Budget a panacea for small farmers: Bansal
2 "The budget will go a long way in solving the problems of the small farmer,' said Pawan Kumar Bansal, Minister of State for Finance, while speaking at a seminar, "Agriculture
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Farm loan waiver via cash, bonds
HERE'S the answer to the most intriguing question about this year's budget
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Will loan waiver address farm distress?
It will provide only short-term relief THERE arefour crore small and marginal farmers who are unable to repay their crop loans to the banks. The Rs 60,000-crore budgetary allocation for waiving their loans will now enable a farmer to go back to the same bank, apply for another loan and await either of these two outcomes: a good crop or another loan waiver. While the gesture provides farmers relief in the short term, it would be harmful for the economy, especially the farm economy, in the long run. If we take the risk versus reward incentive out of an economic activity such as agribusiness, the enterprise quotient diminishes and hinders both growth and innovation.These key attributes, along with structural reforms and investment in agri-infrastructure, are needed to raise agricultural productivity and maintain the growth trajectory of the economy. The question we need to ask ourselves is why these farmers have not been able to repay their crop loans. Can Rs 15,000-per-farmer reward help them produce a better crop in the next season? The answer sadly is No. Small farmers face two main challenges: meeting their input needs (seeds, pesticides) and dealing with the weather risks to their crops. Issuance of input coupons for purchase of quality inputs for the next season would have been more beneficial. Bad weather plays havoc with agriculture. Dealing with weather risk calls for appropriate risk management tools such as weather insurance. This requires a network of weather stations at the block level for timely collation of data, a basic requirement for weather insurance products. Establishing a network of weather stations would have required only a fraction of the Rs 60,000 crore outlay. The budget will definitely encourage the creation of rural enterprises such as nurseries and cold chain establishment. The one-time budgetary assistance of Rs 75 crore for setting up mobile soil testing facilities is also a good step. However, the provision of Rs 60,000 crore for loan waiver which can at best provide short-term relief to farmers has robbed them of possible agri-infrastructure projects such as roads, marketing and storage facilities, and irrigation which could have yielded better returns on a sustainable basis. (*Country Head, Food & Agribusiness Strategic Advisory & Research) RAKESH TIKAIT Spokesman, Bhartiya Kissan Union It will not solve the deepening agri crisis THE Union budget 2008-09 is prima facie a pro-farmer budget, with the primary emphasis on writing off the loans of small and marginal farmers. It is a good step to provide instant relief to farmers who are heavily indebted, although it covers only 40% of total farmers. However, the debt relief will not solve the deepening agrarian distress. Nevertheless, we see the announcement of debt waiver as a victory of farmers' union, activists and pro-farmer media. It was a great battle and we are grateful that the finance minister took this step despite corporate pressure. We believe that this measure alone is not enough to address the farmers' problems. It is well known that the basic problem faced by farmers is their inability to get fair price for their produce. The policy makers have said nothing on this count. Nothing has also been said about ensuring better farm gate price for agriculture commodities or making available a price stabilisation fund to help farmers increase their income. The price offered for the commodities produced by them must not only fully cover their cost of production but also ensure livelihood security. Subsidy is another area of concern. Traders and producers are currently getting all the benefits while farmers have to suffer due to scarcity of fertiliser. The budget has also not made any announcement to strengthen the extension services of the ministry of agriculture to make it more relevant for the farmers. As a result, farmers are forced to depend on agents of pesticide and seed companies for technical advice. It seems that the government has made up its mind to hand over this system to the corporate sector. In this context, we are closely watching the Indo-US knowledge agreement and the multinational companies in seed business. In conclusion, although the budget is pro-farmer, the actual need of the Indian farmer is not just the removal of debt and interest. Many other important issues need to be addressed. These include access to market, fair price for produce, timely availability of fertilisers and seeds, direct subsidy and the public sector investment in agriculture business. We hope the government will consider all this in future. And the main need is to keep corporates far from farming business. K CHAKRAVARTHY Country Head* YES BANK
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Farm loan waiver to help small tea growers
KOLKATA: The finance minister's farm loan waiver will help 1.10 lakh small tea growers become more competitive. Small growers contribute 25% to the national tea production, which stood at 940 million kg in 2007. The Budget has also abolished cash transaction tax, which was a burden to the tea industry in particular. "Nearly 80% tea estate workers do not have bank accounts and have to be paid in cash. For the tea industry, which is yet to come out of a crisis, this tax was an added burden,' Ambootia group chairman Sanjay Bansal said. There are 3 million direct workers in the country's tea estates. The estates also provide indirect employment to some 1.5 million people. The wage bill of the industry is around Rs 80 crore. The payment to workers are made on weekly, fortnightly or monthly basis.
