Sunday, March 2, 2008

Farm Favours: Long Live Indian Democracy!

The 60,000 crores loan waiver announced by the Finance Minister (FM) for small and marginal farmers did not come as surprise to any one. In fact, the political parties had started making small noises about the loan waiver scheme, days before the presentation of budget, to extract political mileage. In view of the dismal growth rate of agriculture, major policy interventions were long overdue. However, it took five budgets for the FM to come with a prescription for rejuvenating the agriculture sector.

Was the loan waiver only option available with the FM? It has been reported in the media that the farmers in Andhra Pradesh, Punjab and Gujarat and to some extent in Karnataka, have welcomed the waiver. However, it has drawn muted reactions from farmers in Vidarbha, as large numbers of farmers in this region have taken loans from local moneylenders and hence will not benefit from the loan waiver. It was reported today that a farmer consumed pesticide in Aligarh district of UP because of failure of his potato crop due to frost. He was also dependent on the sahukaar ( moneylender) for his credit needs. It is thus evident that the problem with agriculture is much deeper and warrants a more sophisticated solution than the easy and popular option of loan waiver.

The loan waiver scheme has been welcomed by all the political parties as everyone wants to be seen sympathising with the farmers, specially when elections are around the corner. Demand is now also being made to waive entire loans of big farmers instead of 25% waiver announced in the budget. The scheme will definitely provide immediate relief to an estimated 4 crores farmer families. But, the FM seems to have skirted the basic issues afflicting agriculture. The loan waiver, as past experience has showed, will play havoc with the credit system as it rewards the defaulters and creates expectations for future waivers. The problem of institutional credit would have been better addressed by improving the access to the institutional credit than playing tricks with the credit institutions themselves. It will not help the banks either, in the long run, though it will help them cleanse their balance sheets for the time being. Further, the problem of credit does not seem to be the only reason for farmer suicides as states with better access to credit have witnessed the largest number of suicides

The FM has also talked about increasing the target for banks for agriculture credit from 2,25,000 crores in 2007-08 to 2,80,000 crores in 2008-09. It is not clear as to how will this be achieved. A more comprehensive strategy, however, is required for fuelling the growth of agriculture. Easy access to timely and adequate institutional credit to all the farmers along with a cheap and efficient crop insurance scheme is a must for their survival. Remunerative prices for the farm produce, elimination or minimization of intermediaries in their marketing and additional income from allied activities will reduce alienation of farmers from agriculture. The FM decided not to address any of these issues.

In an interview, the FM denied that loan waiver is an amnesty scheme and said that if 4 crore farmers are enthused to take to farming in a more aggressive way and the balance sheet of banks is strengthened, it is sound economics. It appears we need to take fresh lessons in economics in an election year. Long live Indian democracy!

Saturday, February 16, 2008

Loss of Credibility

The drama in Maharashtra ended with the brief detention of both Raj Thakeray and Abu Azmi. But it took a week’s time and little hard talk by the Centre for the Deshmukh government to act. But, after sufficient damage had been done to the social fabric, a life had been lost, industries in worst affected Nashik districts had lost more than Rs. 400 crores and large number of Biharis had boarded trains eastwards for their safety. It is yet to be seen whether they will ever come back to their adopted state.

Even after all this, Raj Thackeray of Maharashtra Navnirman Sena (MNS) remains totally unrepentant and has been quoted as saying that what has happened has happened. Even the reaction of major political parties has been beyond comprehension. Except for Laloo Yadav and Nitish Kumar, who condemned the violence, neither BJP nor Congress, not to talk about the Left, came out strongly against the utterances and acts of violence by MNS. It seems the political expediency takes precedence over everything else.

Does it mean that our major political parties endorse the act of MNS in the garb of protecting Marathi culture? Where from did MNS arrogate itself the authority to protect Marathi culture? Can culture or for that matter practice of a particular religion be enforced? Our constitution prohibits any discrimination on grounds of religion, race, caste, sex or place of birth. Inciting violence against the migrants also attracts penal provisions. Why did the law enforcement agencies then took so much time to act? It seems they were seeking directions from the Mantralaya. If our police does not performs its duties and the political leaders look the other way, it is the credibility of the state as protector of its citizens, which will take the beating. Can a liberal democracy like India afford to allow this? We are all talking about becoming an economic super power. What happens to the idea of a civil society?

The only solace during the entire episode has been the reaction of conscientious Mumbaikars of all hues and colours. There is still hope.