I had prepared a grading system for the 2011-12 Budget. The greater the capacity of the Budget to promote higher production, the higher would be its grade. I regret to say that the Budget has scored rather poorly and would, most probably, cause famines at a time when the nation is looking for food security and higher nutrition.
ENERGY ISSUES OVERLOOKED
The initial mistake was the great haste in which the UPA government launched the agricultural Debt Relief and Loan Waiver (DRLW) Scheme. The farmers’ movement had never demanded waiver of only the bank loans; it had clearly asked for a general write-off of the electricity tariffs as well.
This was logical, since electricity tariffs, for many years, have constituted single largest item of farm expenditure, and the non-remunerative character of agriculture was bound to affect the ability of farmers to pay power bills.
To add to the move of certain state governments to cut off power connections, came the phenomenal hike in fossil fuel prices. The government continued its policies of importing crude oil from Arab countries. It would appear that political considerations made such a choice necessary.
Little or no attempt was made by the UPA government to encourage domestic production of bio-diesel or ethanol. A measure to encourage production of bio-diesel and ethanol would have made agriculture more paying. The policy of letting the petroleum companies decide the prices of petrol was disastrous for agriculture.
The UPA government continues to obstruct the healthy development of futures markets, when there is substantial evidence to show that the futures markets add neither to volatility nor to inflation.
POOR OUTPUT INCENTIVES
Apart from the power cuts and the anti-national policy on bio-fuels, the UPA government has been following policies that discourage the hardworking peasantry and encourage indolence and lethargy. Flagship schemes of the UPA government will pump large amounts of money in the hands of the consumer even as there is little policy effort to lift production commensurately.
As a whole, the Budget 2011-12 will only prove the Expert Committee of the PMO on Food Security right and actually generate food shortages and food inflation, which will make food security an impossible task.
Farmers may well be inclined to go for production of quality foodgrains, and limit it to domestic consumption. Production from the use of chemical fertilisers and insecticides may well be diverted to producing bio-fuels.
Attempts on the part of the farmers to produce foodgrains exclusively for domestic consumption might result in some sort of a levy system of the pre-1965 days, or in outright efforts by bandits to rob granaries preserved by the farmers.
The 2011-12 Budget is entirely ignorant of the realities and problems of agriculture and, in fact, will exacerbate food insecurity and price inflation.
Liftout: By failing to promote biofuels, the Budget has been unmindful of the impact of higher fuel prices on agriculture. The demand-supply gap in foodgrains is set to widen.
(The author is Founder, Shetkari Sanghatana and a Rajya Sabha MP.)