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Farm waiver gets bigger: Rs 65,000cr
UPA's mega poll sop for farmers has got bigger. The loan waiver for "small and marginal farmers' will now add up to a staggering Rs 65,000 crore even as the government is preparing to enlist banks as primary agents in identifying the scheme's four crore beneficiaries. The figure for the one-time settlement, which will benefit farmers who are willing to make a payment of loans to get a rebate, is yet to be finalized and discussions at the top echelons of government have seen the total write-off range up to Rs 100,000 crore. As of now, the figure has been revised to Rs 65,000 crore. The other key issue of identifying the beneficiaries, crucial to the waiver's success, will be largely entrusted to the banks. Banks to identify beneficiaries New Delhi: A large part of identifying the beneficiaries, crucial for the success of the Rs 60,000-crore loan waiver to farmers, will be entrusted to banks. It is felt that this would be the best option for the government as banks are expected to have records of persons they have given loans to, and in the case of farmers, would also have the size of their holdings. Having set 2 hectares or 5 acres as the size of holdings for the waiver's beneficiaries, the government has the mammoth task of getting accurate lists ready so as to facilitate a complete rollout by the June 30 deadline. Commercial and rural banks and cooperatives would have an incentive to draw up lists as they would be paid money for loans which had suffered defaults. Official sources pointed out that most of the loans being targeted were anyway "basket cases' for the banks. With little hope of recovery, the banks should be more than willing to divert resources to identify farmers who can benefit from UPA's largesse. In this way, the government would not have to depend on land and revenue records, which were not always well maintained and could be open to manipulation as well. Though payment to the banks will be staggered, in the first year, the banks will be given Rs 40,000 crore. Agriculture minister Sharad Pawar told the media that in the next three years, the figure would be Rs 8,800 crore for 2008-09 and 2009-10 while the final amount to be paid in 2010-11 was expected to be Rs 2,400 crore. While the effectiveness of the loan waiver, and its potential political benefit, is being discussed, the Congress leadership is in an upbeat mood. Scenes of farmers celebrating and dancing have helped waiver enthusiasts argue that the Budget announcement was a popular hit. The massive giveaway, along with the pro-middle class decision to raise incometax exemption limits, could deliver a formidable advantage to the ruling combine. Those who feel somewhat differently point out that most of the really distressed farmers were engaged in dry-land farming. In normal circumstances, they were not eligible for high loan amounts and in contrast, farmers in irrigated areas, with holdings of similar size, would get larger loans. Dry-land farmers had to depend on private money lenders and these debts were outside the waiver. On the other hand, farmers in irrigated areas would now benefit from the waiver while also being in a position to raise regular loans from banks.
