

Inflation pressures

The Finance Minister started with the economy's accomplishments highlighting GDP growth, and glossing over the miserable performance of the agricultural sector.

Under pressure from various quarters, especially his own party-men, particularly after the Congress' defeat in the Punjab and Uttarakhand Assembly elections, Mr Chidamabaram tried to explain away the escalating inflation as the result of the expansion in bank credit, money supply and foreign exchange reserves, which are concomitant with double-digit GDP growth.

He then blamed supply-side constraints, and digressing from the Budget speech, he announced that with immediate effect, futures trading in wheat and paddy was being stopped. But this is missing the basic purpose and mechanism of the futures market. The futures market provides time and space dimensions to the farm utility created by the farmers. It is an effective instrument of price discovery, and in smoothening fluctuations in prices and risk-bearing. It is not a mere exercise in speculation and gambling, as is made out in some quarters.

The ban on futures in wheat and paddy seems clearly motivated to score political points or to find a scapegoat for the inflation problem. Statistical evidence shows little difference between the increase in prices of commodities in which futures trading is allowed and in those not permitted. Only recently, under pressure from the Centre, most private companies decided to leave wheat procurement to the Food Corporation of India.

Now, with futures trade banned, farmers would most probably be strangled by the FCI and the Minimum Support Price (MSP). But the farmers may not take this lying down, and the coming procurement season portends a fierce battle between farmers and the Government.

For the farmers, thus, the Budget has only a lot of words:

The draft national policy for farmers submitted by the National Commission on Farmers is under consideration.

The committee under Dr R. Radhakrishna, appointed to examine all aspects of rural indebtedness, is still to submit its report.

The Pulse Mission, Tea Fund, Accelerated Irrigation Benefit Programme, Water Resources Management and Ground Water Recharge are only mentioned.

The need to make the extension scheme effective is noted but it is left to the Ministry of Agriculture to draw up a new scheme that will replicate the `Training and Visit' programme, in consultation with the State governments. That means nothing new and no new allocations either.

On the fertiliser subsidies, the Finance Minister declares an intention to find an alternative method of delivering the subsidy directly to the farmer and to conduct a study in collaboration with the industry.

The allocations made for agricultural insurance, Nabard, Rural Infrastructure Development Fund are insignificant.

No note has been taken of the recommendations of the various commissions to reduce the rate of interest on crop loans from 7 per cent to 4 per cent, to establish a network of quality testing laboratories, to set up an information network encompassing all villages, as also use retail trade to shorten the time between harvest and the kitchen.

Thousands of farmers have committed suicide and their number is growing. But apart from mentioning the scheme for relief for specially distressed areas, little else is there to address the problem.

The Budget glosses over the need to provide a market for agricultural land, the negotiable warehousing receipts as also investment advisory services to the farmers who come into funds on sale/acquisition of land.

On general rural development too, the Budget is wanting. One can easily gloss over the enumeration of the elements of "Bharat Nirman," a superficial and unsustainable exercise to face-lift the rural areas.

It is also quite clear that, in spite of all the tom-tomming, the National Rural Employment Guarantee Scheme (NREGS) is a colossal failure and has emerged as an exercise in bureaucratic craft, justification of records and inculcating a spirit of laziness among the poor.

It is inexplicable that a Finance Minister known for his Dream Budgets should have so disappointed farmers.

(The author, a member of the Rajya Sabha, is Founder of the Shetkari Sanghatana. E-mail: sharad.mah@nic.in)

More Stories on : Agriculture | Insight | Budget

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
A poor harvest

A harvest of platitudes for farmers

Making a fetish of secrecy

A fund of changes for financial services

Not power-packed enough

Handful for non-residents

A boost to rural banking

Scope for more lustre

Sizing up transfer pricing regime

No vote for the silent majority

Housing cost

Farm focus