Speak in farmer8217;s language

If you look at the grain, the truth is that there is both a flip and a flop side to the budget vis-a-vis agriculture. As India marketises it...

If you look at the grain, the truth is that there is both a flip and a flop side to the budget vis-a-vis agriculture. As India marketises its agriculture, it is important to create sound credit and financial markets to support production, trade and investment in and for the sector. Investment in soil, water and infrastructure lies both in the public and private sectors. This needs planning and policy reform. My main comment on the Economic Survey was that it underplayed demand deficiency in the economy and the impact of the East Asian meltdown. The budget treats demand deficiency by sensibly keeping down government8217;s revenue deficit and borrowing for investment. This permits a policy and a plan for agriculture to crowd in private investment. The revenue deficit projected at 3 per cent of GDP is lower than the 4 per cent in 1993-94, 3.2 per cent in 1994-95, but is higher than the 2.6 per cent of 1996-97. The election year meant 3.1 per cent in 1997-98.

More money has been provided for watershed development.Last time we regretted that my advanced irrigation benefit programme was given up as a Central Plan scheme. It is now a loan scheme for states. We are happy they are listening out there but no one can stop states from diverting loan money. A pet idea was to start a practical scheme of raising production in the eastern region. Former Agriculture Secretary Rajan built a scheme based on shallow tubewells and the revamping of the cooperative system. It was endorsed in a committee on the agricultural development of the eastern region that I chaired. A token provision of Rs30 crore was made for it last year, but the Finance Minister now has provided Rs150 crore this time for this three-year, Rs450 crore scheme. Again I hope this money will be spent wisely to tap the vast potential of states like Bihar and Orissa. In eastern UP in the 8217;80s around 6 million tonnes of extra wheat was produced with a larger investment in tubewells because, in most of these regions, even during drought, water is available at less than30 ft.

The problem, of course, is that funds through the land development banks are not easily available, since very few societies are eligible on account of their defaulting on repayments. Then again, on account of unrecorded tenancies, the peasant is not able to give collateral for investment loans. The primary agricultural cooperatives can give loans without collateral for working capital, since the standing crop is considered as collateral, but this is not the case with investment loans. So a very large part of India8217;s agricultural potential lies locked up. The Water Management Project included in the budget could help unlock some of this.

Studies all over the world show the high rates of return to agricultural research. It is not widely appreciated that the ICAR has taken as much advantage of the Incentive Rupee Scheme, as the CSIR did. The increase in the agricultural research budget is therefore welcome.

Sinha8217;s emphasis on restructuring the Regional Rural Banks, extension of Rural InfrastructureDevelopment Fund, starting self-help cooperatives and extending a comprehensive Crop Insurance Scheme in 22 districts are important supportive steps for initiatives taken earlier. The sums involved are small but, if implemented wisely, would help the reform process in agriculture by strengthening the institutional base for financial markets. It is, however, very worrying that even the intention of restructuring cooperative financial institutions has been given up.

The description of the urea price hike as quot;marginalquot; and for changing nutrient balance is odd. The Rel per kg increase was 50 per cent of the subsidy on domestic and 33 per cent of imported urea. If change of nutrient balance was the only objective, the price of PK could be reduced. We must have the courage to speak the truth. We must also move away from the firm level pricing on the supply side, as some of us suggested a decade ago and the Hanumantha Rao Committee has endorsed.

The increase in excise duties is mindless. Having removedquantitative restrictions on all major agro-processed goods like juices, poultry, dairy products, spices, and so on, to now tax domestic industry is an amazing lollipop to our competitors, particularly since the developed countries have negotiated a strong position for themselves. This will particularly hurt diversified agriculture states like Gujarat. The cut in budgetary support to the power sector from Rs 2841.42 crore is doubly hurtful to me. As power minister I was lucky to get an increase from the then FM after the budget, and the cut will affect agriculture as rural electrification gets scaled down. The dilution of tariff discipline in the Electricity Regulatory Bill is disastrous for the land and water prospects of agriculture. Between August 14, when I had introduced the Bill in the Lok Sabha, and now nothing has happened to justify this loss of nerve.

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On balance, however, there are more pluses rather than minuses. But I would urge the Union government to organise two or three groups of farmers indifferent agro-climatic regions from whom reactions can be obtained before and after the budget. The government must learn to speak the language of the farmer.