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Banks to identify beneficiaries
A large part of identifying the beneficiaries, crucial for the success of the Rs 60,000-crore loan waiver to farmers, will be entrusted to banks. It is felt that this would be the best option for the government as banks are expected to have records of persons they have given loans to, and in the case of farmers, would also have the size of their holdings. Having set 2 hectares or 5 acres as the size of holdings for the waiver's beneficiaries, the government has the mammoth task of getting accurate lists ready so as to facilitate a complete rollout by the June 30 deadline. Commercial and rural banks and cooperatives would have an incentive to draw up lists as they would be paid money for loans which had suffered defaults. Official sources pointed out that most of the loans being targeted were anyway "basket cases' for the banks. With little hope of recovery, the banks should be more than willing to divert resources to identify farmers who can benefit from UPA's largesse. In this way, the government would not have to depend on land and revenue records, which were not always well maintained and could be open to manipulation as well. Though payment to the banks will be staggered, in the first year, the banks will be given Rs 40,000 crore. Agriculture minister Sharad Pawar told the media that in the next three years, the figure would be Rs 8,800 crore for 2008-09 and 2009-10 while the final amount to be paid in 2010-11 was expected to be Rs 2,400 crore. While the effectiveness of the loan waiver, and its potential political benefit, is being discussed, the Congress leadership is in an upbeat mood. Scenes of farmers celebrating and dancing have helped waiver enthusiasts argue that the Budget announcement was a popular hit. The massive giveaway, along with the pro-middle class decision to raise incometax exemption limits, could deliver a formidable advantage to the ruling combine. Those who feel somewhat differently point out that most of the really distressed farmers were engaged in dry-land farming. In normal circumstances, they were not eligible for high loan amounts and in contrast, farmers in irrigated areas, with holdings of similar size, would get larger loans. Dry-land farmers had to depend on private money lenders and these debts were outside the waiver. On the other hand, farmers in irrigated areas would now benefit from the waiver while also being in a position to raise regular loans from banks.
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Loan waiver not fair to Punjab farmers: Badal
Bathinda: Dubbing the loan waiver announced by the Union government for Punjab farmers as a classic example of "administering medicine for cold to a person suffering from cancer', Punjab Chief Minister Parkash Singh Badal today said Punjab farmers were not meted out fair treatment by the Centre while announcing the relief. The CM said focus should have been on reducing input costs like diesel prices and fertiliser costs for ushering in sustainability in the agricultural sector. Badal was in Malooka village near here today to participate in the bhog ceremony of Chatin Kaur, mother of Akali leader Sikander Singh Malooka. He dwelt upon the need for setting up an all-party expert committee comprising agri-experts to bail out state farmers from the crisis. Badal said only 29 per cent farmers of Punjab
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Water restrictions to stay
MELBURNIANS can expect water restrictions to remain for several years until massive infrastructure projects are completed, including the desalination plant due to begin operating in 2011. The city's water supply is in better shape than at this time last year but a drier autumn looms. Water Minister Tim Holding said yesterday some restrictions would continue until major projects were completed. Water Services Association of Australia executive director Ross Young said Melbourne ended February with its catchments 35.5% full, up from 34.2% at this time last year. He attributed the increase to a fall in water consumption, down 9% on the previous year, and more summer rainfall, 10% above average. However, Mr Young said dry soil throughout the state meant higher rainfall was not delivering the boost to reservoirs that might be expected. The streams that fill Victoria's reservoirs were flowing at only 58% of the long-term average flow. Water storage levels in Ballarat were at just 9.5%. Meanwhile, the Murray-Darling Basin Commission yesterday warned that flooding rains in Queensland and above-average summer rainfall in the upper Murray River would bring little or no relief for Victorian irrigators. Total inflows into the Murray system are still only a quarter of the long-term average. Victorian irrigators will receive only 42% of their entitlements this financial year, with worse likely for next year. With CHRIS HAMMER
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A bridge too far gone ...
