The Hindu Business Line : Hesitant repayment of debt of gratitude

The criteria for small and marginal farmers do not reflect the economic situation of the peasant family. In cases where the land is divided in every generation, a sizeable landlord is soon reduced to the status of a marginal farmer. And it is not the small farmer who made India self-sufficient in food.

Sharad Joshi

The Budget that the Finance Minister, Mr P. Chidambaram, presented on February 29, 2008 can be judged on various criteria.

The promises Mr Chidambaram had himself made in his last Budget regarding revision of the fertiliser subsidy system and replacement of the collapsing agricultural extension system.

The Finance Minister this year made only a passing reference to his promise to devise a system of subsidies for fertilisers that would benefit the farmers directly without even attempting to explain the reasons for his failure. He did not even mention the collapse of the agricultural extension system.

The expectations farmers entertained in the context of the rising number of suicides by farmers unable to withstand the humiliation of their inability to repay loans, and the kind of relief the government is

trying to provide to the minority community under the recommendations of the Sachhar Commission.

The Finance Minister did announce the outlines of a loan waiver and debt relief scheme. The scheme is limited to loans disbursed by certain types of banks till March 31, 2007 and which remain overdue on December 31, 2007 and unpaid until February 29, 2008.

In the case of small and marginal farmers, such loans were totally waived. For other farmers they will be subject to a scrutiny and one-time settlement where 25 per cent of the overdue amount may be waived on the condition that the remaining 75 per cent is returned.

It would appear that this is a successful political gimmick, as is obvious from the apparent joy of those gathered in front of Ms Sonia Gandhi’s residence to felicitate her for the largesse conferred. The fact remains, however, that this scheme has neither rhyme nor reason.

Despite the Finance Minister’s forceful statement that this was payment of the debt of gratitude to farmers, he has certainly cringed on repayment of that debt.

The criteria for small and marginal farmers do not reflect the economic situation of the peasant family. In cases where the land is divided in every generation, a sizeable landlord is soon reduced to the status of a marginal farmer. Further, it is not the small and marginal farmer who made India self-sufficient in food.

More important, the estimate of Rs 60,000 crore of the cost of the scheme appears rather inflated.

The Radhakrishnan Committee has estimated the total indebtedness of farmers at Rs 1,30,000 crore. With all the overdues included, it would appear that the actual cost might be much short of the estimate given by the Finance Minister.

The estimate of the lost cost to the farmers in the years 1981 to 2000 alone being more than Rs 3,00,000 crore, the waiver of Rs 60,000 crore is like rubbing salt in the wound.

Since some sort of waiver was expected, many individuals and political groups have been trying to claim the credit thereof.

These groups had also tried to dilute the demands of the general and total loan waiver. It would seem that these disruptive tactics have paid off. It also means that the government is trying a “divide and rule” tactic.

The remedial action for the injury Chidambaram inflicted a year back by banning the trade in wheat and paddy on the futures market, that brought in its train a misguided decision regarding the procurement price of wheat and massive imports of inferior foodgrains, causing the Exchequer a huge loss.

The only thing that the Finance Minister said about commodity exchanges was the declaration that there will be a tax on transactions in commodity exchanges; not a word about removing the band on wheat and paddy declared last year

Expectations of those battling to extricate Indian agriculture from its present precarious position by encouraging large-scale treatment of solid waste to produce compost.

On this score, Mr Chidambaram gets near full marks as he has completely abolished the excise duty on compost equipment, though not the Customs duties on the import

Action programmes that would enable the minimal production of foodgrains in the coming 20 years, as forecast by the World Bank Development Report 2008 in the context of the foreseen climate change.

The Finance Minister has merely repeated the flagship programmes of the UPA and reiterated the national food security mission as also the national Krishi Vikas Yojana.

The rosy future he has outlined for us seems destined for a harsh and painful failure.

(The author, a Rajya Sabha MP, is founder, Shetkari Sanghatana. Feedback can be sent to sharad@mah.nic.in)

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