The discussion on the President's address got off to a confrontationist and bitter start in Lok Sabha on Monday with NDA and UPA benches repeatedly interrupting each other even as Leader of Opposition L K Advani called on Prime Minister Manmohan Singh to reveal how the mega loan waiver would be funded. Advani said while a relief package for farmers was welcome, it was incumbent on government to tell Parliament how it intended to compensate banks and cooperatives for the Rs 60,000 crore sop. "Will this be by way of bonds that will be redeemed later?' he asked. He also pointed out that rural distress had been aggravated by price rise. The Radhakrishnan report on indebtedness said that there were a range of factors that were adding to the farmers' burden. Many farmers who were facing a debt trap had borrowed heavily from private money lenders. He sought to link the waiver with the possibility of an early election and said "since last August there has been uncertainty' referring to Congress-Left brinksmanship over the India-US nuclear deal. He said an unstable government could not deliver. Advani was interrupted with Congress MPs questioning him on issues like the record on combatting terror and BJP's position on Telangana. The heckling seemed part of a pre-planned script. Congress chief Sonia Gandhi's decision to sit on the last bench during the debate seemed to encourage her MPs who competed with one another in aggressively defending the party. The loan waiver issue also had an echo in Rajya Sabha with BJP and CPM charging the Centre with not addressing the real concerns of the poor. Participating in the discussion on the motion of thanks, Abhishek Singhvi (Congress) said the economy had grown by over 8% in the last four years. "But this gung-ho spirit has to be tempered' in the face of hard reality of 25% people still living below the poverty line.

The 2007 report of the United Nations (UNCTAD) emphasises regional cooperation between developing countries TRADE AND DEVELOPMENT REPORT, 2007

Nath: Where Will Funds Come From? The mega loan waiver announced by the Manmohan Singh government is running into some in-house scepticism with doubts about funding for the give-away being aired in the Cabinet. On Monday, a meeting of the Cabinet saw commerce minister Kamal Nath asking whether the government had made provisions for the Rs 60,000 crore scheme it has announced in the Budget. He also seemed to argue that it would have been better if the Cabinet had been taken into confidence. Sources said that Prime Minister Manmohan Singh intervened to commend finance minister P Chidambaram and the loan waiver. Foreign minister Pranab Mukherjee also said that the finance ministry has chalked out the broad direction and details will soon be worked out. This reflected doubts put forward that the waiver unfairly lumps farmers tilling irrigated lands with those in dry-land conditions and that the two hectare cut-off for beneficiaries cannot apply across the country. Wondering whether the waiver would benefit distressed farmers, minister of state for new and renewable energy Vilas Muttemwar told TOI, "The problem lies in many farmers in areas like Vidarbha owning up to 15 acres of land, but being very poorly off. It is not just the small farmer, even those with larger holdings, who actually can access credit, are suffering.' Muttemwar said he would speak to the Prime Minister and Congress chief Sonia Gandhi and ask for the eligibility for the Rs 60,000 crore waiver announced by the government to be altered in a state or regionwise manner. He also said that even smaller farmers might not be able to use the waiver as they were largely indebted to private money lenders. Muttemwar disputed agriculture minister and NCP boss Sharad Pawar's call to farmers to stop paying money lenders. "This is easier said than done. These loan sharks get farmers to sign agreement to sale documents. Even those sales are being closely scrutinised, it is not easy for farmers to simply throw off the yoke of money lenders,' he said. The minister's views could be some cause for worry as he represents Nagpur, the political centre of the Vidarbha region which has been reeling from suicides by farmers. The criticism that farmers who need help might be outside the waiver also dovetails with the argument that UPA's largesse will help well-off agriculturalists in areas like western Maharashtra. Well-known agro-economist M S Swaminathan agreed that it was difficult to compare farmers from green revolution states with those in impoverished dust bowls. "Comparing farmers owning two hectares in Punjab with those with holdings of similar size in Rajasthan or Vidarbha is unfair. The size of holdings in distressed areas should be much bigger,' he said. Swaminathan said farmers in irrigated areas who used advanced methods had access to credit much in excess to what farmers in distressed areas were able to garner. Budget can't be challenged in court: SC Even before the applause for a Budget