At this time of year, Jasabi village in Lhuentse is calm and quiet. There is not much activity as farmers serenely prepare for the spring season which heralds yet another busy farming cycle. But the farmers from about 15 households in this village dread summer. They fear summer not because of the drudgery of farm life, but for a common problem they share every summer - the Jasabi bridge. The suspension bridge over the Kurichhu river in Kurtoe gewog, which is a lifeline for the village, is about 23 years old and about to fall apart, according to farmers. Over the years, the river has eaten into the foundation of the bridge, which was built in 1985. "I think the bridge will not survive the swelling river, forget a flood,' said a worried farmer. There is enough reason for concerns. Jasabi is a two- to three-hour walk from the nearest farm road in Dungkhar. It is the only bridge that connects the village to the dzongkhag headquarters, the hospital, and the gup's office. "Even to sell a few village products, we have to cross that bridge,' said another farmer. "If the bridge breaks down, our children will miss one academic session because the school is on the other side of the river.' "We'll be isolated,' said the village tshogpa, Pema Wangchuk. According to him, there is no other means to get to Lhuentse if the bridge is washed away. "During winter, we can wade through but, with the Kurichhu swelling in summer, there's no other way to get across.' However, Dzongkhag officials are aware of the concerns of the Jasabi farmers. According to the dzongkhag engineer, Tshering Chophel, the bridge would be renovated in the first year of the 10th Plan. "The bridge is risky and we've already made plans to renovate it,' said the engineer. "We'll provide protection to the foundation of the bridge, so there's no need for a new bridge,' he said. "The wooden deck will also be repaired.' The Kurtoe gup added that the importance of the bridge was long realized and included in the Plan. Contributed by Tashi Yetsho
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Farm loan waiver runs into trouble
Nath: Where Will Funds Come From? The mega loan waiver announced by the Manmohan Singh government is running into some in-house scepticism with doubts about funding for the give-away being aired in the Cabinet. On Monday, a meeting of the Cabinet saw commerce minister Kamal Nath asking whether the government had made provisions for the Rs 60,000 crore scheme it has announced in the Budget. He also seemed to argue that it would have been better if the Cabinet had been taken into confidence. Sources said that Prime Minister Manmohan Singh intervened to commend finance minister P Chidambaram and the loan waiver. Foreign minister Pranab Mukherjee also said that the finance ministry has chalked out the broad direction and details will soon be worked out. This reflected doubts put forward that the waiver unfairly lumps farmers tilling irrigated lands with those in dry-land conditions and that the two hectare cut-off for beneficiaries cannot apply across the country. Wondering whether the waiver would benefit distressed farmers, minister of state for new and renewable energy Vilas Muttemwar told TOI, "The problem lies in many farmers in areas like Vidarbha owning up to 15 acres of land, but being very poorly off. It is not just the small farmer, even those with larger holdings, who actually can access credit, are suffering.' Muttemwar said he would speak to the Prime Minister and Congress chief Sonia Gandhi and ask for the eligibility for the Rs 60,000 crore waiver announced by the government to be altered in a state or regionwise manner. He also said that even smaller farmers might not be able to use the waiver as they were largely indebted to private money lenders. Muttemwar disputed agriculture minister and NCP boss Sharad Pawar's call to farmers to stop paying money lenders. "This is easier said than done. These loan sharks get farmers to sign agreement to sale documents. Even those sales are being closely scrutinised, it is not easy for farmers to simply throw off the yoke of money lenders,' he said. The minister's views could be some cause for worry as he represents Nagpur, the political centre of the Vidarbha region which has been reeling from suicides by farmers. The criticism that farmers who need help might be outside the waiver also dovetails with the argument that UPA's largesse will help well-off agriculturalists in areas like western Maharashtra. Well-known agro-economist M S Swaminathan agreed that it was difficult to compare farmers from green revolution states with those in impoverished dust bowls. "Comparing farmers owning two hectares in Punjab with those with holdings of similar size in Rajasthan or Vidarbha is unfair. The size of holdings in distressed areas should be much bigger,' he said. Swaminathan said farmers in irrigated areas who used advanced methods had access to credit much in excess to what farmers in distressed areas were able to garner. Budget can't be challenged in court: SC Even before the applause for a Budget
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NDA, UPA in war of words over funding of dole for farmers
The discussion on the President's address got off to a confrontationist and bitter start in Lok Sabha on Monday with NDA and UPA benches repeatedly interrupting each other even as Leader of Opposition L K Advani called on Prime Minister Manmohan Singh to reveal how the mega loan waiver would be funded. Advani said while a relief package for farmers was welcome, it was incumbent on government to tell Parliament how it intended to compensate banks and cooperatives for the Rs 60,000 crore sop. "Will this be by way of bonds that will be redeemed later?' he asked. He also pointed out that rural distress had been aggravated by price rise. The Radhakrishnan report on indebtedness said that there were a range of factors that were adding to the farmers' burden. Many farmers who were facing a debt trap had borrowed heavily from private money lenders. He sought to link the waiver with the possibility of an early election and said "since last August there has been uncertainty' referring to Congress-Left brinksmanship over the India-US nuclear deal. He said an unstable government could not deliver. Advani was interrupted with Congress MPs questioning him on issues like the record on combatting terror and BJP's position on Telangana. The heckling seemed part of a pre-planned script. Congress chief Sonia Gandhi's decision to sit on the last bench during the debate seemed to encourage her MPs who competed with one another in aggressively defending the party. The loan waiver issue also had an echo in Rajya Sabha with BJP and CPM charging the Centre with not addressing the real concerns of the poor. Participating in the discussion on the motion of thanks, Abhishek Singhvi (Congress) said the economy had grown by over 8% in the last four years. "But this gung-ho spirit has to be tempered' in the face of hard reality of 25% people still living below the poverty line.
