Budget 2011: Rx for food insecurity and inflation

I had prepared a marking system for grading 2011-12 budget. The greater the capacity of the budget to generate higher production higher would be its grade. The lesser the potential of the budget for increasing production and productivity, the lesser would be its grade.

I regret to say that the budget has failed very badly in scoring any grade and would, most probably, cause famines at a time when the nation is looking for food security and higher nutrition.

The initial mistake started with the great haste in which the UPA government launched the agricultural debt relief and loan waiver scheme.

The farmers' movement never demanded waiver of only the bank loans; it had clearly asked for a general write off of the electricity tariffs as well. This was logical in the sense that electricity tariffs, for long, long years, have constituted the single largest item of farm expenditure and the non-remunerative character of agriculture was bound to affect the ability of farmers to pay the power bills.

To synchronise with the move of certain state governments to cut off power connections at points far away from the villages affected, came the phenomenal hike in fossil fuel prices.

The government continued its policies of importing crude oil from Arab countries. It would appear that the political considerations made such a choice necessary. Little or no attempt was made by the UPA government to encourage domestic production of biodiesel or ethanol.

A measure to encourage production of biodiesel and ethanol would have made agriculture more paying. The policy of letting the petroleum companies decide the prices of petrol was highly unpatriotic and disastrous for agriculture.

The policies of the UPA government to obstruct the healthy development of futures markets in spite of the substantial evidence it had to show that the futures markets add neither to volatility nor to inflation.

Apart from the power cut offs and the anti-national policy on bio-fuels, the UPA government has been following policies that discourage the hardy peasantry and encourage an ambiance of indolence and lethargy.

On the other hand, all the flagship schemes of the UPA government result in pumping of large amounts of money in the hands of the consumer; there is little effort to make production concomitantly.

As a whole, the budget 2011-12, as it stands, will only prove the expert committee of the Prime Minister's Office on food security right and actually generate food shortages and food inflation which will make food security quite impossible.

I have not talked of the possible reaction of the farmers. The farmers may well be inclined to go for production of quality food grains, keep it limited to domestic consumption. All the production coming out of the use of chemical fertilisers and insecticides may well be diverted to production of bio-fuels.

The attempts on the part of the farmers to produce food grains exclusively for domestic consumption might result in some sort of a levy system of pre-1965 days or in outright efforts by bandits to rob the food granaries preserved by the farmers.

The 2011-12 budget is entirely ignorant of the real and the practical situation of agriculture and, in fact, will result in food insecurity and its concomitant price inflation.

Sharad Joshi is founder, Shetkari Sanghatana