The cabinet has recently cleared the way for disbursing loans to farmers at interest rates below nine per cent by passing the National Bank for Agriculture and Rural Development (amendment) bill. The bill is expected to bring relief to the agricultural community, which has been trying to cope with the high interest rates — ranging between 14 and 16 per cent — charged by state-owned banks. Cooperative banks were also guilty of doling out agriculture credit at 16 to 18 per cent interest. If implemented in spirit, the bill would ensure that the farm sector, like the industrial sector, enjoys a single-digit interest rate.
The agricultural community in India has been traditionally exploited by the ruling classes. Even in lean seasons, farmers have been slapped heavy taxes by kings and zamindars. Professional moneylenders have also traditionally charged exorbitant interest from the poor and vulnerable farmers. The picture did not change much in post-independence India. Development policies were skewed in favour of other sectors; agriculture and the rural communities continued to be systematically ignored. The fact that even nationalized banks were charging higher interest rates from poor farmers than from rich industrialists testifies to this.
During the last three years, agricultural production went down in several states because of drought conditions, resulting in a drop in national growth rates and a reduction in the purchasing power of the rural masses. As a result, the sale of manufactured goods was adversely affected, so much so that the industrial sector went into recession. A good monsoon has lifted the atmosphere of gloom somewhat, and the national growth is expected to be above six per cent this fiscal year. Can one still doubt the centrality of agriculture in the Indian economy'
Most economists agree that money should be given to a sector according to its employment-generation capacity. Although agriculture provides employment to more than half the working population of India, the government spends only 1.3 per cent of the gross domestic product on this sector. Giving huge concessions to the industrial and urban lobbies while victimizing agriculture and the rural populace has had a high human cost — an alarming increase of suicide among farmers all over the country.
Funnily enough, it is the urban and industrial sectors which habitually accuse the government of appeasing farmers through subsidizing electricity, fertilizers and food. Such criticism is unjust. A large number of farmers cannot even arrange for two square meals for their families because of their poverty. Ironically, the same farmers who have helped India achieve self-sufficiency in foodgrains at the national level are the ones whose families perish from hunger because the country has yet to achieve self-sufficiency at the level of individual households. Economic liberalization has benefited the urban rich, but made life harder for farmers.
The NABARD (amendment) bill has met with fierce resistance from the rich, urban and industrial sections. The reaction is based on their fear of a hike in the absurdly low rates of interests they have been enjoying. They have accused the government of resorting to a “populist” measure to consolidate their vote banks. They have also alleged that the government wants to revert back to the controlled interest rate regime, although the Union finance minister, Jaswant Singh, has made it clear that “there is no question of reintroducing administered interests rates through the back door, front door, or side entrance”.
The criticism of the bill smells of hypocrisy and an acute urban and industrial bias, since the same critics who label such concessions to farmers as “populist”, welcome concessions to the rich industrialists as “incentives”. This duplicity is yet another reminder of the sorry plight of Indian farmers. But then, post-independence India is full of such cruel contradictions.