Indian budget will not raise farm incomes’

Odd then, that in its present form, it excludes the very regions whose pain brought it into existence.

Millions do indeed get relief from what is a positive step. (Though not quite as 'unprecedented' as some believe). Even the colonial raj went in for loan waivers or 'karza maafi' more than once. And those waivers addressed private moneylender debt. (There were no nationalised banks in those days.)

That's something the present waiver does not touch - even though usury accounts for the overwhelming share of farm loans. In Vidarbha, money owed to private lenders would account for between two-thirds and three-fourths of all debt. In short, we haven't begun to resolve the debt crisis of these and millions of other farmers.

Unproductive holdings

In Vidarbha, the average landholding size is 7.5 acres or 3.03 hectares. Way above the two-hectare cut-off mark for the bank loan waiver. Up to 50 per cent of Vidarbha's farmers are above this limit.

Not because they are big landlords. They tend to have larger holdings as their land is unproductive and unirrigated. Poor adivasis in Yavatmal, for instance, often own over ten acres but get very little from their land.

In Anantapur in Andhra Pradesh, too, many farmers will be left out by size or other norms. By contrast the farmers of Western Maharashtra, the Union Agriculture Minister's stronghold, will benefit greatly. Their holdings are smaller, well-irrigated and more productive.

For those with over two hectares, there is the old deal of "one-time settlement" of their bank loans. In this case, if they repay 75 per cent of the loan, they will be given a rebate of 25 per cent. Only very large farmers will gain from this.

If the rest, drowning in debt, could pay 75 per cent of their dues, they wouldn't be committing suicide. They would pay hundred per cent.

Then, of those farmers falling within the two-hectare limit, only a small group have access to bank credit. So the gainers in this crisis-hit region will be a small percentage of the total number of farmers.

The few who do qualify, gain much less than farmers in, say, Western Maharashtra. The average crop loan in sugarcane territory is Rs. 13,000 per acre. Apart from which farmers there get up to Rs. 18,000 per acre for drip irrigation.

In Vidarbha's cotton regions, they get loans of just Rs. 4,400 per acre. So the scale of the write-off will be far greater for the relatively better off farmers.

In political terms, this benefits Union Agriculture Minister Sharad Pawar's base. At the same time, it undermines the farm base of the Congress in Vidarbha. Indeed, the average loan for the grape growers (outside of Vidarbha) is Rs. 80,000 per acre.

The cut-off date of March 31, 2007 works against even the small group of Vidarbha farmers who do benefit. Loans in the cotton regions are taken between April and June. In the cane growing regions, they are taken between January and March. This means the Vidarbha farmer has one less year of loans waived than the others.

Other anomalies

Since no distinction has been made between dryland farmers and others, anomalies abound. West Bengal and even the non-crisis regions of Kerala have large numbers of farmers below the two-hectare limit.

With agriculture in bad shape, don't grudge them the windfall the waiver brings. But it is odd the same does not happen for farmers in dryland regions who need it most. What's more, the farmers of Bengal and Kerala have far more access to bank credit than those in Vidarbha do.

The State government itself reckons that Rs. 9,310 crore of the waiver comes to Maharashtra. That is, almost a sixth of the total.

Of this, a fraction goes to Vidarbha, the rest being collared by better off farmers. And what of other dryland farmers across the nation? Those in, say, Rayalaseema or Bundelkhand? What do they get?

Is the waiver 'unprecedented'? Each year, nationalised banks write off thousands of crores of rupees as bad debt. Mostly money owed by small numbers of rich businessmen. And theirs is not a 'one-time waiver.' It is a write-off that recurs every year

Between 2000-04, banks wrote off over Rs. 44,000 crores. Mostly, this favoured a tiny number of wealthy people. One 'beneficiary' was a Ketan Parekh group company that saw Rs. 60 crore knocked off. (The Indian Express, May 12, 2005). However, those 'waivers' are done quietly. In 2004, last year of the NDA, such write-offs went up by 16 per cent. Such 'waivers' have not slowed down since 2004.

Staggering giveaway

And all this is apart from the annual Rs. 40,000 crore 'giveaway' to the rich, mainly corporate India. That has been the average in the budget every single year for over a decade.

Then there are the straight handouts. No one knows how many thousands of crores are lost by handing out spectrum the way it's being done. But we know it's a staggering amount. Tot up the 'tax holidays,' exemptions and the rest of it and you're looking at sums that make the 'unprecedented' one-time farm loan waiver look like loose change.

But let us look, for instance, at the millions of farmers owning less than one hectare - the largest group. Some 7.2 million of them have accounts in scheduled commercial banks. And the total outstandings against these accounts is Rs. 20,499 crores. (Reserve Bank of India: Handbook of Statistics on the Indian Economy 2006-07.)

Those farmers with between one and two hectares hold 5.9 million accounts and owe Rs. 20,758 crores. That is: these 13 million account holders owe less than the Rs. 44,000 crore written off by the banks during just the NDA period for a tiny number of rich people.

The waiver does bring great relief to large numbers of farmers. But it is no solution to even the immediate crisis let alone long-term agrarian problems. Nothing in this budget will raise farm incomes. Which means farmers will be back in debt within two years.

Worse, fresh credit will not come cheap. Pleas for 'low-interest or no-interest loans' have been ignored. There is no mention of a price stabilisation fund to shield farmers from the volatility of corporate-rigged global prices. Besides, the idea of a five-year repayment cycle has not been touched.

One funny outcome of the budget is that the media are now talking about farmers. When the budget rolled out, one anchor said: "And now for the budget bad news. India Inc.'s plea for a cut in corporate tax rates went unheeded." Isn't that cute?

And of course, the elite panellists mostly rued this "gigantic giveaway." While gasping at the size of the "write-off" it's worth asking why the loan waiver comes up now.

Why not in 2005, when the demand was already being made? Or in 2006 when the Prime Minister visited Vidarbha and was shaken by the widespread distress. Mr. Pawar has outsmarted his rivals. Had the step been taken then, the credit would have gone entirely to the Congress.

For three years, while the misery and suicides mounted in Vidarbha, there was not even the admission that a loan waiver was possible. Indeed, it was shot down by those now taking out full page ads claiming credit for it.

As they complain in Vidarbha, this is not about karza maafi. It is about seeking voter maafi (voters' forgiveness) in election year.