Small farmers not big gainers

The Budget was certainly a political statement with its focus on women, youth and the poor. Finance minister P Chidambaram has raised the allocation for farm credit, raising it from Rs5.75 lakh crore to Rs7 lakh crore.

Between 2000 and 2010, RBI data show farm credit has risen by 755%, but what remains hidden is that much of this credit is actually appropriated by the agribusiness companies, warehousing corporations and even state electricity boards.

As per a leaked report of the ministry of finance, less than 6% of small farmers, who account for 82% of the farming community, receive institutional farm credit. In other words, of the Rs7 lakh crore promised, only Rs50,000 crore will go to small farmers.

Since the government provides interest subvention of 3% to those who pay back in time (which effectively brings down the interest to 4%), the benefit to agri-business companies is enormous. What is, therefore, important is to segregate the farm credit category so that the impression that small farmers are the biggest gainers is dispelled.

The Budget is quiet on extending any additional outlays on major and micro-irrigation. Besides MNREGA, backward state programmes, including the trouble-torn Naxalite districts, too have been provided enhanced outlays. Overall, it’s a tight-rope walk.