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Anguish of the agriculture sector
Arkadev Ghoshal
Senior sub editor, FW
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Photo: Shailendra Pandey |
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SEVERAL SECTIONS in the agriculture sector may have rejoiced at the government’s decision to increase agricultural credit by Rs 1 lakh crore to Rs 5.75 lakh crore. Of course, this enables farmers to take bigger risks when it comes to tilling their land. However, that’s not the bottomline. In fact, the bottomline lies hidden in a statement finance minister Pranab Mukherjee made towards the beginning of his budget speech — the country needs to improve its supply side infrastructure by removing bottlenecks.
This is actually a reference to the large amount of foodgrains that have been left to rot in states like Punjab and Haryana while people throughout the country have died of hunger. This is also a reference to instances where potato has been sold at Rs 100 per tonne or left to rot by the roadside because of a bumper crop production that the government somehow ignored to export. Unfortunately, instead of outlining very specific steps that the government can take to address these problems, the finance minister has instead chosen to focus on irrigation and urea production in the budget. He has earmarked Rs 300 crore for an intensified irrigation programme, promulgated the setting-up of a state-owned irrigation body and set a target of five years for the country to become self-sufficient in urea production. But what will farmers do with better and cheaper access to irrigation and urea when they do not receive proper remuneration for their produce?
Unless supply-side infrastructure gets a major boost by the government, we are looking at a problem that is already spreading its tentacles in the farm sector across the country — farmer suicides. Whenever a farmer can’t repay his loan, he chooses to end his life, saddling the burden on his family, who transfer the load to the banks and the loaned amount becomes yet another non-performing asset (NPA).
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What will farmers do with a urea policy when they do not get proper pay for their produce? |
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The last time farmer suicides got out of hand, the government had to fill in for NPAs worth Rs 60,000 crore, if not more. If it happens again, the government might feel obliged to waive more loans in an effort to appear ‘sensitive’ to the common man’s needs. However, given India’s fiscal deficit which was predicted to be 4.6 per cent of the GDP but has turned out to be 6 per cent, we are already spending way beyond our means! A further hit in the form of a massive tax waiver may just push our country over the brink, and into the chasm of global recession that the rest of the world is looking at.
Even if the loan waiver is given, it is no guarantee to solve the problems of farmers. Most ryots get their farm loans from local lenders, who charge exorbitant interest rates, which trap the hapless farmers into an unending cycle of debt payment. Often, the interest itself outstrips the principal loan amount by manifold. If the government chose to waive farmers’ loans, it would target loans provided by public and private sector banks. It would have no knowledge of the loans given by mahajans and sahukars, and therefore, would do nothing to address the issue. There goes another ‘well-intentioned’ move down the drain, because it fails to reach a lion’s share of those whose plight it was supposed to allay!
And therein lies the bottomline. No amount of easing the path to farm loans or providing better tilling infrastructure would help the farmers unless they got good price for their produce, which can only be ensured by developing the supply-side infrastructure of farm products. Unfortunately, this very issue, which Pranab Mukherjee has cited as one of the factors that have driven up inflation, has not received ample attention in the budget. This is a very disappointing budget for a large portion of the agri sector.
The opinions expressed are the author’s own.
arkadev@tehelka.com
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