for the banks, of course. they are sitting on non-productive, soon-to-become-non-productive and long-rotting agricultural credit worth 1,00,000 crores.
this will help 3 crore small and marginal farmers in the country.
oh really? find me 3 crore small and marginal farmers who got institutional credit in the first place, in the last three years or any three years before that. the prime minister himself said not more than 14 days ago:
We are also looking into the credit needs of farmers.We cannot have a situation where 80% of our agricultural sector is outside the formal financial system and suffers from excessive burden of indebtedness.the total number of all agricultural holdings (large, medium, semi-medium, marginal etc.,) in india was around 120 million, approximately, a few years ago. which doesn't mean we have 120 million farmers in the country. the number of active farmers in the country ranges from 60 million to 100 million, according to various estimates. it's most probably closer to 80 million. but, for the sake of argument, if we assume each of those 120 million or more holdings equals one farmer, only 20%, according to the prime minister, of those 120 million landholders ever gets institutional credit in india- which means not more than 24 million farmers. or more exactly, 24 million landholders. i repeat, where did chidambaram find 30 million agricultural customers for indian banks? and how many of those were actually small and marginal farmers?
well, a substantial number of small and marginal farmers would get relief, anyway.
at best, not more than 10 million small landholders, not farmers, would benefit from this largesse. it doesn't matter how many large farmers benefit from it- they're not killing themselves anyway. mostly.
why?
85% of indian holdings, or 100 million holdings, fall in the small and marginal category. average sizes being two acres and half acre respectively (both are slightly optimistic estimates). there are around 20 million medium and large landholdings in the country (average sizes: 10 acres and 40 acres, respectively). if you were a banker, who'd you treat with more respect- the small guys or those with not less than ten acres each? you can totally rule out the 80 million marginal farmers (with holdings less than half acre each), i think. how many of the 24-25 million farmers who get credit from banks would be small and marginal farmers? .4-5 million (after taking care of the 20 million medium and large farmers)? slightly more- say, 10 million? 13 million? 13 million sounds impossible, doesn't it? considering, that would mean more than half of the 24-25 million agricultural customers of banks are small and marginal farmers. so, even 10 million is a very, very optimistic figure. and most of them wouldn't fall in the suicidal farmer category.
it wouldn't benefit any farmers in distress?
let's talk of farmer p.c.chettiar. he works in the finance ministry in delhi but holds 4 acres in the cauvery delta region. his brother p.d.chettiar, who owns race horses and runs hotels in chennai, owns the adjacent plot of four acres. another brother, p.e.chettiar, whose interest is racing cars and lives in milan also owns four acres. yet another brother, p.f.chettiar, who's an assistant commissioner of police in madurai also has another 4 acres to his name. the last brother, p.g.chettiar, who also owns 4 acres actually looks after agricultural operations in all the twenty five acres all the brothers together own. and all 5 of these small farmers would benefit from this relief offered by chidambaram. that's one kind of farmers this measure would benefit- the absentee farmer from the regions with a long history of access to irrigation. like two-three districts in coastal andhra and western maharashtra, several districts in punjab, haryana, western uttar pradesh and west bengal etc., regions which grow sugarcane, paddy, wheat and other commercially profitable crops. the more prosperous sections of farmers in these regions would benefit.
who wouldn't benefit?
farmers in most of india. in the rainfed, arid regions which constitute 70% of all arable area in india. like vidarbha, telangana, rayalaseema, many parts of karnataka, madhya pradesh, gujarat, rajasthan etc., and also marginal farmers from all over india, including the prosperous, irrigated regions like punjab, coastal andhra etc., i had mentioned earlier.
would the suicides stop?
no. 90% of the farmers who are committing suicide do not receive any institutional credit. if some of them ever did, they do not receive it now. most of their credit needs are met by private moneylenders.
then who'd benefit from this measure?
like i said, prosperous upper caste farmers from the irrigated regions of the country. and upper caste run banks which 'can clean up their books now', as chidambaram says, of some bad credit which would have been written off anyway, in due course. they would receive around 20,000 crores each year as additional capital from the government and this would enable them to lend an additional 2,00,000 each year as credit, hopefully, to more upper caste customers working in the organized sector looking to buy new cars, homes or holidays.
as i said in this post, budgets are mostly about dressing up sectarian interests in widely acceptable, egalitarian garb.