This Article is From Mar 02, 2015

Jaitley's Budget is for Sahib Log

(Mani Shankar Aiyar is a Congress MP in the Rajya Sabha.)

Every year around the end of February, the sahib log and the pink papers (and now, increasingly the TV news channels) whip themselves into a frenzy over what the Budget holds for them.

There is no equivalent frisson of excitement among the broad masses of the Indian public. One reason, of course, is that the broad masses pay no direct taxes. Therefore, there is no incentive to discover how much less or more the taxman is going to snatch from them. But more important, I think, is that at least since we entered the era of neo-liberalism, the Finance Minister concentrates his attention on the corporates (who make or break his reputation) - and the corporates on him to see what's in it for them.

The vast majority of Indians working in agriculture and allied activities (dairying, fisheries), as unskilled labour on the farms, in construction and domestic services, in petty retail and nano-to-micro-industries, are neither looking to the FM nor is the FM looking towards them.

Of course, there is a ritual invocation of the poor and the kisan by every FM at the start of every budget speech, but once he has got over that hump, he quickly moves on to more congenial matters such as augmenting the annual Rs 6 lakh crore subsidy given to fat cats and written off under the heading "revenues foregone".

(However, not one FM mentions the figure in his budget speech for fear that if the figure is boldly stated, sharp questions will be asked why if this subsidy to the rich can go up year after year, it is only the subsidies to the poor that come under annual attack from sources who wish to portray the rich as prudent and the poor as profligate).

Unsurprisingly, this has happened again this year. Arun Jaitley shed a few crocodile tears for the kisan and khet-mazdoor before devoting five-sixth of his speech to his real clients. And this despite the fact that in this year where the (statistically fudged) claim is that India is growing at plus seven per cent, will cross eight per cent next year and soar to double digits thereafter, the Government's Economic Survey 2014-15, Vol II, chapter 5, divulges the tragic truth that Indian agriculture has grown by only 1.1 per cent in this miracle year.

With nearly half our workforce engaged in agriculture and nearly 60 per cent of rural households essentially dependent on agriculture for their household income, this horrifying story of stagnation in a period of stratospheric growth has merited neither the attention nor the concern of the Finance Minister nor any of the sahib log. It took a heroic effort on my part to get in even a word edgewise on this in the televised budget discussion in which I was entrapped for some six hours on Budget day. We, the sahib log, just don't seem to care.

Every single agricultural crop of significance is down. Our output of rice, wheat and coarse cereals (jowar, bajra etc) is down; our output of oilseeds and pulses is also down. Only monkey nuts are up! What has saved the rural economy is dairying and poultry. All this is spelled out in the Economic Survey but merits no attention in the Budget speech. Moreover, the Economic Survey details what needs to be done to pull this most vital sector of the Indian economy out of the mire in which it is sunk. But the Finance Minister (and his PM) appear to have skipped Chapter 5 which succinctly sets out the steps to be taken.

Chapter 5 emphasizes that the biggest lacuna in Indian agriculture is agricultural research and extension to address the twin problems of yield and productivity. It says "the paradigm shift in yield/productivity required for the second green revolution" renders it "imperative to make Indian agricultural growth science-led" and a nation-wide network of extension services provided to carry the message to the farmer. Studies show that two-thirds of Indian kisans do not even know that extension workers are supposed to get this new knowledge to them gratis. Yet, apart from Rs. 100 crore set aside in Jaitley's last budget for two additional institutes of excellence, the subject is not even mentioned in this year's speech.

Moreover, no recognition is accorded to the heartbreaking story of agricultural credit despite numerous studies, most recently the 2013 NSSO 70th round, establishing conclusively that "the crop loans are not reaching intended beneficiaries and there are no systems and procedures in place at several bank branches to monitor the end-use of funds." These alarming facts are underlined at a time when 40 percent of farmers' credit requirements are still being secured from "informal sources" (which translates as the village middleman) and "usurious moneylenders account for a 26 percent share of total agricultural credit", both "issues that need to be addressed on a priority basis". The share of long-term credit in total agricultural credit has collapsed from 55 percent to 39 percent. Worse still, the bulk of so-called rural credit is availed of by corporate farmers from urban branches, while a disturbingly large number of kisans are not even aware of the credit facilities being made available by Government.

Unless and until the Panchayat Raj Institutions are integrated into the agriculture credit and extension services system, there is no way "last-mile connectivity", underlined by the Survey, can be ensured. Yet, the Finance Minister did not even whisper the word "panchayats" and drastically cut the allotment for the Union Ministry of Panchayati Raj from over Rs. 6500 crore to just Rs. 95 crore.

This is clearly a government that either knows nothing of India's real needs or is so obsessed with its corporate sponsors that it cannot look beyond the factory to the farm. The tragedy, therefore, continues of 60 per cent of India's population that lives in her villages having to make do with just 13 percent of the nation's GDP.

Astoundingly, this neglect of the rural economy is received with applause by those who wish to see investment in private sector industry and PPP infrastructure rise exponentially. Agriculture's disaster in recent decades has  been the drying up of public investment in agriculture. For a whole decade, public investment has stagnated; it is now running at about one-eighth of total capital formation in agriculture. The Survey says, "Given the vast investment needs of this sector, greater public investment would only help increase private investment." Yet, the Finance Minister has seen fit to glide away altogether from this desperate need of the real aam admi - the kisan and the khet-mazdoor. This is deeply depressing as growth is ultimately for the people and needs to find reflection in employment. Agriculture is the most employment-intensive segment of the economy. Investment, public or private, in private big business and PPP projects leads to capital-intensive and technology-intensive growth, that is, jobless growth of the kind we have suffered for the last two decades and more.

Where then should the priority lie? Please don't ask Mr. Jaitley because the poor man does not know. All he sees are the bulging bags of private domestic and foreign industrialists.  Hence, a Jaitley budget that is principally addressed to these corporate big-wigs and their fellow-sahib log.

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