Debating India

ANDHRA PRADESH

Long, Hard Haul

Savitri Choudhury

Monday 19 July 2004, by CHOUDHARY *Savitri

The suicides won’t stop. The state wants Rs 3,190 crore from the Centre. But will the money reach the farmer?

Rural Andhra Pradesh’s cup of woes brimmeth over. Leave Hyderabad and all you get to hear are tales of despair. The government has changed but the farmer suicides haven’t-179 officially confirmed debt-related deaths since the new government took over. So, the big crisis before chief minister

Y.S. Rajasekhara Reddy is to first contain the suicides and then to revive the agricultural sector. The Congress leader has won on a pro-farmer ticket but he will need a huge infusion of finances from lending agencies and the Centre if he has to implement the various rural schemes. More importantly, he will have to set in place a mechanism that ensures that funds reach the right people. Incidentally, Andhra Pradesh has never been short of largesse. During Chandrababu Naidu’s tenure, he ensured that relief from New Delhi was not wanting. The only problem was that much of it didn’t reach the farmer. Rajasekhara Reddy also has a friendly government at the Centre. Prime minister Manmohan Singh’s first visit after assuming office was to AP, where he announced the release of 1.82 lakh tonnes of rice and Rs 60 crore in cash. The state government has asked for Rs 3,190 crore central assistance. Plus, it wants Rs 45,000 crore debt financing for 23 irrigation projects.

At the core of the problem are tenant and marginal farmers. This group has proved doubly vulnerable, as they have to pay exorbitant rents for leasing the land they cultivate. Then, having no fixed assets, they are not eligible for any loans from institutional lenders and are on the mercy of local sharks. In fact, institutional lenders such as nationalised and rural cooperative banks only account for between 20 to 30 per cent of rural credit today. The bulk of the monies are lent out by local moneylenders who charge an exorbitant 24 to 60 per cent interest on borrowings. The new government has promised to force banks to make an additional Rs 11,000 crore available as rural credit. It also plans to introduce a scheme so that marginal farmers can qualify for these loans.

Most of the rural credit is paid in kind and controlled by vested interests. For example, the local money lender, who is often also an input supplier, gives the farmer seeds and pesticides, which turn out to be spurious. Now, the government has promised to introduce a Seed Act to check adulteration and book the guilty. Says minister for agriculture, N. Raghuveera Reddy: "Both the state and central government are committed to introducing the Seed Act to ensure the quality of seeds and pesticides. Those who try to cheat the farmers will be given harsh punishment. We will introduce proper crop insurance, as what we have so far does not really benefit the farmer."

The much-maligned food for work programme still remains one of the major drought relief measures. Raghuveera Reddy claims this time the works conducted under this programme will be restricted to building of permanent structures to safeguard against corruption. Earlier money was siphoned off in the name of projects that were either fictitious or had a short shelf-life. Also, it would crack down on those diverting food into the open market.

Over the past few years, liberalisation has meant the withdrawal of several subsidies for the farming sector, resulting in a sharp increase in the cost of agriculture inputs. The rise in the cost of fertilisers and seeds coupled with the power hikes introduced during the Chandrababu Naidu regime as part of his government’s World Bank-sponsored structural reform programmes meant the cost of cultivation in Andhra Pradesh became substantially higher than other parts of the country. With the opening up of the economy, these farmers are at a clear disadvantage when they have to compete nationally for prices. Also, the procurement agencies have not been paying the support prices they are supposed to.

YSR has admitted the World Bank is "unhappy" with his decision to provide free power to the farmers and waive dues worth Rs 1,280 crore. However, he believes this is essential to make farming viable again in the state. The power subsidy will cost the state exchequer Rs 450 crore annually. But more than the economics, the fear is that this might lead to further depletion of already scarce groundwater by rampant borewell use.

Indiscriminate digging of borewells by farmers desperate to find water has already led to a chain of environmental and personal tragedies. With the government failing to provide irrigation, especially in Telangana, farmers have been forced to borrow heavily to sink in borewells. As a result, the water table has fallen drastically and the digging often proves futile. This exorbitant mistake then drags the farmer deeper into debt, a cause of several suicides.

The previous government had introduced the walta or Water, Land and Tree Act, which laid down certain conditions for digging a borewell-a distance of 500 feet between two wells and certificates from local engineers before digging could start. This law was meant to safeguard the interest of the farmer but it was never implemented for fear of a political backlash. The new government is also talking to insurance agencies for a scheme against failed borewells.

The effectiveness of this government’s relief measures can only be judged by the extent to which their benefits filter down to the small farmer. "Unfortunately, most schemes announced are more populist than productive," says Pedireddy Chengala Reddy, chairman of the Federation of Farmers Association of Andhra Pradesh. According to him, farming is becoming increasingly unviable across the country because of the mismanagement of successive governments who have failed to grasp what farmers really need. The marginal farmers of Andhra Pradesh are unfortunately among the hardest hit-paying with their lives for bureaucratic and political myopia.

In the end, it all boils down to money. The YSR government would require a near-doubling of its plan expenditure from the previous levels of Rs 11,000 crore to about Rs 20,000 crore to fulfil all its election promises. However, the state’s own finances are in bad shape. Its present fiscal deficit is Rs 6,365 crore. Hopefully, the government doesn’t meet with the same fate as the farmers-keep digging deeper and find the well empty.

P.S.

Save The Farmer

- Replace local loan sharks with institutional lenders.

- Introduce the Seed Act which lays down stringent punishment to those who sell spurious seeds/fertilisers.

- Food for work programme to be restricted to construction of permanent structures, to stop diversion of grains in the name of short-term fictitious projects.

- Step up vigilance and punish those diverting food/funds meant for relief.

- Bring in a more comprehensive and farmer-friendly crop insurance policy.

in Outlook India, Monday, July 19, 2004.

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