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After the debt waiver, what?

RASHEEDA BHAGAT

Many commentators have hailed the Budget’s debt waiver scheme for farmers as an important measure in ensuring food security as much as a humanitarian gesture. There has been criticism too. Apart from the knee-jerk reaction by Opposition parties, there are calmer voices outlining serious concerns, which should be taken note of, says RASHEEDA BHAGAT.



Expecting more: Apart from the loan waiver, farmers need help in getting quality inputs. — Shaju John

As a colleague came in to work today, a security person, who knows she works for Business Line, stopped her and asked: “Madam, please tell me which mutual fund I can invest in”.

Obviously a first-time investor in mutual funds, the man was, no doubt, enthused by the higher disposable income the Finance Minister has put into his hand from April 2008. While older people like him are thinking about saving/investing that money, yo ung Indians, one is sure, are rubbing their hands in glee at the prospect of blowing up more money in the months to come.

But, then, the relief to salaried classes such as the security officer is only one part of the Budget story. The big proposal that has hogged media headlines and given the jitters to the Opposition parties and the Congress’s Left allies alike, is the massive Rs 60,000-crore package for farmers.

Mr P. Chidambaram seems to have fine-tuned the art of giving political responses to queries/doubts/scepticism on what was surely the UPA Government’s trump-card in the Budget — a concrete proposal to alleviate the suffering of the small and marginal farmers through a one-time debt-waiver.

Taking on the avalanche of criticism that has followed — both from the Opposition and those sections of the agri-community that did not benefit from this measure — the Finance Minister’s immediate response has been: “If you’re against the farmer, have the courage to stand up and be counted; don’t duck the issue.”

One can sympathise with his outrage that the very classes/political parties that were clamouring for government help for the distressed agri sector are now shouting hoarse that either he had done too little too late, or he has got it all wrong! To those who now tell him that farmer suicides were triggered by pressure for loan repayment, not from commercial banks but from private moneylenders, his exasperated response is understandable: “Which private moneylender do I identify and compensate?”

Unhappiness with the Budget proposal can be broadly classified under two categories; the political response to it from rival parties that must be frustrated and annoyed that they cannot claim some credit for this measure which can yield a political windfall in terms of votes; and that expressed by some genuine quarters, which needs to be studied for response, if not immediately, in the near future.

Agricultural scientist Dr M.S. Swaminathan has argued, in his response to this scheme in a signed article in The Hindu, that while Mr Chidambaram’s proposal is a “major step in recognising the indebtedness of the country to farm families who are safeguarding national food security and sovereignty”, the question is whether this step will end the farmers’ dependence on moneylenders.

He has suggested that the definition of small and marginal farmers should be changed for the irrigated and dry farming areas, pointing out that in such regions as Vidarbha, the distressed farmers hold around 4-5 hectares but the income of such farmers is “uncertain and their agricultural destiny is bound closely to the behaviour of the monsoon.”

Big farmer, big problems!

Mr V. B. Patil, Senior Manager (Agronomy and Training), Jain Irrigation Systems, who prides himself on being in constant touch with farmers at the grassroots level, where he works to transfer the best and latest in water irrigation and other technologies such as tissue culture, welcomes the relief package for farmers but says it has “been done all wrong. A farmer is a farmer, and what is the use of separating them into small and big? Are we saying that big farmers do not take loans; jitna bada kisan, utni badi uski takleef (the bigger the farmer, the greater his problems).”

He argues that big farmers have taken loans for tractors, trailers, etc., and also face the problem of loan repayment. “Actually, and to be honest, in India today a 1-2 hectare landholding does not make economic sense and people having such small farms are more farm labourers than farmers, because they cannot make profit from their land.”

Mr Patil says the massive loan waiver package would have made more sense if it had been used to give relief to farmers through a different calculation… “say, those who had borrowed Rs 1 lakh could have got a relief of Rs X, those who had borrowed Rs 2 lakh, a relief of Rs Y, and so on”.

But much more than loan waivers, Indian farmers needed handholding when it came to getting quality inputs — seeds, fertilisers, pesticides, and so on. “The farmers are saying: ‘Give us good market rates through better price realisation, and give us good marketing facilities including post-harvest community godowns, where we can store our produce till we get the best prices.”

Even when it comes to providing agricultural credit, Mr Patil suggests that this should be divided into two major components — crop loans and long-term loans for agricultural development. “Only if we enable farmers to use technology and go in for crops that fetch the best prices can we hope to provide long-term solutions to the distress in the farm sector,” he adds.

More interesting ideas

Economist and former Union minister Dr Yoginder K. Alagh offered an interesting viewpoint when he wrote in a newspaper column that the more interesting ideas for agriculture in Budget 2008 are in the education, health and social security programmes. “The Rs 30,000 insurance scheme for unorganised workers, many in the agricultural sector, the 24x7 primary health centres, the schools and colleges in rural areas, particularly for poor children and girls, have great possibilities. Also, the knowledge networks, if scaled to village needs and implemented in a manner that the villages can maintain them, with models already available.”

When Business Line put to him the poser that, while education is indeed a crucial need that has to be addressed, the educated children of farmers don’t want to remain in agriculture and would rather have, for instance, software jobs, he said: “Software jobs are coming up in small towns, which are really big villages. Our experience is that when young people are given skill training in rural areas, they tend to get jobs in the region.”He points out that he had noted in Gujarat, even in the 1991 Census, there were more than 1,800 villages which met all the Census criteria to get the ‘urban’ label, but had not been declared as towns. “So, widespread growth will help. But those who want to go to the big cities must be allowed to move there.”On the suggestion that Indian farmers’ income could be pushed up by the consumers paying more for their produce, Dr Alagh said: “It is very wrong to fight inflation through sectoral policies, like keeping agricultural prices down and even subsidising agricultural imports. In a liberalised economy, inflation has to be fought by macro policies and not by making a sector like agriculture bear the burden. It is incorrect to give subsidies, on the one hand, and then take the benefits away by wrong market policies.”

Migration and job security

Ultimately, of course, India cannot afford to have such a huge chunk of its population dependent on agriculture. Dr Alagh says that 45 per cent of people are today engaged in growing crops and if that activity is no longer profitable to all of them, “workers must be encouraged to migrate where the jobs are. This leads to higher incomes, poverty removal and increased competitiveness.

Chinese economists argue that their restrictions on migration are counterproductive. Migration helps job security. Son-of-the-soil agitations need to be met with better employment and skill training policies, rather than the great benefits of a national labour market for all, including the regions where the agitations take place, being destroyed.”

At the end of the day, the fact remains that the farmer’s lot will improve only if his vocation becomes more profitable. One could see the rationale of this argument while visiting the banana growing farmers of Jalgaon in Maharashtra last fortnight; they had adopted tissue culture and gone in for drip irrigation, and were reaping a rich dividend.

Others, such as Zainab Sabir Hussain (Business Line, February 29), who owns a 50-acre farm, had an even better idea: switch over from wheat and cotton to not only horticulture but also floriculture. Farmers certainly have a future in agriculture, said the feisty young woman, “but only if they innovate and embrace the latest technology”.

(Response may be sent to rasheeda@thehindu.co.in)

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