For the first time since Manmohan Singh was sworn in as the prime minister to head the second version of the UPA government, he has started appearing vulnerable. The extent can be gauged from the fact that in the face of insistent opposition to the backbreaking food inflation inside and outside Parliament, the Congress has been forced to mobilise the full weight of its president and the UPA chairperson, Sonia Gandhi, to back the budget proposals of the finance minister and the pronouncements of the prime minister.
This is a rally to salvage the image of a government battered by the increasing irreconcilability between claims of representing the concerns of the ‘aam aadmi’ and the blatant neo-liberal direction to burden the common man and providing tax breaks to the rich.
She has claimed that the government has done everything possible to tame the incessant upward movement of food prices. She has even hinted apportioning the blame on the state governments as her colleagues have attempted to do. But she is defending the indefensible!
Because in his post-budget interactions in the public space, the finance minister has himself admitted that his budget proposals do contain inflationary elements. But he has tried to reassure the nation that the impact of the oil price hike will be limited. Time will tell.
The finance minister claims that inflation is driven by the rapid upward movement of food prices and essentially because of the failure on the supply side — insofar as food grains are concerned. And it can be absorbed by increased production. But the reality of Indian agriculmay prove otherwise.
Some 65% of the population depends on agriculture despite its share declining to 15.7% of the GDP in 2008-09. The tenth plan target for agriculture was of 4% growth. It was achieved only by half. With last year’s growth at less than 2% and this year’s estimate of -0.2%, the 11th plan target is also slated to go for a toss.
The reason for this is not hard to find. Public investment in agriculture has sharply declined since the onset of reforms in early 1990s from 16% of the GDP to 6 per cent last year. The alternative strategy of supplementing this decline by the engagement of the private sector has not yielded results in augmenting the overall production or productivity.
The individual farmer is being marginalised with adverse terms of credit. An eminent commentator on the sector has brought out a damning equivalence study. In 1990, a cotton grower in Maharashtra could buy 15 gm of gold by producing one quintal of cotton. Today the same grower would need 15 quintals of cotton but would get only 8 grams of gold.That is a 30-fold adverse ratio for the hapless cotton grower. This forms the backdrop of farmers’ suicides.
The economic survey has revealed that the total kharif production this year is down by 16%. With rabi and kharif accounting for roughly 50% of the total production each, the estimate of -0.2% appears to be extremely optimistic. What was therefore needed was a sharp enhancement in the allocation, not the current measly amounts of 9.45 per cent of this Union budget and 1.56% of the GDP. These are down from 10.77% and 15.074% and 1.79% and 2.50% of 2009-10 and 2008-09 respectively. This sets out the sense of priority that the finance minister accords to the challenge that grips our agriculture sector. Add to this the sharp reduction in the fertiliser subsidy and the intent to move towards a market-driven international price regime which will further burden the farmer.
The sense of urgency that ought to have featured the budget is conspicuous by its absence. The structure drawback of Indian agriculture lies in the reality of its skewed nature. Some 48 million hectares of irrigated land account for 56% of our total food production while 95 million hectares of non-irrigated rain fed and dry land areas produced just 44%.
Without concentrating our efforts in improving the question of irrigation infrastructure and technology promotion and assimilation in these areas of low production and productivity, the over all growing food needs cannot be met. Private sector-led seed, pesticides, supply chain corporates both domestic and multinationals would never be interested in addressing such an onerous challenge. Huge swathes of backward agriculture and petty growers will continue to remain unviable.
So that is the story of the budget. With the Union finance minister refusing to show the urgency that is needed to draw the Indian agricultural sector and peasantry out of the bottomless pit that they are continuing in a sinking journey, the hope for containing food inflation by managing the supply side deficit will remain a pipe dream.
Comments