The newly-constructed eight km of low maintenance, durable roads and drainage structures in the Pottuvil, Ampara district, funded by The United States Agency for International Development (USAID) and the United Nations Office for Project Services (UNOPS) were opened recently, said a US Embassy press release. In the past, the roads flooded and became almost impassable; today, with the professionally-constructed roads and drainage structures, residents and visitors can travel with ease. The finished roads have had a major impact on the community in Pottuvil. Because the roads are now paved, the reduction of dust in the town is significant. Additionally, the local population's access to many essential services, including schools, health clinics and places of worship, has been dramatically improved by the new transportation systems. USAID, the US Government agency in charge of delivering development assistance from the American people, funded the project, and UNOPS implemented its construction. For the opening ceremony, USAID and UNOPS welcomed representatives from local government and the community. They were joined by A.H.M. Ansar, Divisional Secretary A.L.M. Asmy, Assistant Divisional Secretary, A.L. Mohamed Rauf, Pradeshiya Sabha Chairman, and A.M. Abdul Majeed, Opposition Leader, Pradeshiya Sabha, Mike Gould, Senior Engineer from USAID was joined by Rainer Frauenfeld, Fergus Gleeson and Fraser Sparks from UNOPS. The project began in September 2006, with the initial work being done on the construction yard in Pottuvil. In December 2006, work began on a concrete block casting yard. In March 2007, the concrete blocks produced at the casting yard were used to begin the road construction. In December 2007, just over one year after the project began, the entire eight km network of roads and drainage systems was successfully completed. The end result did more than just produce roads and drainage, it created jobs and experience. It also built human capital. The concrete block construction yard created in excess of 50,000 labour days with a workforce of some 400 labourers, significantly improving individual livelihoods and the overall economy of the tsunami and conflict-affected Pottuvil.

Bathinda: Dubbing the loan waiver announced by the Union government for Punjab farmers as a classic example of "administering medicine for cold to a person suffering from cancer', Punjab Chief Minister Parkash Singh Badal today said Punjab farmers were not meted out fair treatment by the Centre while announcing the relief. The CM said focus should have been on reducing input costs like diesel prices and fertiliser costs for ushering in sustainability in the agricultural sector. Badal was in Malooka village near here today to participate in the bhog ceremony of Chatin Kaur, mother of Akali leader Sikander Singh Malooka. He dwelt upon the need for setting up an all-party expert committee comprising agri-experts to bail out state farmers from the crisis. Badal said only 29 per cent farmers of Punjab

The budget this year provided 15 per cent higher allocation for health and 20 per cent for education. However, this may not mean that more children will learn to read or write or more doctors will be available at public health centres. In the present context, outlays are supposed to be considered ends in themselves. While higher outlays are welcome, there is an urgent need to measure outcomes, the actual effectiveness of a government scheme. A clear index of deliverables is what will lead to other reforms: rewarding states that are doing it right and implementing mid-course correction in areas where the scheme fails to take off. A paragraph towards the end of this year's budget speech shows that the government is beginning to wake up to this need: "I think we do not pay enough attention to outcomes as we do to outlays; or to physical targets as we do to financial targets; or to quality as we do to quantity. Government therefore proposes to put in place a Central Plan Schemes Monitoring System (CPSMS) that will be implemented as a Plan scheme of the Planning Commission.' It is heartening to see an acknowledgement of a long-felt void. As the government disburses more money, there is an even greater need to track it better, to find out a rupee's worth in intervention A versus B or its performance in different states. For now, one has to depend on a few private NGOs/research institutions who fulfill this need: For example, