Budget 2004-05 : Farmers are the new untouchables

Jul 12th 2004, Devinder Sharma
For the BJP-led National Democratic Alliance, and now the Congress-led United Progressive Alliance, farmers have become the new untouchables. If the two Budgets presented in 2004 are any indication – first the interim Budget by the outgoing Finance Minister Mr. Jaswant Singh, and then the Budget 2004-05 presented by his successor Mr. P. Chidambaram – agriculture has become a burden on an ungrateful nation.

The writing is clearly on the wall: farmers can go on committing suicide.

Amidst the rhetoric of strengthening agriculture or emphasis on agriculture to make villages smile, Mr P Chidambaram has followed the age-old principle: repeat the promise a hundred times and it will be taken as truth. With the ignorant electronic media, and the print journalist latching on to the right vocabulary that Mr. Chidambaram used, an impression is being given that the Budget 2004-05 promises to ‘tax India, fund Bharat'. In reality, it has failed Bharat.

This is exactly what happened with the ''India Shining'' promos. The media, including the newspapers, had accepted it without any question. In fact, the media was used by the ruling party to disseminate the message far and wide. The media is once again being used very effectively and has become a convenient ally to political rhetoric, manipulations and machinations.

''We've shown that we are a caring government by addressing agriculture, rural economy and infrastructure,'' the Finance Minister was quoted as saying in one of his routine post-Budget interviews on the television. In reality, Mr. P. Chidambaram did not provide any additional outlay for agriculture or the allied sector. Nor did he provide any indication of a road map for boosting agriculture growth. Such is the insensitivity to agriculture that he did not even make a mention of the growing crisis on the farm front that was forcing farmers to take their own lives.

It is true that agriculture sector requires massive investments. To say that such investments have to be made through credit-enabled private investment and enhanced public investment (for which no indication is available) shows the step-motherly treatment being doled out for agriculture. When it comes to industry and corporate sector, the government never shies away in making a direct investment in the name of boosting efficiency and competitiveness but for agriculture it has to be through enhanced credit!

Doubling the flow of agricultural credit in the next three years is not the answer to the blood bath that is being enacted in the ravaged farm sector, a direct fallout from the green revolution equation going wrong. A majority of the thousands of farmers who continue to take the fatal route to escape the humiliation that comes along with increasing indebtedness, are actually dying because of their inability to repay the loans. Credit is therefore part of the problem, and how the policy makers think of solving the problem (inability to repay the loans) by extending more loans surely defies any sensible logic.

What the farmers need is an assured income. Like everyone else who lives in the urban centres, he too needs an adequate monthly package that takes care of his family needs and leaves him with a little surplus to sow the next crop. Successive governments, through the process of annual Budgets, have actually ignored the plight of the farming community thereby acerbating the agrarian crisis. Such was the contempt against anything rural, that for the BJP-led coalition, Bharat had simply disappeared from the economic radar screen. Unfortunately, the UPA too is following the same model of economic growth.

Studies by the Ministry of Agriculture have clearly demonstrated that farm incomes have fallen in the past five years. Rice farmers in West Bengal for instance earn less by 28 per cent in 2002-03 than what they earned in 1996-97. Incomes of sugarcane farmers decreased in Uttar Pradesh by 32 per cent and in Maharashtra by 40 per cent. Farm incomes of north Indian farmers eroded by 10 per cent on an average. The sharp decline

in farm incomes is happening at a time when incomes in the urban areas is on an upswing.
If nothing better, Mr. Chidambaram could have at least extended the crop insurance cover. For the past 20 years, the government has been talking of introducing crop insurance. It hasn't gone beyond the pilot testing stages. Even at times when insurance has become a strong plank of globalisation, this service industry refuses to touch the farm sector. Instead of saying that the crop insurance scheme will be extended on a trial basis to 20 rain gauge stations in the current crop season, Mr. P. Chidambaram should have learnt a lesson or two from the newspaper industry. Some newspapers had announced a life insurance cover of Rs 2 lakh to each of their subscribers if they buy the newspaper for three months.

If only Mr. Chidambaram had extended this cover to the farm sector, thousands of farmers who sacrificed their lives at the altar of development could have been saved from the gallows. All that the government needed to do was to provide them with a newspaper subscription for three months.

Doubling horticulture production in the next ten years, and launching a National Horticulture Mission is a faulty prescription. The fault is further compounded by the assertion that horticulture production will be enhanced by following the cooperative dairy structure. First, it has to be known that India is amongst the world's top producers of fruits and vegetables. The average availability of horticultural products is around 780 grams per day. However, against the prescribed minimum nutritional norms of 90 grams to be consumed daily, an average Indian only manages to eat 40 grams.

Increasing horticulture production therefore is not the answer. The challenge is to see how to increase the consumption of existing horticultural produce. Add to it the declining consumption of cereals in real terms, the message is crystal clear. For bulk of the population, the capacity to buy food is eroding fast. This is leading to worsening of poverty and thereby leading to acute malnutrition. The Economic Survey, presented a day before the Budget, clearly stated that cereal consumption within a year had fallen drastically, from Rs 1,58,621 crore in 2001-02 to Rs 1,24,560 crore in 2002-03, indicating worsening poverty levels.

