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Mainstream, Vol XLVII, No 31, July 18, 2009

Union Budget 2009-10: Accentuating Agrarian Crisis

Saturday 18 July 2009, by K. Varadarajan, S. Ramachandra Pillai

The 2009-10 Budget has been presented at a time when recession has hit all sectors of the economy. The Congress-led UPA Government was expected to come up with concrete measures to meet the extraordinary situation. The agrarian sector has been hit by delayed monsoons and indications of early drought conditions. Manipur has already been declared drought-hit and predictions of a similar fate for certain other States are also rife. The suicides by farmers continue unabated touching an average of 17,000 every year or one suicide every 30 minutes. The Finance Minister turns a blind-eye to these realities and the government has failed to provide adequate resources that are necessary to stimulate growth. The utter disregard for the masses and their livelihoods is clear when one looks at the allocations made for agriculture and rural development. The acute agrarian crisis and slowdown of agricultural growth in 2008-09 have had a severe impact in the rural areas. The government has provided little support in terms of Plan outlays to overcome such a situation. Certain glaring facts need to be noted to understand the callous attitude of the government:

• The Finance Minister’s Budget speech sets a target of four per cent growth rate for agriculture in 2009-10. This has to be seen in the context of the Economic Survey figures which clearly points to a decline in the growth originating from agriculture and allied activities from an average growth of over 4.9 per cent over three years
(2005-06 to 2007-08) to merely 1.6 per cent in 2008-09. There are no concrete measures taken whatsoever which will bring about a turn around.

• The agrarian sector has witnessed a sharp decline in growth rate and there is a fall in production of foodgrains. Except for rice which has registered a marginal increase of 2.4 per cent over an above the targets for 2008-09 all other food-grains have shown a decline. It is a decrease of 1.1 per cent for wheat, 7.9 per cent for coarse cereals, 8.5 per cent for pulses and an overall decline of 1.4 per cent in foodgrains over the target. The decline is higher for oilseeds, cotton, sugarcane etc. There is no talk of remunerative prices for crops nor is there any respect for the recommendations of the Commission for Agricultural Costs and Prices in this regard. The M.S. Swaminathan Commission’s recommendation of Cost of Cultivation plus 50 per cent (C2+50%) for fixing Minimum Support Price has also not been accepted.

• The Budget talks about the subvention of one per cent in interest rate for farmers who repay their crop loans on schedule. In the absence of an effective procurement system with remunerative prices, the farmers are bound to be forced to make distress sales and remain indebted. The kharif prices proposed by the CACP have not yet been accepted by the government. This being the case the farmers are only going to be further pushed into the cycle of indebtedness. The interest of seven per cent is too high and again opposed to the M.S. Swaminathan Commission’s recommendation of four per cent interest rate.

• The mention of a task force to look into the issue of loans from private moneylenders and informal sources would not serve any purpose if it is going to be restricted only to Maharashtra or in an even skewed manner to Vidarbha. The phenomenon of farmers being indebted to private moneylenders is a nationwide phenomenon and the National Commission on Farmers’ recommendation as well as the Kerala example should have been considered rather than coming up with a half-baked election-oriented measure.

• The addition in allocation for irrigation is a paltry Rs 1000 crores even in the context of delayed monsoons and early drought situation in most parts of the country. The Budget talks of direct fertiliser subsidies to farmers but has no concrete proposal about the mechanism. It also does not have any vision for replenishing the soil or promoting balanced soil nutrition through encouraging organic fertilisers and judicious use of chemical fertilisers.

• Unfortunately the Finance Minister has approved an increase in price of foodgrains by
Re 1 per kilo for Antyodaya families and a cut in the allocation of food quotas by 10 kg to BPL families in the name of the National Food Security Act. This also does not take into account the fact that the BPL families identified are far lesser than the reality.

• While the allocation of Rs 39,100 crores to the NREGS is welcome there is no concrete proposal to utilise the scheme to enhance the living conditions of agricultural workers who are engaged in agricultural activity and thereby making effort to subsidise the labour costs primarily for small and marginal farmers.

• The Budget talks about 44,000 villages where the population of Scheduled Castes is more than 50 per cent and proposes integrated development in 1000 of them (which is less than three per cent) and allocates a humiliatingly low sum Rs 100 crores for developmental activity. This is a pittance and a mockery in the name of social justice.

The days of crisis for the peasantry are far from over. The government seems keen on pushing anti-people policies with far greater vigour. It is the need of the hour for the peasants and agricultural workers to build consistent struggles against such policies.

S. Ramachandra Pillai is the President and K. Varadarajan the General Secretary of the All India Kisan Sabha.

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