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Loan waiver: "worst affected farmers rendered ineligible'
Delivering the Third Sumitra Chishti Memorial Lecture here on Monday, The Hindu Rural Affairs Editor, P. Sainath, methodically demolished the "historical and unprecedented' Union budgetary farmer loan waiver stating that the worst affected farmers were rendered ineligible as they possessed more than the stipulated two hectare land holdings. "In Vidharbha, over 50 per cent of land holdings are over 7.5 acres [around 3 hectares] and of the remaining 50 per cent, 25 per cent have restricted access to banks. There is nothing in the budget that increases the income of farmers or stabilises prices,' he said. Agrarian crisis Speaking on the agrarian crisis, the Magsaysay Award winner said over 1.5 lakh farmers had committed suicide in the past five years. A farmer killed himself every 30 minutes and the number of such suicides had increased from 15,000 a year between 1997 and 2001 to 17,000 a year in the 2002-06 period. "Just like each case of child labour has a personal history behind it, every farmer suicide had a multiplicity of causes. But the larger canvas or backdrop that leads to such suicides is common and stems from certain undeniable causes.' Enumerating these causative factors, Mr. Sainath said there had been a transfer of funds from the poor to the rich, an unprecedented growth of the corporate sector and gross undermining of local sovereignty and governance. "Farming has been rendered so unviable at the small-scale level that there are not many takers for it and the relentless drive towards corporate farming has just hastened the demise of the small farm not just in India but the world over,' said the eminent journalist.
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Budget can't be challenged in court: SC
Even before the applause for a Budget
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Band aid, in wrong place
No one asks the farmerBringing up babus With its Rs 600 billion farm loan waiver in the current budget, the government has applied some band aid to the financial haemorrhaging of India's farmers. It is another matter that the hurt is at some other place. The farmer has difficulty in obtaining cheap and reliable credit; various laws prevent him from selling his produce at the most competitive prices in the open market; there is no reliable advice available to him on how best to tend his fields in an economical manner; existing farming techniques, guided by corporate interests, continue to suck life out of the soil without replenishing it and there is no system of health security in the villages. On all these counts, the government has yet to show even minimal movement. The farm loan waiver gives the impression that farmers do not wish to repay their loans. This is a serious misrepresentation of the ground reality. According to figures from the NABARD, only some 10 per cent of the farmers default on bank loans. And even then, it is rarely that farming assets are taken away by the banks for failure to pay back loans. The problem for farmers lies in the loans taken from informal sources: moneylender and relatives. Often, the moneylender himself is a prosperous neighbourhood farmer. He gives large loans that are beyond the paying capacity of the borrower. These loans come with exorbitant rates of interest and severe penalties for default. The lender here does not falter in taking away farming assets, including land. After all, this could be a strategy for acquiring more land for himself. The advice of the agriculture minister a few days ago at Mumbai that farmers need not pay back loans taken from
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Waiver: Pawar begins scoring political points
