Nov 30, 2013

Squandering Rs 75,000-crore in the name of self-employment. Why not provide direct income support to farmers instead?

Why can't improved skills be imparted to farmers to make them gainfully self-employed, and eventually turn them into entrepreneurs. 

I have always said that there is hardly any relation between common sense and economic sense. At a time when Prime Minister's Employment Generation Programme (PMEGP), launched in 2008, has already established 2.21 lakh self-supporting business units, and has created 20.34 lakh person employment opportunities as per Govt claims, the UPA Govt is planning to launch Rs 75,000-crore action plan to provide self-employment opportunities to 7-crore households in rural India over the next 10 years.

Rs 75,000-crore for 70 million households. In other words, each year the UPA Govt plans to invest Rs 7,500-crore in helping self-help groups that will help people become self-employed across rural India. According to a news report in Economic Times (Nov 29, 2013) UPA's Rs 75,000 crore self-employment plan for 7cr rural homes (here is the link:"Funds would be given to self-help groups (SHGs) to impart training to the rural poor to take up skilled and semi-skilled jobs. The idea is to scale up their skills so that they become eligible for concessional credit from financial institutions."

There is already a National Skill Development Agency, the Prime Minister's National Council on Skill Development and the National Skill Development Coordination Board. 

Now, isn't this interesting. Under the new programme, being planned just before the 2014 elections, Rs 75,000-crore is to be spent over 10 years for 7- crore (or 70 million) households. For a year, it comes to Rs 7,500 crore. As per the plan, the Govt would spend Rs 15-crore per block in each village, comprising 10-12 rural households, over the next 10 years. 

Wouldn't it make economic sense if the UPA Govt was to simply distribute Rs 1-crore to each of the rural family? I am sure every one in this country would be able to spend Rs 1-crore in a manner that it makes them gainfully self-employed for all times to come. It will be a dream project for a majority of rural India. And if we were to go by Rs 1-crore per family, imagine how many would be able to immediately join the Crorepati Club.    

Knowing this is not going to happen, the UPA Govt's plan seems to be to allocate this huge amount primarily for collecting some more votes. Everyone knows that much of the amount would be siphoned-off, but then that is how the Govts operate -- turning a blind eye to rampant corruption.  

Anyway, if the idea is to spend so much for enabling people to get gainfully self-employed. Then why not begin with farmers. As per Indian Census 2011, there are 119 million (11.9 crore) cultivators, which means farmers who own land, and there are more than 2,000 farmers who quit agriculture every day (See this report: India losing 2,000 farmer every single day These are also the people who are self-employed and need not only improved skills but also financial support to turn farming economically viable. These are also the people who produce food for the country and are primarily responsible for ensuring food security. 

Admitting that farming has become an economically unviable profession, the Govt is making all efforts to see that those who quit agriculture are gainfully employed elsewhere. The continuing agrarian crisis is also leading to enhanced rural-urban migration. Why doesn't the Govt therefore provide Rs 75,000-crore to the farming community in a way that it becomes an assured monthly income for them? If the farmers become economically viable, the domino effect will be felt across various sectors of the economy. Why don't we therefore put the money where we need it most? Why let the money be squandered under a Govt programme as has been the experience over decades? But then, didn't I say in the very beginning: there is no convergence between common sense and economic sense !

Further reading: As in the West, Indian farmers too need direct income support.


Shailesh Tiwary said...

Very nice one !!! I too have experienced the need of direct income support, few days back when i was in a village in bundelkhand region what i have found, during my survey, that around 70% are small & marginal farmers and out of which only 25% are using subsidized chemical fertilizer what does it means that 53% of the total farmers in that village are not enjoying the benefit of subsidies that government is providing. So, what should be done that remove all type of subsidy on these chemical fertilizer and pesticide and give these money as direct income support and another implication would be from that it encourage the organic farming and it lead to more sustainable development.

Anonymous said...

So aptly is it said that "Bad economics makes good politics" and vice-versa. Your suggestion, excellent as usual, is the urgent need of the hour to save the farming community, which is traditionally entrepreneurial in nature imbued not with the typical profit-making but with a sense of reverence towards Mother Nature (until the green revolution came), from further migrations and distress and also bring some respect and much-needed financial viability to it. It is a reflection of the heart-breakingly egregious blunder of our netas and babus to relegate agriculture to the back burner and take to foreign-inspired destructive, ill-conceived economic policies and indulge in useless intellectual discussions about them. Our country is crying for the emergence of dynamic avatars of J.C.Kumarappa who is one of the rare great nationalistic souls our country has ever produced in Independent India, to redeem & ameliorate our agriculture and small scale industry.
Incidentally, how about extending the same kind of largesse to poor Brahmins (or for that matter any poor man engaged in traditional jobs) who are forced to shift to worldly jobs leaving behind their holy Vedic activities and austere lifestyle laid down by the Scriptures, so that they need not join the wretched race to earn jobs along the unemployed multitudes and thereby significantly reduce unemployment. I don't think it is impracticable or too much to expect this. After all we don't mind spending huge amounts of money and efforts on boring caves in mountains to make roads or embarking on space missions to Mars etc. whose success is not guaranteed! Is any one listening? O I can hear two hoots coming from somewhere!!

Yours Respectfully,
Chintamani venkata Krishna Manoj,

Anonymous said...

75000/7= rs 10700 per household