PaRCha - JNU - AISA material - 2006 ID-16997
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Perhaps, strong signs of the aggravating agrarian crisis come from Punjab . Debt per farmer is Rs.45,000, the highest in the country. CM Amrinder Singh himself came out with the fact that the aggregate annual income of farmers in Punjab was Rs.7,200 crore and their aggregate debt is Rs.24,000 crore. There was a forceful demand from the farmers and protests for increase in MSP for wheat to Rs.950 and the state government offered only a bonus of Rs.50 above the MSP of Rs.650 a quintal. But Amrinder himself has gone on record admitting that the input prices have risen by Rs.112 a quintal. .
Chidambaram promised to reduce the rate of interest on agricultural loans to 7% in his budget as against the recommendation of the National Commission on Farmers to bring it down to 4%. But even this promise has not been implemented so far. He had a meeting with the chiefs of PSU banks on April 24 and the bank bosses were against lending below 9.5% and reportedly demanded Rs.2,000 crore from the Union Government to lend at 7%. Coming out of the meeting, the Punjab National Bank Chairman Mr.Gupta told reporters that, there was no directive from the Finance Minister to reduce lending rates to agriculture. ( The Economic Times (ET) , April 26, 2006 ). Khariff season is approaching and still there is no sign of reduction of rates for kharif season loans. .
Actually, the average cost of funds for banks is only 5.4% and remaining 4% accounts for operational costs! Government has so far not taken a decision to subsidise banks to the tune of Rs.2,500 crore to provide agricultural loans at 7%. The government is citing high fiscal deficit as a pretext and even planning to increase PDS issue prices once again. But this fiscal deficit argument is the usual humbug. Chidambaram's Union Buget itself, in an obscure sub-section discernible only to the careful reader in Annexure 12 of the Receipts Buget has revealed that in 2004-05 the tax exemptions [of course, to the rich and the corporate houses RV] have eroded Rs.1,58,000 crore worth of taxes. This was more than the fiscal deficit of Rs.1,25,202 crore in 2004-05! And Chidambaram in this year's budget also refused to tax rich farmers which could have generated revenue more than needed to offer remunerative prices to all farmers. .
Another sign of intensification of the agrarian crisis in the country this year is the government's controversial decision to further import wheat (See box). The government is paying only Rs.700 per quintal to the farmers. But the market price of wheat for consumers shot up from Rs.940 a quintal in the beginning of April to Rs.1,104 per quintal in May, an unprecedented 20% rise within a single month. This only shows the racketeering by the wholesale traders' lobby. The government declared its intention behind wheat imports as market intervention to bring down the prices. The Australian wheat imported from big business AWB at Rs.950 a quintal, a price higher than what the Indian government pays to its own farmers has started arriving in April itself but there is no sign of prices easing but inspite of imports there is a sharp rise. The AWB wheat is sub-standard and thanks to timely objections by Chennai port authorities the ship has not been allowed to unload. Secondly, the government has now allowed private corporates to import wheat which is contradictory to its declared intention of market intervention through the STC. .
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PaRCha - JNU - AISA material - 2006 ID-16997
.
Perhaps, strong signs of the aggravating agrarian crisis come from Punjab . Debt per farmer is Rs.45,000, the highest in the country. CM Amrinder Singh himself came out with the fact that the aggregate annual income of farmers in Punjab was Rs.7,200 crore and their aggregate debt is Rs.24,000 crore. There was a forceful demand from the farmers and protests for increase in MSP for wheat to Rs.950 and the state government offered only a bonus of Rs.50 above the MSP of Rs.650 a quintal. But Amrinder himself has gone on record admitting that the input prices have risen by Rs.112 a quintal. .
Chidambaram promised to reduce the rate of interest on agricultural loans to 7% in his budget as against the recommendation of the National Commission on Farmers to bring it down to 4%. But even this promise has not been implemented so far. He had a meeting with the chiefs of PSU banks on April 24 and the bank bosses were against lending below 9.5% and reportedly demanded Rs.2,000 crore from the Union Government to lend at 7%. Coming out of the meeting, the Punjab National Bank Chairman Mr.Gupta told reporters that, there was no directive from the Finance Minister to reduce lending rates to agriculture. ( The Economic Times (ET) , April 26, 2006 ). Khariff season is approaching and still there is no sign of reduction of rates for kharif season loans. .
Actually, the average cost of funds for banks is only 5.4% and remaining 4% accounts for operational costs! Government has so far not taken a decision to subsidise banks to the tune of Rs.2,500 crore to provide agricultural loans at 7%. The government is citing high fiscal deficit as a pretext and even planning to increase PDS issue prices once again. But this fiscal deficit argument is the usual humbug. Chidambaram's Union Buget itself, in an obscure sub-section discernible only to the careful reader in Annexure 12 of the Receipts Buget has revealed that in 2004-05 the tax exemptions [of course, to the rich and the corporate houses RV] have eroded Rs.1,58,000 crore worth of taxes. This was more than the fiscal deficit of Rs.1,25,202 crore in 2004-05! And Chidambaram in this year's budget also refused to tax rich farmers which could have generated revenue more than needed to offer remunerative prices to all farmers. .
Another sign of intensification of the agrarian crisis in the country this year is the government's controversial decision to further import wheat (See box). The government is paying only Rs.700 per quintal to the farmers. But the market price of wheat for consumers shot up from Rs.940 a quintal in the beginning of April to Rs.1,104 per quintal in May, an unprecedented 20% rise within a single month. This only shows the racketeering by the wholesale traders' lobby. The government declared its intention behind wheat imports as market intervention to bring down the prices. The Australian wheat imported from big business AWB at Rs.950 a quintal, a price higher than what the Indian government pays to its own farmers has started arriving in April itself but there is no sign of prices easing but inspite of imports there is a sharp rise. The AWB wheat is sub-standard and thanks to timely objections by Chennai port authorities the ship has not been allowed to unload. Secondly, the government has now allowed private corporates to import wheat which is contradictory to its declared intention of market intervention through the STC. .
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