BUDGET 2008-09 IMPACT The Rs 60,000 crore loan waiver for farmers announced in this year's Budget is being projected as a major achievement of Agriculture Minister Sharad Pawar in his stronghold and sugar cane country western Maharashtra. The minister has unleashed a blitzkrieg of advertisements of his Nationalist Congress Party, addressing sugar cane farmers there. On the other hand, Congress leaders in the party stronghold of Vidarbha are on the defensive, even as farmer groups are openly saying that Pawar engineered the package to weaken the Congress in Vidarbha. The political sub-plot to the waiver has once again added to the agony of the dryland farmers who were earlier denied a waiver when the prime minister announced a relief package. The waiver benefits sugar cane and horticulture crops vastly, while the benefits for cotton farmers and those doing unirrigated farming are minimal. For, while loan available for dryland farming is Rs 4,000 an acre, it is Rs 50,000 for irrigated farming, which sugar cane farmers do. Hence the waiver will be a lottery for farmers in western Maharashtra and in Pawar's constituency of Baramati. The advertisements seek to drive the point home. The full page advertisements appearing in Marathi newspapers on March 1, with several pictures of Pawar, trumpet home the fact that the waiver is meant to benefit the sugar cane and horticulture farmers of western Maharashtra rather than the cotton farmers of Vidarbha. Pawar's advertisements in newspaper Sakal's Nagpur edition, for instance, talk about how loans for tractors will be waived. The advertisements in Lokmat and Tarun Bharat, which appeared on March 1, also splashed Pawar's picture and highlighted the waiver saying that loans for pipes, wells, tractors and buying of cattle would be waived. The Sakal advertisement, which says
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Why loan waiver won't stop farmer deaths
MOUNDHALA (BULDANA): His clothes remind me of him,' wails Leelabai, clutching a bundle of clothes in front of the dilapidated structure she calls home, as younger sister Kalabai wipes away her tears
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Why does farm production stagnate?
India and the world population has doubled or tripled since the World War II. The world and India produces seven times more food than 60 or more years ago when many nations were in a shambles and farms were marred by mines and other hazardous chemicals in the aftermath of millions killed by bombs and gun battles, though not India, which was not a big theatre of war, but of the war of Independence. Imperial rulers were preoccupied with German and Japanese invaders and with conquering them. India was the fodder of the war machine with 2.5 million soldiers to fight on every front to defeat the Axis power. The war had seen the Bengal Famine with tens of thousands dying of hunger, but official records called it malnutrition, not starvation. That was the Imperial nomenclature, valid ever since until today. Yet in the bygone 20th century we have seen great strides, we have seen great visible progress in pursuit of Mahatma Gandhi's goal of wiping every tear from every Indian face. Irrigation dams by the score have been built and dry farms have had irrigation canals and channels supplying life-giving water. Where canals could not reach hand pumps or powered pumps have been installed to irrigate farms. Punjab, Haryana, western UP and many other States prospered, but not all areas. From 30 million tons of grain, India today produces as much as 210 million tons. For a long time, India was supposed to be self sufficient, not needing to import any grain, though for some years now, as part of the policy of food security a buffer stock has been built and wheat and rice have been imported. Sometimes exotic basmati rice has been exported and cheaper and large quantities of cheaper imported to try and feed Indians, but the exercise has not fully succeeded. In spite of the great Indian success story, when India's economy is one of the fastest growing at a clip of nine per cent per year why do we in free India, 40 per cent of us remain below the poverty line, sleep on an empty stomach, why 42 per cent of all children starve or are very poorly fed? Yet, literacy and education are fundamental rights, food is not. There are no free lunches, though midday school feeding programmes are much in place, yet honored more in the breach than in the observance, because 80 per cent of the money provided must be and is known to be siphoned off by the time it reaches the panchayat or the village or the city school into the pockets of all kinds of people, be they suppliers, petty or senior officials and politicians, down now to the village panch, leave alone the sarpanch. Is that the way of the Third World, if not all world, because corruption in the First Word is far more sophisticated; it runs into millions and billions of dollars, not in peanuts or a few rupees, hundreds