Indra’s Drishtikona (Viewpoint)

Will the rural population be lucky this time?

Posted : June 30, 2004 at 9:33 am [IST]

Election 2004 has made a significant change in thinking of the economists as well as politicians. Every one talks about the rural population and its pitiable conditions. Every one has some formula to make the farmers rich and to provide employment to other non-farming population.

India’s Finance Minister (FM) has already increased farm credit by 30%. The theory behind this is - farmers can not pay even if they wanted to thanks to the myriad hazards that they face in farming. They buy seeds which are of poor quality, fertilizers and insecticides that are spurious, the rain god always deceive them. They go to private money lenders where the interest rates have remained same as it was in pre-independence period. What can be the solution? Can subsidies, free power, interest free loan be the answers? If you ask me, the answer is a resounding NO.

According to a famous economist Bibek Debroy:

If all ‘pro-poor’ subsidies were put together, the total amount would be around Rs 274,352 crore. If this amount is handed over directly to 30 crore people in the category of ‘below poverty line’ (BPL), each individual will get Rs 9,145 a year amounting to nearly Rs 46,000 per household. If this would have happened, by now destitution would have gone in pages of history.

If this simple arithmetic is correct and the number of BPL has remained so high, it is fairly obvious that the intermediaries have been gtting all the benefits. Perhaps these subsidies are going on and being sustained to keep the large number of inefficient and corrupt officers in their cozy jobs. So why should we not cut down these subsidies and put that money, at least a major portion of that in investment in asset creations - good roads, electricity, irrigation projects, in creating and encouraging organizations that ensure good quality seeds, accountable R&D facilities, in agriculture biased education for rural students who are going to be tomorrow’s farmers. Agriculture today continues to be based on the traditional knowledge getting transferred from previous generation. Did you know that there are close to 400 projects of irrigation worth Rs 79,000 crore pending since 1960? Who is accountable for this financial indiscipline? If these projects are not feasible, why can’t they be written off?

The latest idea of the economist PM to transfer the development fund directly to the district level will be effective, only if a transparent mechanism of its disbursal and check on its utilization so that the benefits reaches the intended group is laid down. The PM must appreciate the observation of economist Kripa Shankar’s estimate that the government spends Rs 20 to get one rupee worth of food to the poor.

All I can say to the folks trying to do this is: “Good luck and all the best”.

- Indra

Category: Government Policy/Administration |