The Budget proposals do not address the real problems
While presenting the budget for the year 2006-07, the Finance Minister, P. Chidambaram, gave a rosy picture of how agricultural credit has been increasing by leaps and bounds in recent years. In 2004-05, farm credit amounted to Rs. 125,309 crores. For the year 2005-06, it is expected to cross Rs 141, 500 crores. For the financial year 2006-07, he has recommended in the budget that the credit should further increase to the level of Rs 175,000 crores and that another 50 lakh farmers be brought into the portfolio of the lending banks. The Finance Minister also announced that as a gesture of 'compassion' to farmers in difficulties, he proposed to set aside Rs 1700 crore as a subsidy against the interest cost of farmers' loans.
The Finance Minister may pretend that facilitating borrowings by farmers is the solution for their distress or for the crisis in agriculture. However, an objective analysis of the unfolding phenomenon of farm distress shows very clearly that the problem is deep seated. It is rooted in the capitalist economy that prevails in Indian agriculture. Increasing commercialisation and intensification of capitalism in Indian agriculture has meant that from the small to the large peasants, every cultivator is producing for the market and is vulnerable to risk at every turn. The peasant is caught between rising input costs and widely fluctuating output prices; this is made worse by an absence of guarantee of quality of inputs, dismantling of the state procurement system, with no insurance or protection from the government. In such a context, the farmers have been forced to sell their assets to pay just the interest costs, let alone repay their loans.
The data from the Situational Assessment Survey of Farmers carried out by the NSSO in 2005 clearly reveals the condition of farmer households with respect to income, expenditure and indebtedness. According to the survey, the average annual income from cultivation of the farmer household was Rs.11,628, while the corresponding expenditure on cultivation was Rs.8,791, leaving an annual net income from cultivation of Rs.2,837. Aggregating income from all sources, including wage earnings, the average annual income of the farmer household at the all-India level was Rs.25,380. The average annual consumption expenditure of such a household was Rs.33,240.
It is this condition that is causing farmers to borrow continuously and become indebted.
Data from the same NSSO Survey confirmed that the share of debt for non-business purpose was very high as high as 76 per cent for rural households which owned assets valued at less than Rs 15,000. This means that the majority of households are in such dire straits that they have to borrow even for day-to-day necessities.
In such a situation, it is clear that subsidising interest cost of borrowings or replacing the money-lender by institutional credit will bring very little relief to farmers. Most small and medium farmers are so heavily indebted (at the time of the survey, indebtedness ranged from 44% to 66% across different sizes of holdings varying from less than 0.01 ha to more than 10 ha). that only waiving all loans can bring any relief to them. But even this step can only postpone the crisis point that is driving hundreds of farmers to suicide across several states in the country.
The fundamental problems of Indian agriculture and the producers lie in the outmoded relations of production in which millions of small peasants are eking out their survival on small plots of land and have to compete with the biggest farmers; further, with the thrust on "agri-business," policy is moving towards increased monopolisation of agricultural trade, placing the farmers at the mercy of giant corporations for sale of their produce..
Only a thorough overhaul of the present system, which is dictated by the interests of the big multinationals, financial empires and industrial conglomerates, can make any change to the farmers' lives. Unless the workers and peasants take their future into their own hands and establish their own rule, the situation is not going to change for the vast majority of the working people of India. From Peoples'Voice Comparty India
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