The United Progressive Alliance’s (UPA) proposed mega relief package to the agricultural sector, including a waiver in farm loans that will likely be announced in the coming Union Budget, should be seen in the context of the general election that is just a year away. As per current estimates, the agricultural sector is projected to register a mere 2.
6% growth in the year 2007-08, against the overall GDP growth rate of 8.7%.
People in the government point out that the loan waiver is being offered in the wake of a sharp dip in the growth forecast for agriculture, which would seriously jeopardise the overall projected dream GDP growth rates of 9%. In reality, the proposed write-off has less to do with the dip in the growth of the agricultural sector and more to do with the declining electoral fortunes of the ruling coalition and the Congress party’s growing concerns about its winning prospects in the next year’s general election.
With 57% of the country’s population dependent on agriculture as the principal source of livelihood, the falling contribution of agriculture to the GDP to well below 20% has exacerbated the urban-rural disparities and is stoking a lot of dissatisfaction among the rural populace. The loan waiver is intended as a major sop to appease farmers who are unhappy with the UPA government for importing wheat at exorbitant prices, denying similar prices to domestic growers; offering lower minimum support price for paddy in comparison with wheat; increasing diesel prices; and promoting special economic zones, acquiring their lands at cheap rates.
I have repeatedly argued in this column that the agricultural sector is passing through an existential crisis and urgent and timely interventions are needed. In this regard, I welcome any initiatives intended to benefit farmers and the agricultural sector.
The moot questions are whether a blanket loan waiver is what is needed to help farmers in distress and boost agricultural growth and whether the initiative will help the electoral fortunes of the ruling UPA. Most small and marginal farmers do not have access to institutional credit.
http://in.news.yahoo.com/mint/20080218/r_t_mint_bs_budget08/tbs-will-farm-loan-waiver-lift-upa-s-for-a839eca.html
6% growth in the year 2007-08, against the overall GDP growth rate of 8.7%.
People in the government point out that the loan waiver is being offered in the wake of a sharp dip in the growth forecast for agriculture, which would seriously jeopardise the overall projected dream GDP growth rates of 9%. In reality, the proposed write-off has less to do with the dip in the growth of the agricultural sector and more to do with the declining electoral fortunes of the ruling coalition and the Congress party’s growing concerns about its winning prospects in the next year’s general election.
With 57% of the country’s population dependent on agriculture as the principal source of livelihood, the falling contribution of agriculture to the GDP to well below 20% has exacerbated the urban-rural disparities and is stoking a lot of dissatisfaction among the rural populace. The loan waiver is intended as a major sop to appease farmers who are unhappy with the UPA government for importing wheat at exorbitant prices, denying similar prices to domestic growers; offering lower minimum support price for paddy in comparison with wheat; increasing diesel prices; and promoting special economic zones, acquiring their lands at cheap rates.
I have repeatedly argued in this column that the agricultural sector is passing through an existential crisis and urgent and timely interventions are needed. In this regard, I welcome any initiatives intended to benefit farmers and the agricultural sector.
The moot questions are whether a blanket loan waiver is what is needed to help farmers in distress and boost agricultural growth and whether the initiative will help the electoral fortunes of the ruling UPA. Most small and marginal farmers do not have access to institutional credit.
http://in.news.yahoo.com/mint/20080218/r_t_mint_bs_budget08/tbs-will-farm-loan-waiver-lift-upa-s-for-a839eca.html
