Indianfarmers

articles >

Is the Budget Pro-Farmer or Pro-Industrialist?

No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. Adam Smith

Excerpts from ‘And yet another pro-farmer budget’: P.Sainath-The Hindu 010310: This Budget belongs to 'Aam Aadmi'. It belongs to the farmer, the agriculturist, the entrepreneur and the investor. — Pranab Mukherjee, budget speech, Feb. 26, 10,Gee! Another pro-farmer budget. Going by the media, every budget this past decade has been one.

	Rarely mentioned are the massive subsidies, now larger than ever before, for the Corporate sector. This year alone, the budget gifts over Rs. 500,000 crore in write-offs, direct and indirect, to the Big Industrialists. That's Rs. 57 crore every single hour on average — almost a crore a minute. Beating last year's Rs. 30 crore an hour by more than 70 per cent. revenue foregone in this budget in direct tax concessions to corporate tax payers is close to Rs. 80,000 crores. It was over Rs. 66,000 crore last year. And Rs. 62,000 crore the year before that. In all, Rs. 2,08,000 crores of direct freebies in 36 months.
	Consider that this loot-and-grab sortie has been on for two decades now. It means that in direct tax freebies alone the corporate sector has had the equivalent of some 15 'farm loan waivers' since 1991. Then there's the indirect stuff. In this year's budget: Revenue foregone in excise duty — Rs. 1,70,765 crores. Customs duty — Rs.2,49,021 crores. Together with the Rs.80,000 crore in direct write-offs, the total nears Rs. 500,000 crores.
	Several of the loans disbursed as “agricultural credit” are in excess of Rs. 10 crore and even Rs. 25 crore. And even as loans of this size steadily grew in number between 2000 and 2006, agricultural loans of less than Rs. 25,000 fell by more than half in the same period.
	Higher MSPs certainly helped ease pressure. But with higher food prices, with retail prices rising many times faster than wholesale, where does the farmer begin to benefit? Farm gate prices are way below those of even the wholesale markets. Further, over 70 per cent of Indian farmers are net purchasers of foodgrain
	Cost of cultivation is skyrocketing. It took Rs. 2,500, for instance, to cultivate an acre of cotton in Vidarbha in 1991. Rs. 13,500 in 2006-07 and Rs. 18,000 to Rs. 20,000 today. (Counting family labour and like costs). The 'gains' from these higher costs are cornered by the corporate world in sectors like seed, fertiliser and pesticide. Soaring input costs have been crucial to farm bankruptcies, debt and suicides.
	Agri GDP contracts to minus -2.8% in Q3 FY10 due to decline in the crops rice, coarse cereals and pulses during the Kharif season of 2009-10 by 14.2 %, 20.3 %, and 10.0 % respectively.
	For every ton of grain stored by FCI for a year, the carrying cost is over Rs 2,000 a ton.
	India produces about 14-15 million tonnes (mt) of various pulses and imports 2.5-3.0 mt a year, making the total availability close to 18 mt. The problem is not inadequate availability, but a faulty import and distribution policy. For controlling pulses prices, the Centre ought to use a combination of domestic procurement and imports on its own account through PSUs and ensure that packaged pulses are supplied to the States for PDS along with rice and wheat. Giving States the option to seek imported pulses is not an effective way of helping the poor access pulses. The subsidy is actually wasted, and there are no positive results to show.The same goes for edible oil too. As for sugar, the less said the better about the government's policy responses the past two years. BL 260210
	On why farmers were not getting a remunerative price the minister said, "There is a huge cost of intermediation (middle men) from farm gate to kitchen. Discussion is necessary to address this problem. F M250210
	Extension services are in a state of disarray and this is responsible for the deceleration in agricultural growth. Surinder Sud

Who are the Real Rural Poor?

The proportion of the rural population below the poverty line. At least four alternative figures are available: 28 per cent from the Planning Commission, 50 per cent from the N.C. Saxena Committee report, 42 per cent from the Tendulkar Committee report, and 80 per cent or so from the National Commission for Enterprises in the Unorganised Sector (NCEUS). It was an important contribution of the NCEUS report to point out that even a moderately enhanced poverty line basket, costing Rs.20 per person per day, would be unaffordable for a large majority of the population. Jean Drèze

Decline in crop response to fertiliser use

Crop response to fertiliser use (kg foodgrain: kg NPK) declined from 15 kg in the 5th Plan period to 6 kg in the 11th Plan period. Productivity levels of several crops too stagnated, increasing dependence on high priced pulses, oilseeds, wheat, sugar imports. Soil infertility in several key food producing parts of the country has led to low productivity.

The use of fertilisers in our country has been rising in recent years and now stands at around 115 kg a hectare. A fixed subsidy on a per hectare basis may be paid to the farmers, who can then source the most appropriate fertiliser mix for the land, making the industry market-driven with freedom to innovate.

Is India a soft State?

“The politics of a soft state, the sociology of a hierarchical society, the economics of a poor country, the laxness of a system of public administration that gives zero priority to accountability ... the predatory and exploitative nature of the state that has yet to shed its colonial provenance, the historical experience of a people who have experienced good governance only episodically — each contributes to the dysfunctionality of the Indian state, which worsens with each passing year...” Business Standard Editorial-24/04/08 : NOTE: The observations made above in2008 hold good even now in 2010 and worsened further.

In Kerala trade unions are being formed to demand higher wages and more guaranteed days of work every year.

The key demands include increasing the number of guaranteed workdays to 150 from 100 and raising wages from Rs 125 per day to Rs 150 per day. The labourers should be paid the minimum of Rs 150 not only by the government but also by the farmers too is the demand raised by the Trade Unionoists. Violent trade unionism has been blamed for industrial stagnation in Kerala. Source: Now, NREGA gets a taste of uniongiri. ET 180210

NREGS expenditure-1% of total household consumption

The minimum daily wage under the programme was raised to Rs 100, thereby increasing the daily wages by nearly 50 per cent in certain states such as Uttar Pradesh. In 2008-09, the NREGS generated Rs 10,720 crore of rural income at current prices, which is expected to increase to Rs 27,760 crore this year,

NREGS-generated consumption expenditure amounts to nearly 1.4 per cent of total rural consumption and nearly 1 per cent of total household consumption in India this year, nearly doubling the share since 2007-08.

In terms of the size of the overall Indian economy, our estimates suggest that the NREGS is expected to add roughly 50 basis points to GDP growth this year.

In Rajasthan, Karnataka and Tamil Nadu, almost one-third of all rural working-age population is expected to be employed under the scheme in the current year.

It is unlikely that the scheme has yet transformed household investment into productive assets and education significantly and, therefore, it may not be contributing effectively to the growth potential of the economy. It is also true that any scheme of this proportion is prone to leakages in terms of corruption and inefficiency. It has also been found that the NREGS creates shortage of farm labour, given the high wages paid under it as compared to the wages of daily farm workers.

Milton Friedman said, “There is nothing so permanent as a temporary government programme.” This might very well be the case in this fiscal stimulus package put into action through the NREGS.

Source: The NREGS kept rural employment and expenditure up in a drought year, Vidya Mahambare: BS: 130210