Budget 2008 no relief to agricultural recession

it was the biggest feature of the union budget, and was played to the maximum effect. Waiver of small and marginal farmers' loans amounting to Rs 60,000 crore triggered a virtual stampede among political parties to claim credit for it; the ruling United Progressive Alliance (upa) termed the decision 'momentous'. The budget, however, offers little to address the larger problem of agricultural recession, the main reason behind severe indebtedness of farmers (see graph Unsustainable).

Available official data shows that rainfed areas with the maximum concentration of small and marginal farmers will not benefit from the waiver. Add to it the fact that the budget does little else to raise agricultural productivity in rainfed areas, and it becomes clear the decision will not go a long way in reversing the recession.The Economic Survey that preceded the budget had made an urgent call "A second Green Revolution, particularly in the areas which are rainfed, may be necessary to improve the income of the persons dependent on the agriculture sector." It did not find an echo in the 2008-09 budget.

"Writing off loans may not have any real beneficial effect on the areas and cultivators that are the worst affected by agrarian distress," says Jayati Ghosh, an economist with Jawaharlal Nehru University in New Delhi who has extensively studied agrarian crisis in India. It seems the government has done creative accounting to minimize the scope of waiver but to extract the maximum political mileage. "Seventy per cent of farmers who own less than one hectare do not opt for commercial credit. So the waiver bypasses them," says Mohan Guruswamy, chairperson of the Delhi-based Centre for Policy Alternative.