Feb 5, 2011

Budget 2011 will also bypass farmers

If we look at the Budgets presented in the past 5-7 years, it looks as if the government has been focusing on food and agriculture. We have seen successive finance ministers covering up their apathy towards agriculture by saying that their budget would bring in ‘Kisan Ke Azadi’ or terming their budget as the ‘life line for agriculture’ and so on.

However, in reality all annual Budgets in the recent past have bypassed agriculture when it comes to making the right investments, and this year too is not going to be any exception. The finance minister has been holding pre-budget parleys with industries and the industry sponsored farmer organizations. It is therefore quite obvious that the 2011 Budget (to be presented on Feb 28, 2011) is also going to be business as usual. I am not therefore much hopeful in the coming Budget for the farm sector as well as the farmers. They will have to live on hope. Like in the past, this Budget too will support the agribusiness industry in the name of farmers. This year, I am quite sure industry will manage a larger chunk of the state exchequer considering that the country is faced with rising food prices for quite some time. Don’t forget whenever a crisis takes place or a disaster happens, it becomes an opportunity for business.

2010 was a year of unmanageable spiral in food prices. The crisis that the government faced with respect food inflation comes as an opportunity for the business to exploit agriculture. Having said that, the following is likely to be the highlighted in one way or the other in the ensuing Budget:

a. There would be more emphasis on streamlining agricultural supply, which means there will be more money allocated for the back end operations like cold storages and transportation. Already the State bank of India has reduced the interest on warehousing by about 3 per cent so as to attract private sector investment. This is primarily to facilitate the entry of FDI in multi-brand retail like Wal-Mart and Tesco into the country which would need backend support for its India operations. In reality, the backend investment too should come from the industry but as it happens it is the industry which walks away with bulk of the subsidy in the name of agriculture.

b. The other area that is likely to receive more emphasis by way of budgetary allocations would be in the field of enhancing crop production – primarily for wheat and pulses. And then of course there is going to be duty exemptions on import of farm equipments, all in the name of increasing production and productivity. Unfortunately this is not what ailing farm sector needs.

In my understanding, what the finance minister needs to do is:

a) The government has to get over with the obsession with 4 per cent agricultural growth. Whether the farm growth is 2 per cent or four per cent, it is not going to rescue millions of farmers from the agrarian distress that stares at them. In any case, farm growth cannot be measured on the basis of production figures for two consecutive years. A realistic farm growth can only be ascertained when viewed over a minimum of a five year period.

The finance minister should instead focus on farmer’s income. According to the National Sample Survey Organisation (2003-04), the average monthly income of a farm family in India was barely Rs 2115. In 2011, we can at best think that the monthly income has risen to Rs 2400. This means that farmers in India are by and large living below the poverty line. To expect these poor farmers to be investing their meager resources and effort in boosting productivity is not fair. I think the fundamental question that remains unresolved so far is how to increase the farm incomes. I don’t see much of hope here, all that I am expecting this year is that the credit for agriculture would be enhanced from the existing Rs 3.7 lakh crore to Rs 4 lac crores or above. Even this is not going to be of much help to farmers since much of the credit in the name of agriculture goes to warehousing, cold storages, seed production etc etc.

b) Last year the government had allocated money for pulses production in 60,000 villages in the dryland regions. This became an opportunity for the industry, including farm equipment suppliers. They pooled the money allocated for 10 villages, forming a cluster, and were able to lease or sell farm equipments. It has therefore not made much difference to pulses production this year. The little increase we see is the result of the expectation of a higher price following the rise in dal prices in 2009-10.

Actually pulses are not suffering from technology gap. What it requires is the provision of an assured market for the produce. Although the government does announce procurement price for the pulse crops but there is no procurement system in place. If pulses were to be procured, like wheat and rice, we will see the production rising steadily and the dependence on imports reducing.

c) Considering the stupendous rise in prices of vegetables, the focus of the finance minister will remain on efforts to curtail the price rise. For several years now, we are told that 40 per cent of fruits and vegetables go waste in post-harvest losses. I am not sure of the basis for these loss estimates. These figures of food wastage have not changed for the past 30 years or so. Having said that, what we need in case of fruits & vegetable is a surveillance and market intelligence system. This has to be back up by crop insurance and weather insurance. Unfortunately, crop insurance still remains at a pilot project level, and it is because of the lack of emphasis that farmers in India still are not ensured against the vagaries of the weather. More financial allocations are required for market intelligence and crop insurance.

d) Food security, especially in the light of the NAC proposal on the proposed food security bill, will also attract finance minister’s attention. In the name of food security, and knowing that food prices had remained beyond the reach of the lowest strata, finance minister is likely to enhance the allocation. In other words, more money will be allocated for a defunct and corrupt PDS. What is needed urgently is to provide financial resources for setting up a network of village/taluka grain banks across the country. This has to be linked with regional grain banks in each of the states.

The ministry of rural development has already provided resources for setting up panchayt ghar in every panchayat. The more pressing need is to construct grain banks in each panchayat, if not every village. This will not only help minimize grain wastage but also ensure household food security at the local level. There are about 6 lakh villages in the country, of which 4 lakh villages produce food. The national Food Security Act should aim at making these 4 lakh villages food secure. This will help reduce the burden on the PDS, which can therefore by trimmed and made effective.

e) There has been a lot of talk for ushering in 2nd Green Revolution to meet the growing food requirements. In the last budget, the government had provided for Rs 400-crore for extending the Green Revolution to the northeast states. What has not been ascertained is that damage Green Revolution has done to the intensively farmed regions of Punjab, Haryana, Western Uttar Pradesh. Already Green Revolution has destroyed the natural resource base by poisoning the soils, mining the ground water and contaminating the food chain with chemical pesticides. More investments to extend the Green Revolution model to the northeast or to bring in the 2nd Green Revolution in the rest of the country imeans that we have not learnt from past mistakes.

What we need is allocation to bring about a kind of a model of sustainable agriculture which does not force farmers to commit suicide and also does not end up destroying the environment, natural resource base and does not add to global warming. Such a model is already available in Andhra Pradesh. In Andhra Pradesh, out of 23 districts, in 21 districts there is something called as non pesticide management of a agriculture. Farmers in 28 lakh acres are not using chemical pesticides, and have also phased out the application of chemical fertilizers. There is no drop in crop yields, and the insect population has greatly reduced. The soil health is rejuvenated, and expenses on health for farm families have fallen by an average of 40 per cent. Farm incomes have gone up, and food security is ensured. This is Government of Andhra Pradesh programme.

Mr Pranab Mukherjee should provide allocation for extending this programme to the rest of the country. Here lies a future model of food security and farm viability for the country. #

1 comment:

Anonymous said...

Dear Sir

In the Independence speech by Honourable Prime Minister of India while commenting on Agriculture, he specifically mentioned of introduction of latest technologies to enhance growth in production to meet food supplies to feed every Indian.

I may have heard it wrongly as the speech was in English but whatever I can understand is that Govt. if India is unequivocally accept that there is shortage of food produce & they will do whatever they can to increase it with the help of latest technologies & practices adopted by the Westerns.

In recent news floated by expectations of budgetary benefits for the middle class are in the form of hiked tax slabs so that they can have marginally higher money to spend on nutritional steroids like Bornvita, Horlics, Cerelacs, Chavanprashes etc.

Ashok Kumar