Decelerated growth of agriculture sector is translated into a lower overall growth of GDP during 2007-08 which
grow at 2.6 per cent against previous year growth of 3.8 per cent. Besides the weather induced fluctuations, what ails the growth of agriculture sector has been reduced capital investment and plateauing of productivity of major crops. Acceleration of growth of this sector will not only push the overall GDP growth upwards, but make the growth more inclusive. To provide impetus to this sector, Finance Minister introduces a plethora of schemes for the staggering farm community hoping for largesse in his agro-political economy based budget.
To give boost to the agricultural sector, the scheme of Debt Waiver and Debt Relief for farmers has been announced. The relief package has taken into account recommendations of the Expert Group on Agriculture Indebtedness chaired by Prof. R Radhakrishna . Such a scheme will spoil the credit culture leading to high (NPA) non performing assets of lending institutions. A loan waiver is a total disaster.It sets a wrong precedent and nation is going to pay a very heavy price for this misdeed. Providing remission of 25 per cent to big farmers seems to be taken in self interest of most of the brother MP’s earning huge agriculture income. One will never know how many of our affluent sections, including politicians own sizeable parcels of land. There are many business people or otherwise rich guys who have bought cheap waste-land across the country and registered themselves as Kissan (farmers). They not only take loan but cheat the government to pay their income tax with an excuse that they have lost whole of the harvest while they did not cultivate an inch or to say they don’t even know where there land (so called farms) is.
There is still another problem. What about one-half of the farmers who are in debt to informal sources? Most of the private money lenders are local politicians and their relatives. Indian banks had failed to serve the rural poor since nationalization of banks. They follows the philosophy of what may be called Kick Your Customers. There is urgent need to address the endemic corruption and inability of the public sector banks to serve the rural poor.
Government has also been creating irrigation potential through public funding and assisting farmers to create potential on their own farms. The average annual rate of utilization remained lower than the average annual addition to the irrigation potential resulting in the cumulative utilization witnessing continuous erosion. This not only amounts to an inefficient use of funds but also a forgone income from irrigated lands.Central Government initiated Accelerated Irrigation Benefit Programme (AIBP) from 1996-97 for extending assistance in completion of irrigation schemes which had remained incomplete. But only 91 major/medium and 4605 surface MI schemes have been completed. Budget proposes allocation of Rs. 20,000 crore under AIBP with a grant component of Rs.5, 550 crores. Micro Irrigation (MI) has been allocated Rs. 500 crore to cover 400 thousand hectare. But farmers will spent only on irrigation system once the water is made avaialable. It provides Rs. 100 crore as initial corpus for establishing the Irrigation and Water Resource Finance Corporation (IWRFC). States governments and others financial institutions will be invited to contribute to the equity to mobilize resources to fund major and medium irrigation projects. Rainfed Area Development Programme (RADP) has been finalized with an allocation of Rs. 348 crore. Priority will be given to those areas hat have not been the beneficiaries of watershed development schemes. Irrigation is also one of the six components for the development of rural infrastructure under Bharat Nirman and aims at creating the irrigation potential of 10 million ha by 2008-09. But only 3.62 million ha has been created up to 2006-07.
The government has also proposed to provide Rs 644 crores in 2008-09 to National Agriculture Insurance Scheme (NAIS) to cater to the needs of farmers and insurer,Rs. 50 crores for the Weather based Crop Insurance Scheme and to increase the corpus of RIDF-XIV in 2008-09 to Rs. 14,000crores with a separate window for rural roads with a corpus of Rs. 4,000crores. National Rural Employment Grantee Programme (NREGP) has been extended to all the districts with budgetary allocation of Rs. 16,000 crores.
More budget allocations for farm sector alone is not enough. Government should shift the emphasis from Punjab and Haryana and western Uttar Pradesh to the Gangetic Plains. MSP should be linked to the wholesale price index and subsidies on tools agricultural implements and planting material should continue. Shift should be in research and development, agricultural procurement and developing infrastructure and land for tilling. The long term policy framework at broad sectoral level needs to strengthened and focused on improving inter and intra sectoral linkages. While public investment in agriculture may not have kept pace with the requirements of the sector, food and agriculture subsidies have supported the agriculture sector. There is a need for better targeting these subsidies with a view to optimize the resource allocation and returns there from. Agricultural progress has to be measured by the progress in the growth of the real income of farmers by converting words into action. Human resource development is necessary not only to have greater penetration of better technology but also because new skill sets would be necessary to enable underemployed labour to get absorbed in other fast growing sector of the economy.