Exclusive: Balancing act in Budget 2017 is a curse for the poor, writes Yogendra Yadav

It was a replay of last year. Finance Minister Arun Jaitley read out his budget speech, paying special attention to agriculture and rural areas. He highlighted a few figures. The media caught on to his words and figures and declared the budget to be pro-farmer, pro-rural and pro-poor.

We analysed the FM speech in our KisanSansad, held this year at Jantar Mantar, to coincide with the budget presentation. We were disappointed and angry. Some of us went to TV studios, tried to expose the truth behind the finance minister’s words and selective figures. Anchors wore an incredulous look. We appeared like habitual complainers, if not professional regime-haters. Politics and TV moved on.

As I read newspaper headlines, editorials and commentaries this morning, I notice positivity all over: fine balance, no populism, tight-rope walk. I began to wonder if we are the ones who have lost our sense of balance.

I went over our expectations and the budget once again.

Reuters

Reuters

The farming sector had reasons to expect something big this year. We are living through an era of agrarian crisis and rural distress. Let me not bore you with numbers. Enough to remind that while the share of population dependent on agriculture is going down very slowly, the share of agriculture in the country’s income is coming down rapidly.

Two successive droughts brought down growth in agriculture production. We even had negative growth in agriculture. Just when the farmers were about to celebrate the first good harvest after two years, they were hit by demonetisation. Prices crashed for some perishable crops. Farmers scrambled for cash to pay for seeds, fertilisers and labour for sowing the new crop. They badly needed, and hoped for, some big relief in this budget.

That’s not what they got. Let us review four key dimensions of farm economy: amad (income), kharch (cost and expenditure), apad (disaster protection) and karj (debt).

On farmers’ income, the finance minister repeated last year’s solemn assurance: “The government is committed to doubling farmers’ income in the next six years (now five years)”. Lovely. Except that he has not clarified, despite repeatedly queries from economists, whether he is talking of nominal income, that keeps increasing with inflation, or real income. Nor did he spell out any blue print for how this is to be achieved. Not even a para.

Farmers’ movements have been demanding a legislation on minimum assured income for the farmers. The “krishi budget” speech in our KisanSansad had made a concrete proposal in this regard. Minimally, the finance minister could have announced a Farmers’ Income Commission. He did not. He did not find it necessary to even report the progress made towards increasing farm income in the last one year. Not even one figure. Just imagine the outrage in the business media if the FM had made a similar casual announcement about, say, doubling the income of IT industry. I did not notice any such outrage yesterday.

On agriculture inputs – seeds, fertilisers, water, electricity – there was no mention in the finance minister’s speech. Experts noted with satisfaction that the huge bill of fertilizer subsidy was not hiked. Fair enough. Fertiliser subsidy is poorly targeted and benefits big companies more than farmers. In any case it is a perverse incentive to put more fertilisers that damage the soil. Could the FM not have done something to ensure better targeting and utilisation of this amount? There was a lot of talk about ‘reforms’ but I did not hear anything on this reform.

There was a lot of expectation on relieving farmers of some part of the huge debt burden. Instead the finance minister repeated the routine announcement about credit target for the farm sector. This year the target is Rs 10 lakh crore. The media presented it as big bonanza, without mentioning that it was routine increment from Rs 9 lakh crores last year. It overlooked the fact that the government was not paying for this. It was merely asking the banks to extend this loan.

In any case, no one remarked on the small detail that an overwhelming majority of this loan does not go to any farmer. Agri-business companies corner much of this loan. Farmers needed something else. They were not asking for a blanket farm-loan waiver. A section of farmers caught in debt-trap do need such a relief. For most of them, a relief in the interest part of their outstanding dues would have been a great help. They also needed a scheme to shift loan taken from money-lenders, who charge exorbitant rates, to banking institutions. None of this came up for even a mention.

Finally, the issue of protecting farmers against the vagaries of weather, worsening due to climate change. The finance minister waxed eloquently about the Prime Ministers Fasal BimaYojna. He drew applause by showing how the government has spent more than double the amount budgeted for this scheme.He glossed over some crucial details, and so did the media.

The PMFBY replaced a range of pre-existing crop-insurance schemes which covered only about 21 percent of the farmers, at a cost of little less than Rs. 3,000 crore. Those schemes were rightly criticised and replaced by PMFBY. The new scheme has so far provided insurance cover to additional 5 percent of the farmers while the cost for the government has gone up more than four-fold.

The question that begs an answer is: did this additional money go to the farmers or to private insurance companies? There was also an irony that no one noticed. The government has spent more than Rs 13,000 crore this year in covering less than 30 percent farmers. Next year it proposes to cover 40 percent farmers under the same scheme with just Rs 9,000 crores. Would the finance minister play this joke with any other sector?

What about crop loss compensation? Currently the government pays the farmers a princely sum of Rs 2,700 for complete crop loss in one acre of un-irrigated land. Every year we hear reports of farmers getting compensation check of Rs 27 or something like that. There was no mention of revision of this cruel joke. Forget natural disasters. The finance minister did not provide a paisa for compensating the farmers for the disaster inflicted by the government’s own policy of demonetisation.

The pain of urban middle class standing in queues to withdraw their money from ATM was evident in TV studios. The trauma of farmers and daily wage-earners who lost their income due to demonetisation was not.

As I reviewed the budget speech, I came to see the ‘balance’ in a different light. Budget is not merely an accounting exercise. It is an exercise in political will. Budgetary allocation is where you see the real political priorities of a government. Is the government willing to put its money where its mouth is? Which way does it wish to tilt the existing balance of power?

Seen in this light, Arun Jaitley’s budget is indeed a very ‘balanced’ budget. It preserves the existing balance of power. If you view this exercise from the top of the pyramid, maintaining balance is a virtue. But if you happen to view the budget from the bottom of the pyramid, a balancing act is nothing short of a curse, for it perpetuates the existing imbalance. That is what my colleagues in KisanSansad wanted to say to the TV anchors.

Like beauty, balance also lies in the eyes of the beholder.

(The writer is President of Swaraj India)


Published Date: Feb 03, 2017 08:04 am | Updated Date: Feb 03, 2017 08:04 am


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