or thousands of them. Such is the system, like it or not? Is that why 30 per cent growth some areas of the services sector and nine per cent overall, farm or grain production grows only at 2.6 per cent and in years of monsoon failure or excess of it, the growth is what in modern parlance is sophisticated jugglery of world negative as nobody wants to speak the truth that output has gone down or dropped. Management and official jargon has taken a new leap in falsehood and lies as truth is totally at a discount and invention and magic with words is the norm. That is Harvard or management school education, push the dirt under the rug, don't allow it to be exposed. Thanks to multinational producers and sellers of genetically modified seeds or biotechnology, salesmen push the hybrid seeds for well irrigated farms to grow more cotton whereas rainfed farms can take only ordinary seeds, cheaper and ten times costlier. At the time when farmers in Nagpur or Vidharbha and Andhra should be reaping a big crop, they find zero shoots. They have borrowed money to buy this costly seeds. They are deep in debt, of principal and interest. They have been cheated. Since they cannot afford to pay, the moneylender knocks at their men with musclemen in tow, throws them out of their hearth and home and occupies their parched farm. What does the poor farmer do now? He takes his life, next members of his family start doing the same. Thousands of farmers have been doing so for some decades now, although heartless money lenders have been doing this for centuries gone by. That is the story of Indian village, village after village. Now that a general election is less than 15 months away to choose a new Lok Sabha and three States in the north east are in the process to elect legislatures and six more States will do so before the end of the year or early next year, the Government is engaged in double quick time to line up doles for the voters, especially for the farmers, who are the backbone of a democracy, who hold the maximum number of cards. The magicians that the Prime Minister, his Finance Minister, and their boss, the Chairperson of the United Progressive Alliance are, have ordained that Rs.32,000 crores of buoyant government revenues must be dispensed with as debt relief to farmers to woo them for the grand old party. This is less than ten per cent of the bank loans of Rs.3,42,000 crores the farmers owe to the banks, but it is the government which will reimburse them so that they can balance their books and prudential banking does not receive a jolt. But the farmers at the mercy of private money lenders who charge 2 to 3 per cent are unlikely to benefit. Will they continue to die and starve as before? Only time will tell. God save them, for who else can? Lalit Sethi, NPA
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FinMin mulled Rs 5,000-cr guarantee company before farm loan waiver
Prior to announcing the Rs 60,000-crore farm loan waiver package, the finance ministry had toyed with the idea of setting up an Agriculture Credit Guarantee Corporation with a corpus of around Rs 5,000 crore to deal with bad loans. The entity would have insured lenders against borrower defaults with banks making less provisioning for such loans and continuing to offer farm loans. However, the plan was dropped after the amount of the waiver and relief package rose to a massive Rs 60,000 crore. "We then thought of giving direct subsidies to farmers as there will be no leakage in this scheme and the benefits will go directly to farmers,' said a government official. Cooperative banks account for Rs 37,000 crore or about 61 per cent of the Rs 60,000-crore package announced in the Budget. Regional rural banks and scheduled commercial banks account for Rs 12,000 crore and Rs 11,000 crore, respectively. The details of the farm package are likely to be finalised by March 25. As the government will implement this package over a period of three financial years, it may make a provision of up to Rs 25,000 crore in 2008-09. Part of the financial assistance due for restructuring of cooperatives according to the recommendations of the Vaidyanathan Committee is also likely to be part of the package, officials say. Cooperatives and banks may also have to share a little burden in case of default loan accounts, which have been written off for prudential accounting norms.