Moreover, if the dairy cooperative system is such a wonderful mechanism to boost production, there seems to be no justification for all the efforts being made to dismantle the Amul cooperatives. The milkman of India, Dr George Verghese, is unhappy today, tired of pleading with the bureaucrats not to tinker with the Amul cooperatives. Isn't it therefore surprising that on the one hand the government is increasing joint ventures in dairy cooperatives thereby taking away the spirit of cooperation and on the other the same system is being advocated for another new thrust area.

Exemption granted to the tractor industry by scrapping the excise duty of 15 per cent comes only few months after the industry reaped in a bonanza by the lowering of the bank interest rates for farm sector. What is being hailed as a right step for modernising agriculture is in reality emerged as the biggest killer on the farm front. Aggressive tractor marketing has lured small and marginal farmers to buy tractors on easily available loans. Since the majority land holdings fall much below the viability criteria of at least ten hectares of land needed to maintain the machine, a majority of them get into a debt trap within a year of buying a tractor. A large number of such farmers end up committing suicides.

Tractor availability has already crossed the thresh-hold limit. It is time the government makes tractors out of the reach of the farming community despite the industry crying foul. Too much is also being made out of the new scheme promised for water harvesting. There are already 70-plus scheme for water harvesting operating in the country, another scheme with an additional outlay of Rs 100-crore is not going to make any difference unless we remove the structural flaws in cropping pattern that leads to water crisis.

It seems the policy makers and planners have exhausted all other options to prop up the farm sector. It reminds me of the five blind men and the elephant. No wonder, crop diversification has become the easy escape route to those who are trying to find ways to help agriculture. This is exactly what the World Bank and the IMF have been telling the developing countries to do, and this is exactly what is being perpetuated under the free trade regime being enforced through the World Trade Organisation. The developing world is being repeatedly asked to stop growing crops that are being negatively impacted by monumental subsidies that the rich and industrialised countries provide for their agriculture. This is exactly what I have been warning all these years. Let us therefore first understand the politics behind the emphasis on diversification

The World Bank/IMF have under the Structural Adjustment Programmes (SAP) very clearly tied up credit with crop diversification. It continues to force developing countries to shift from staple foods (crucial for food security needs) to cash crops that meet the luxury requirement of the western countries. It has therefore been forcing developing countries to dismantle state support to food procurement, withdraw price support to farmers, dismantle food procurement, and relax land ceiling laws enabling corporates to move into agriculture. Farmers need to be left at the mercy of the market forces. Since they are ‘inefficient' producers, they need to be replaced by the industry.

The same prescription for farming has never been suggested for the rich and industrialised countries. Let us be very clear, one part of the world that needs to go in for immediate crop diversification is the industrial world. These are the countries that produce mounting surpluses of wheat, rice, corn, soybean, sugar beat, cotton, and that too under environmentally unsound conditions leading to an ecological catastrophe. These are the countries that inflict double the damage – first destroy the land by highly intensive crop practices, pollute ground water, contaminate the environment, and then receive massive subsidies to keep these unsustainable practices artificially viable. These are the countries that are faced with the tragic consequences of massive farm displacements, and are in the grip of food calamities arising from industrial farming.

If India or for that matter other developing countries fail to understand the prevailing politics that drives the agriculture trade agenda, the world will soon have two kinds of agriculture systems – the rich countries will produce staple foods for the world's 6 billion plus people, and developing countries will grow cash crops like tomato, cut flowers, peas, sunflower, strawberries and vegetables. The dollars that developing countries earn from exporting these crops will eventually be used to buy foodgrains from the developed nations – in reality, back to the days of ‘ship-to-mouth' existence. All this is being attempted in the name of growth and development.

All this is being pushed by the corporate sector, which has shown no responsibility towards the social sectors, including agriculture. This is where the economic thinking has gone wrong. And this is where the media has fallen an easy prey to the glamour and glitter that the corporate world provides.

This reminds me of what the former Finance Minister of Pakistan and the author of the UNDP's Human Development Report, the late Mahbub-ul-Haq (who was a personal friend of Dr Manmohan Singh) had once remarked, ''We were wrongly taught that we should take care of GDP and it will automatically take care of poverty. Let us reverse it. We need to take care of poverty and it will automatically take care of GDP". And the World Bank reluctantly acknowledged, though belatedly, ''the gap between some of India's largest and poorest states exhibit slow progress in human development indicators; low growth rates particularly in the agricultural sector. If the present trends continue, the bulk of the poor in these states will be unable to participate in future growth.''

Like Mr. Chidambaram, Mahbub-ul-Haq too refused to accept the stark reality – economic growth will not reduce poverty and deprivation. He too believed firmly in the conviction that the real purpose of development was to increase savings and attract foreign investments. As Pakistan's Finance Minister in the 1960s, he was able to generate a GDP growth rate of seven per cent. ''And still people voted us out,'' he told me once, adding ''it was a rude awakening for me. I realised that economic growth is no indicator of human development."

He had admitted that, expressing certain exuberance that is the privilege of youth, he had all along argued that GDP growth must supersede all other goals. Not realising that in the bargain, poverty actually grows whereas the benefits of economic development are reaped by a handful of the rich industrialists and the elite. On the other hand, revitalise agriculture and poverty and growth are automatically taken care of.

(Devinder Sharma is a New Delhi-based food policy analyst)

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