Budget 2012: Farmer has a lot going for him

there is nothing better for this country than coalition politics.
It is because of coalition politics that we have escaped retail FDI (foreign direct investment) in this Budget, which would have been a disaster for agriculture.

One only has to look to other countries to see how such moves have played out.

The US has large retail chains as well as active commodity exchanges. One might believe that the income of the farmers should be going up as a result, and India, too, is very keen to bring in these refinements. However, the little-known tragedy of the American agriculture is that the farmer’s income in that country is only being sustained by government subsidies. In the 2008 Farm Bill, which was the last one to come out for a period of five years, the US has made a provision for $307 billion for agriculture.

If you withdraw the subsidies, their agriculture collapses. If agriculture were to become profitable because of such retail chains, why would the US government be pumping in the money?
And the same is the case with Europe. Europe is the biggest provider of subsidies and has multiple retail chains. If you look at Britain, the dairy farmers are quitting agriculture because retailers are squeezing their margins to provide goods cheaper to the consumers. Retail chains don’t help the farmers in other countries and India will be no different.

The thrust in this Budget has been on agriculture and rural areas, and that, I think, is more important than big-ticket reforms.

There has been a clear effort towards making more credit available to farmers. He has raised the target for lending by Rs1 lakh crore, and farmers will now have access to Rs5.75 lakh crore of capital.

A 3% rebate is also given to farmers, which means that practically 4% is the rate of interest. Then he has also provided Rs10,000 crore via Nabard (National Bank for Agriculture and Rural Development) to refinance the regional rural banks. He has also provided 7% waiver to self-help groups. And then he has said that banking correspondents have reached over 90% of the habitations. In a way, the making available of credit and reaching it to the people is a remarkable development and it continues.
Secondly, if you look at the area where more money is required to be pumped in, it is basically those areas which are affected by Maoism and Naxalites. These are the 200 backward districts and the tribal areas. And for them, he has enhanced the allocation, which is now in excess of Rs10,000 crore. He has also provided Rs20,000 crore for developing rural infrastructure.

In agriculture, he has kept the focus on the green revolution in the North-East.

Now as the minister said today, the increase in production is seven million tonne (mt) for paddy in such states following just two years of money being pumped in at the rate of Rs400 crore per year.

The corporate world is definitely disappointed this time, but I think for the average person, especially in the rural areas, it is a good Budget.

Devinder Sharma Food and trade policy analyst