Opinion

More cows, less poverty

R. S. Khanna | Updated on July 19, 2013

Why are banks fixated on land as collateral? — B. Jothi Ramalingam

Dairying can lift more people out of poverty than farming, food subsidy or NREGA. The government must wake up to this.



Critics often like to define India in terms of ‘India’ for the rich and ‘Bharat’ for the poor and destitute. The United Nations has estimated that one-fourth of the poor and undernourished of the world live in India. Government after government has announced poverty removal programmes, and yet none has been able to meet the needs of the poor and undernourished.

Farmers, who produce food for India, are the ones most prone to suicides. The first reason for suicides is their inability to repay loans taken for farming activities. Next is their inability to feed themselves and their family.

It is important to note that despite sheer poverty, food always includes milk and milk products and its budget has been increasing — a fact that comes out in National Sample Survey Organisation data over the years. In terms of items of food consumption, milk is in second place after cereals. While the budget for consumption of cereals is declining, that of milk is increasing. The reason is easy to find. Milk is a commodity that is produced daily in the household. While a family may not have cereals and grain stored at home, milk would be produced if the family has a cow or a buffalo.

If milk is produced at home, a part is available for home consumption. Sale of milk gives daily or weekly income. In exchange for the money earned, a family can feed itself. A farmer owning no land but having a milking animal is not likely to commit suicide, while his land-owing counterpart may commit suicide when the crop fails.

The World Bank has singled out “Operation Flood” for praise. It observed that apart from being a programme for dairy development “Operation Flood” was actually responsible for reducing rural poverty.

Another positive lesson from dairy development is the research carried out by the Central Arid Zone Research Institute. The study concludes that areas where farmers rear animals as a source of family income suffer less when there is drought.

Loan for livestock

Therefore, is it possible to help farmers own dairy animals such as cows, buffaloes and goats? On paper, the Government has created guidelines through Nabard for giving subsidies and soft loans to rural people for purchase of own livestock. But are they able to get these loans?

The answer is ‘no’. All agricultural loans and subsidy, including those for livestock, are channelised through commercial banks. The onus of recovering such loans lies exclusively on the financing bank, and not on Nabard. Commercial banks do not give loans without land as collateral. The fact is that close to 60 per cent of rural people engaged either in milk production or as labour are without land. They become ineligible for loan.

On the other hand, farmers who own land take loans year after year. Even if the previous loan has not been fully paid, they can get further loan against their land. In fact, farmers wait for a bad year when the crop fails.

It is well known that after every three or four years farmers’ loans are waived. The commercial banks are not worried at the accumulation of such non-performing assets for two reasons. First the bank has given loan against a security, and second the default in repayment of the loan has been created through an order by the government to waive loans.

A dairy farmer is not so fortunate. So far, no government has ordered waiver of loans to livestock owners. This is because it is not possible for the milk production to fail absolutely. Milk production per animal can be low, but will not fail. There is no politician to lobby for the milk producer if he produces less milk. This is how India’s political economy is successfully creating two Indias.

There is need to ensure that Nabard loans and subsidies reach the rural poor and arm them with milking animals. Dairy animals could be insured, and the insured animal can be taken as collateral for providing loans.

The government should create a separate system of monitoring banks for livestock loans. At present, loans for animals are clubbed along with other agricultural loans. Therefore, it is not possible for Nabard to assess loans given exclusively against the hypothecation for livestock.

Gyan from sage

There is a beautiful story that has been narrated in Skandpuran. Maharishi Aapstamb performed tapas over a period of 12 years immersed in holy river Narmada. Over this period, all the living beings in the river became friendly with the Maharishi. He was their protector and saviour. He loved all of them.

One day a group of fishermen came hunting for fish in the river. They threw the net in and harvested a large number of fish and other creatures. Unfortunately for the fishermen, the Maharishi also got trapped in the net. Just as they were pulling the net out, the fishermen realised their mistake.

They fell at the feet of the Maharishi. The Maharishi advised them to return the fish to the river, failing which he said he would commit suicide.

The fishermen did as he said, but told him that harvesting fish was their only means of livelihood. It was a situation of death either for the Maharishi or the fishermen.

Information about this reached King Nabhag who rushed to the spot. Maharishi Aapstamb advised the King that he should pay to fishermen the value of his (Maharishi) life or he will commit suicide for having made the fishermen go without food. The King offered to pay a lakh gold coins. Maharishi said, “Do you value my life at one lakh gold coins only?” The King offered to pay one crore gold coins. The Maharishi was still not satisfied.

Meanwhile, Rishi Lomash arrived at the scene and offered to help the King. He told the King that Maharishi Aapstamb would become very happy if a good milking cow was given to every fisherman in exchange for his life.

He told the King that a cow is considered as the beginning, middle and end of every yagya and is a source of eternal happiness to the owner. The King immediately agreed to give one good milking cow to every fisherman.

To the King’s surprise, Mahrishi Aapstamb agreed to the proposal. All the fishermen were happy because they would now be able to meet their needs on a continuing basis.

Let us compare this story to what is happening now. It is not important to pass cash to the poor through the Aadhaar card. It is not important to give dole though NREGA for 100 days in a year. It is not important to give, free of cost, 35 kg of cereals and grains to the poor every month.

Poverty cannot be removed even if gold coins are given to the poor. Giving cash under NREGA or free foodgrains as per the Food Security Bill would be perpetuating poverty. The poor would be made permanently dependent on government alms.

This is a negative action. What the government needs to do is to make people actively employed so that they can get a source of living on a regular basis.

Dairy farming is the way. Out of Rs 10,000 crore passed in the current Budget for giving subsidy on food, if government can pass even 1 per cent annually for giving milking cows and buffaloes to the poor, India would have lesser poverty and more milk.

(The author is an international dairy consultant.)

Published on July 19, 2013

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