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PM: Waiver picks up unpaid distress bill
Prime Minister Manmohan Singh today claimed the political credit for making a speech that not only led to a Bharatiya Janata Party (BJP) walkout from the Lok Sabha but earned him applause from the Left parties. Days after the government declared it hadn't given up on the Indo-US civil nuclear agreement despite the Left's staunch opposition to it, and Congress President Sonia Gandhi announcing at a party rally in Tripura that the government was not in power because of any favours shown by the Left, the political message of the PM's speech today was: opposition to the BJP was not the Left parties' prerogative. In his speech in reply to the President's address to the joint sitting of Parliament, Singh charged the Opposition with ruining the lives of farmers and giving in to terrorist pressures when it was in power until 2004. Rejecting Opposition charge that the farm loan waiver was announced with an eye on elections, Singh said it was a historic initiative to meet the "unpaid distress bill' left behind by the erstwhile NDA government. "Doubts have been raised about the resources required for this write-off,' he said, referring to questions raised by Leader of Opposition L K Advani and other members asking the government how it could provide the whopping Rs 60,000 crore towards waiver of bank loans to small and marginal farmers. "Let me remind the Leader of the Opposition that what we have done is nothing more than picking up the unpaid distress bill which the NDA government left behind,' Singh said. If bankruptcy is permissible form of business outcome in industry, what is irrational about this waiver, he asked. "It will allow a fresh flow of institutional credit to farmers. It will clean up banks' balance sheets. It will stimulate economic activity in rural areas,' he said. Singh assured the House that the debt relief will be a simple exercise which will be completed by June-end. "It will not be a long drawn affair,' he said. Singh named Opposition leader L K Advani in his speech, leading to a walkout by the Bharatiya Janata Party (BJP) and its allies.
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State will spare no efforts to help farmers, says Patil
In a massive propaganda drive to claim credit for the 60000 crore loan waiver, NCP which is the alliance partner in the state said that the government was ready to share any additional burden, if so directed by the Centre, to provide further succour to distressed farmers in Vidarbha region. Addressing a mammoth farmers' rally, organised by the NCP here, Deputy Chief Minister R R Patil on Wednesday said the state government would 'fulfil any responsibility' that the Centre gave it while increasing the relief to farmers. Describing as 'historic' the decision to waive loans of farmers holding up to five acres of land, Patil said the state had requested the union government to initiate measures that would benefit more farmers. The state government would seriously consider granting loan waiver to small artisans like cobblers, ironsmiths and carpenters, living in villages, who also had a debt burden but had not benefited from the waiver for farmers, he said. The Deputy Chief Minister, who also holds the Home portfolio, said he had given 15 days for all private money lenders to return all goods and land pledged by hapless cultivators to them to get loans. The police would take strict action against such money lenders afterwards if they did not comply with the instructions, he said. Admitting that the milch cattle given to farmers under the relief packages had become a 'burden' for the beneficiaries since they did not know where to sell the milk, Patil said it was necessary to train these farmers to help them market the output and earn a profit thereon. Patil said government would increase the grant under the Sanjay Gandhi Niradhar Yojana and extend concessions to women's self-help groups (SHG's) to provide succour to the downtrodden Nearly four crore farmers in Maharashtra would benefit from the loan waiver announced by the Centre, Patil said. Saying that the pains of cultivators in Western Maharashtra and in Vidarbha were different, he said farmers in Vidarbha had to battle an unfavourable nature on top of the debt burden. Patil assured that the state government would provide all the funds necessary to ensure that the ambitious Gosikhurd project, which is expected to irrigate 1.90 lakh hectares of land in Nagpur, Bhandara and Chandrapur districts, was completed in the next 4 years. Addressing the gathering, Minister for Water Resources Ajit Pawar said his department had asked the Finance Department to allocate more than Rs 3,000 crore in the forthcoming state budget for completion of various irrigation schemes in Vidarbha, including medium and large projects, canals and lift irrigation projects. Union Minister of State for Civil Aviation Praful Patel said a request had been made to the Prime Minister to initiate measures to provide succour to more farmers. ''We are happy, but not satisfied with the loan waiver. We should not stop here,'' he said. The government must take steps to help farmers holding more than five acres of land, he said. The Government of Maharashtra must also help in this direction, he added. Earlier, Maharashtra Minister for Public Works Anil Deshmukh said the rally was being held to express thanks to Prime Minister Dr Manmohan Singh, Union Minister for Finance P Chidambaram and Minister for Agriculture Sharad Pawar for the historic decision of loan waiver for farmers.