Budget 2003-2004
Budgeting The Demise Of Indian Agriculture
By Devinder Sharma
Successive Finance Minister's
have spared no effort in eulogizing agriculture. Presenting the Budget
2003-2004, Finance Minister Jaswant Singh had remarked that agriculture
is the life blood of our economy. A year earlier, his predecessor, Yashwant
Sinha had romanticized agriculture, saying that his Budget was aimed
at ensuring freedom of the farmer -- "kisan ki azadi".
It all began with the former
Finance Minister Mr Manmohan Singh, the chief architect of the new economic
policy. In his famous 1992-93 Budget speech, Singh had said "Agriculture
is the foundation of national prosperity and no strategy of economic
development can succeed in our country if it does not ensure rapid growth
of production and employment in agriculture. Nor can we hope to provide
sufficient jobs for our growing rural labour force unless we can transform
the economy of our rural areas." And yet, he concluded by saying
that agriculture being in the concurrent list, he was expecting the
States to accord top priority to the farm sector.
This unfailing lip service
glorifying farmers continues unabated. And in the bargain, Indian agriculture
has been pushed into an era of unforeseen crisis - increasing suicides
among farmers, mounting rural indebtedness, unmanageable glut at the
time of harvest, swelling rural to urban migration - clear pointers
of the gathering storm clouds over the farm sector. In fact, ever since
liberalisation became the economic mantra, and the impetus shifted to
business and industry, the persistent neglect of agriculture has cast
an ominous shadow.
Since the dawn of economic
liberalization in June 1991, the annual Budget has become a political
instrument to provide sops and tax holidays to the corporate sector,
trade and industry. In essence, Budget 2003-2004 too is targeted at
India - that lives in the urban centers. What happens to the masses
- comprising the real Bharat - where more than 80 per cent population
lives - has never been the concern of the successive Finance Ministers.
It
never was.
For a country, where nearly
85-90 per cent of the 110 million farming families, somehow elk out
a living from less than 2 hectares of land holdings, Jaswant Singh's
misplaced emphasis is on encouraging 'precision farming' to bring in
hi-tech horticulture. Interestingly, he says precision farming technology
is aimed at judicious utilization of natural resources
like land, water as well as time. "Demonstration of these technologies
will also be part of this scheme," he added, little realizing that
precision farming is a highly sophisticated and expensive model which
collapsed even in United States at the height of the worst drought (in
2002) the country faced in recent memory.
With the World Trade Organisation
(WTO) and structural adjustment programme finally beginning to bare
its fangs, the long-term viability of agriculture and the survival of
the farming community itself is at stake. More so, at a time when Indian
agricultural is faced with a sustainability crisis - declining productivity,
falling commodity prices and sluggish exports. The resulting political
cost of continuing with the benign neglect of agriculture and the farming
sector has finally begun to surface.
Ressurecting agriculture
should, therefore, be the obvious challenge for any Finance Minister.
Successive Budgets show emphasis, through the use of cliches like strengthening
marketing infrastructure, scientific management of scarce water resources,
empowering farmers to take informed decisions and so on. A growing volume
of evidence now clearly suggests that such jugglery in presentation
has not helped.
What is needed is a fresh
approach that takes the ground realities into consideration before embarking
upon any policy imperatives. I am trying to make an attempt, presenting
a collection of five of the important rational decisions, which would
certainly initiate the revival of Indian agriculture. All Budgetary
allocation for agriculture should be made keeping these criteria for
sustainable growth in mind:
Sustainable farming:
Indian agriculture faces an unprecedented crisis in sustainability.
Foodgrain productivity in the food bowl, comprising Punjab, Haryana,
and western Uttar Pradesh, is on the decline. The green revolution areas
are encountering serious bottlenecks to growth and productivity. Excessive
mining of soil nutrients and groundwater have already brought in soil
sickness. Introducing new Centrally Sponsored Schemes to improve production
in these areas is going to be counter-productive. Banking upon genetically
engineered crops to take care of the second-generation environmental
impacts is sure to worsen the existing crisis. Monocultures breed pests
and waste resources.
Jaswant Singh should have
made provision that encourages sustainable and traditional farming practices.
He must discourage investments and increased outlays for agricultural
research that is based on external chemical inputs like fertiliser and
pesticides (glad that he raised the prices of fertilizers, though under
pressure from World Bank). Instead, financial
allocation should be made for reviving low-input agriculture, which
uses cheap and locally available technology and in turn improves production
and protects environment. This has been amply demonstrated in several
parts of the world. Outlays earmarked for genetic engineering in agriculture
also need to be diverted to sustainable agricultural practices.
Farm incomes: Growing
indebtedness in agriculture is forcing an increasing numbers of farmers
to end their lives. This unsavory phenomenon is a manifestation of the
declining farm incomes and lack of farm credit. Institutional finance
and credit has almost disappeared over the years. Banks are no longer
treating agriculture for priority sector lending. Rural Banks and cooperatives
are deep in the red, with a majority of them eating
into their own reserves.
