FARMERS ARE RESCUED FROM UNJUST INTEREST RATES

Aug 10, 2003

FARMERS ARE RESCUED FROM UNJUST INTEREST RATES
WHAT ABOUT OTHER INJUSTICES ?

New Delhi : After a long battle the NABARD (Amendment) Bill got clearance from the Cabinet paving the way for disbursing loans to farmers at the interest rates of below nine per cent. It a great relief for farmers, for the banks as well as private money lenders of our country has been exploiting them for years by giving them loans at a much higher rate of interests than many other sectors including industries.

If it is implemented in letter and spirit, it would be for the first time that the agriculture sector would get loans almost at the same rate as applicable for many other sectors. Earlier the banks have been charging interest rates from the farmers in between 14 to 18 percent, which is much higher even than prime lending rates for industries that have been of single digit for quite some time.

Farmers, who constitute majority of the rural population of our country, have been a traditionally exploited group of people. They did bear the burden of the treasury of the kings and rulers. Even during the famines or flood they have been traditionally subjected to heavy taxation by the kings and zamindars ( a ruling class except in the Punjab, where zamindars were different from the rest of India), and exorbitant interest rates by the money lenders. Whatever development we see today in the field of industry, education, health and many other areas, money initially came from this sector. However, with the beginning of the process of industrialisation and urbanisation, the agriculture and rural sectors have been systematically ignored. It continued even in the independent India. Is it not shocking that even our nationalised banks were charging more interests rate form the poor farmers than from the rich industrialists ?

For the last three consecutive years, many states of the country have been undergoing a severe drought conditions. With the fall in agricultural production, our national growth sharply came down. Rural income suffered, and the purchasing power of the rural folk greatly reduced. Sales of manufactured goods was adversely affected up to such an extent that the industrial sector suffered a serious phase of recession. Now, when the monsoon is good, we see cheer in all the faces from the farmers to the industrialists, from the laymen to the statesmen, and from the households to the national planners. Everybody seems to be in upbeat mood. Planners, government, financial institutions, and industry are now projecting a national growth of above six per cent for the current year, almost 1.5 per cent above the growth achieved in the last fiscal year.

This shows the importance of the agriculture sector in overall economic growth of the country. But we have done a little for this sector. Let us take some examples.

Even today, we are spending only 1.3 per cent of our GDP on agriculture. It is despite the fact that this sector provides 56.7 percent of the total employment in the country, and gives direct means of livelihood to 69 per cent of our population.

The bases on which money for investment should be made available, on which most of the economists agree, are the number of employment the particular sector provides, and the number of people it gives direct means of livelihood. If these two yardsticks are applied to the agriculture sector of India, it is entitled for an investment of 18 per cent of the GDP of the country.

Nevertheless, all the three basic areas of agriculture - land, water and human resource - have been ignored by our planners, who are perceivably carrying forward their urban bias or doing favours to the urban and industry lobbies at the cost of agriculture sector and the rural populace.

How much our 13 crore strong farming communities are suffering can be imagined by the widespread incidents of suicides by farmers right from the Punjab to Hyderabad. The conditions of the agricultural labours are far worse who account for 60 per cent of the 37 crore workers in the unorganised sector of the country.

Urban and industrial lobbies are in the habit of cursing the governments for their alleged appeasement of the farming communities. They have been criticizing the governments for giving subsidies to the farmers in various heads like electricity, fertilisers, food etc, despite the fact that they are traditionally suppressed and reduced to such a poor state that they cannot bear their cost. They produce foodgrains and made the country self-sufficient at the national level, but our nation is yet to achieve food security at the household levels. It is they, who die of hunger. During the last decade of economic liberalization the items they use have been increasingly costlier while the items the rich uses have become cheaper. The benefits of the economic liberalization are going to the rich urban class, and poor farming communities are facing hardships of the WTO regime.

When the relief in interest rates to the farmers was announced, the rich , the urban and the industrial class criticised the government out of fear of losing cheap loan money. They alleged that the government wants to revert back to the controlled interest rate regime. The Union Finance Minister Jaswant Singh had to deny and say, “ There in no question of reintroducing administered interest rates either through the backdoor, front door or side entrance.” Mr Singh had admitted that 46.15 percent of the agriculture loan are being given in the 12-15 percent range, 31.7 per cent loans age made at the rate in 15-18 per cent, 2.54 per cent are in the range of 18-20 per cent and 0.82 per cent are in the range above 20 per cent.

It is highly unfair that the economists and the policy makers in the helm of affair carry urban and industrial bias by alleging all the reliefs to the rural or agricultural communities as “populist” and “subsidies”, while they welcome the concessions to the rich and industrialists by saying them “incentives.” (EOM)