Other stories

Additives cos urge mandatory use for eco-friendly plastic

CII for green youth

LIC launches Health Plus

A budget in the name of ‘vote bank’ politics

By Neha Raghunath

Last updated: 4 pm, March 4 2008

New Delhi: Finance Minister P. Chidambaram announced a Rs. 60,000 crore package for farmers in the Union Budget presented on Feb. 29. Marginal farmers with land holdings upto 1 hectare and small farmers with holdings of 1-2 hectares will have a complete waiver of their loans. Loans overdue upto December 31st, 2007 which have remained unpaid till Feb 29, 2007 will be covered under the package. Chidambaram has ignored the needs of the farmers with three or more hectares of land. Already by distinguishing between the marginal and small farmers the Finance Minister has stirred up a controversy, with farmers feeling the creamy layer (farmers with lesser land) among them is reaping all the benefits.

But waiving loans is not the solution to end the farmers’ crisis for good and it cannot continue for long. Besides this waiver does not apply to large number of farmers who have taken loans from private money lenders. The decision might end up attracting more farmers into the vicious cycle of ‘credit.’ According to government statistics the agricultural credit industry is worth Rs 2, 40, 000 crores in 2007-08. Hence the decision might just increase the profits of the bank at the loss of the farmers. On the other hand the budget does not provide any benefit to farmers who have paid off their loans on time.

A report by the Radhakrishnan panel on Debt in 1991 had stated several reasons opposing the waiver of loans. One of the reasons was around 51% of the country’s farmers do not have access to institutional credit. With the general elections scheduled for next year the Finance Minister has tried to appease the agrarian community. In reaction to the news PSU (Public Sector Undertaking) banks stocks dipped but recovered later. The banks will mostly be reimbursed by the government for their losses in the form of bonds and greater liquidity. However, Mr. Chidambaram did not specify the source of funding for this debt-waiver.

The Finance Minister hopes to finish implementing the relief package by June 30th of this year. But given the numerous paperwork involved, it’s unlikely that the farmers will be able to keep up with the deadlines. The agriculture sector saw a growth of 2.6% this year against last year’s 3.8%. Hence the Finance Minister’s prediction that the sector would row at 4% for the year 2008-2009 looks unlikely given the increasing rate of farmer suicides especially in Vidarbha.

Former Finance Minister and BJP Leader Yashwant Sinha termed the budget as a ‘disaster’ and criticised the relief package. Ironically On Jan. 10 at Wardha, Maharashtra a Kisan Sankalp Rath Yatra was organised by his party colleague Rajnath Singh. At the rally his party workers chanted slogans like “BJP in favour of farmer loans waiver.”

The budget does not talk much about the Public Distribution System except for the use of Smart Cards to distribute food on a trial basis in Haryana and Chandigarh. The Finance Minister also announced the allocation of Rs 31,549 crores for food subsidy under the scheme which will be used next year. The point is whether these funds will reach the needy people and not be pocketed by government officials.

Over the years, many schemes have been introduced by the government. It remains to be seen how much of these new schemes will see the light of the day.

(Vidarbha inputs by Swati Roy/Digantik)

email: raghunathneha@gmail.com