Bank loans for cars are available
at a much cheaper rate of interest than tractors. The more the poverty
level, the more is the rate of interest. I know of tribals in Kalahandi
in Orissa who pay 460 per cent interest to moneylenders. In neighbouring
parts of Madhya Pradesh, the rate of interest is a little lower at 360
per cent. And in Jharkand State, tribals pay something around 160 per
cent rate of interest. Even in the frontline agricultural States of
Punjab and Haryana, 50-60 per cent rate of interest by private moneylenders
is not very uncommon.
Agriculture credit has
to be revived. Finance Minister must spell out schemes that encourage
banks to provide easy credit facilities to farmers. Cosmetic innovations
like Kisan Cards and the likes are not much helpful unless banks have
the willingness to provide support to the agrarian sector. Asking private
banks to go rural is merely an approach that may satisfy the galleries.
Similarly, Budget allocation must be made for assured food procurement
at remunerative prices. In addition, procurement needs to be extended
to coarse cereals, pulses and oilseeds to provide farmers an incentive
to produce more.
Agriculture has to be
made attractive. Finance Minister must ensure that the Budget allocations
are made in such a way that it helps bring back the shine on the golden
grain.
Drought proofing:
Recurring drought continues to engulf vast tracts of central and north
western India. The importance of drought proofing should have been obvious
considering that foodgrain output had slumped by over 13 per cent in
2002-03 as a result of the severe drought that swept through almost
the entire country. Rajasthan, for instance, faces the fourth drought
year in a row. The increased emphasis on water harvesting notwithstanding,
the reduced availability of water is emerging as a major social and
economic crisis. This is because much of the investment is going into
a faulty technology of rain water harvesting, called the "Ridge
to valley" system, a technology imported from the United States.
Investments in rain water
harvesting needs to be immediately shifted to the revival of the traditional
forms of water conservation - ponds and tanks. Subsidies for drip irrigation
and sprinkler irrigation needs to be discontinued as it helps only the
rich farmers and corporates. Fodder cultivation, crop planning according
to the water needs and availability and the emphasis on the local breed
of cattle (and improving its productivity, rather than importing exotic
breeds) need to be encouraged.
Farmers in the rainfed areas
also need to be insured against drought. This can be ensured by making
it mandatory for the foreign insurance companies to invest at least
40 per cent of their funds for farm insurance.
Sugar mills: Sugarcane
is the biggest threat to India's food security. The unprecedented addition
of new sugar mills by successive governments has created a major crisis
on the agriculture front. Requiring good fertile and irrigated land
for cultivation, its growth is at the cost of staple foods like wheat
and rice. With the per hectare productivity of foodgrains on the decline
in the frontline agricultural states, diversion of good fertile land
to sugarcane is not without accompanying hiccups. What makes the switchover
to sugarcane a pernicious trend is its enormous water requirement. Sugarcane,
in fact, is the biggest threat to India's food security.
Since there is no shortage
of sugar in the country, and with a large number of mills actually being
rendered unviable over the past two decades, an immediate ban needs
to be imposed on setting up any new sugar mill. All Budgetary support
to the sugar industry needs to be withdrawn as it has led to a serious
environmental crisis.
Sugarcane farmers need to
be encouraged to divert to other crops. But before diversification becomes
the new mantra, it is important to first lay out the structures that
would help in taking the produce to the consumers.
Marketing: Providing
an assured and remunerative market for agricultural producers cannot
be left to the market forces. The food policy imperatives of public
distribution system and announcing the procurement prices before the
crop season have to be further strengthened. Agri-processing too needs
to be strengthened, but not at the cost of the domestic producers. The
Finance Minister must ensure that food-processing sector uses the abundant
raw material available within the country. The 'rainbow' revolution
that everyone talks about is actually aimed at helping the industry
to exploit the farm sector. Already a number of manufacturing units,
for instance, have begun to source the agricultural raw material, including
oranges, grapes, popcorn, peas etc, from America and Europe.
Although, India is following
the WTO dictates of doing away with the food procurement system, any
tinkering with what is generally regarded as the "famine-avoidance"
strategy, can be catastrophic. Finance Minister needs to take corrective
measures to reduce inefficiency in the system while at the same time
making it broad-based and widespread. PDS also needs to be extended
to upcoming agricultural areas in Bihar, Orissa, West Bengal and the
northeast.
The entire effort should
be to wipe away every tear from the face of the farming families. What
is desperately need is an annual Budget that helps bring back the smile
on the face of farmers rather than the industrialists who have already
milked the public exchequer dry.
(Devinder Sharma is a New Delhi-based food and trade policy analyst.
Email:[email protected]
)