Farmers’ body lauds debt relief, asks for barrier-free market

March 4th, 2008 - 12:30 pm ICT by admin  

A file-photo of P. Chidambaram
By Rajeev Ranjan Roy
New Delhi, March 4 (IANS) Lauding the central government’s farm loan waiver as a “daring move”, a leading farmers’ association has said the government must also ease restrictions on production, supply and distribution of essential commodities to provide a freer market to producers. To provide a better farm produce market, the government will need to abolish the Essential Commodities (EC) Act of 1955, which restricts supply and distribution of essential commodities like food stuff, edible oil seeds and oil, raw cotton, raw jute and textiles, said P. Chengal Reddy, secretary general of the Consortium of Indian Farmers Association (CIFA).

“The Rs.600 billion ($15 billion) relief is a daring move, but the government must act to provide them (farmers) a barrier-free market, where they can sell their products,” Chengal Reddy told IANS.

Once the EC Act is lifted, farmers from different states could sell their products anywhere in the country.

“The government must abolish the EC Act and work out an alternative financial mechanism for tenant farmers. I expect such corrective measures now, as our leaders have realised that agriculture needs serious support.”

Finance Minister P. Chidambaram in his Feb 29 national budget speech announced a loan waiver scheme expected to benefit around 30 million small and marginal farmers owning less than two hectares of land, and a one-time loan settlement for 10 million more.

Reddy also sought easy and cheaper loans for tenant farmers.

“Around 35 percent farmers are into tenant farming and they depend upon private moneylenders for loans, who charge exorbitant interest rates as high as 40 percent,” he said.

“The problems of tenant farmers are quite complicated. They are not the owners of the land, and thus not eligible for loans from the scheduled institutions for agriculture purposes. With no option, they take loans from the private moneylenders,” Reddy said.

“The government should introduce new technology in farming. There is a need to curtail the huge agro-products worth Rs.500 billion that get wasted yearly. Hardly three to four percent agro-products are processed.”

Prime Minister Manmohan Singh’s Economic Advisory Council (EAC) chairman C. Rangarajan in his report on financial inclusion had said only 27 percent farmers get loans from official agencies.

The government’s expert group on agriculture indebtedness, headed by R. Radhakrishna, director of Mumbai-based Indira Gandhi Institute of Development Research (IGIDR), also said in a report submitted last year that a majority of marginal farmers were highly dependent on private moneylenders.

“Farmers’ indebtedness is a serious symptom of our agriculture crisis. It should be addressed on priority basis with a long-term solution. The latest relief will stabilise farmers in next two to three years.”

About the way ahead, Reddy gives the example of China.

“It is remarkable to state that China did not ignore agro-economy even while adopting a liberalised economic policy. Rather, they consolidated agriculture productivity and thereby stabilised their economy as well.”

“In India, agriculture has unfortunately never figured on the government’s priority list since liberalisation. As a result, the share of agriculture in the gross domestic product (GDP) has sharply reduced to 18.5 percent in 2006-07 from 36.4 percent in 1982-83,” Reddy said.

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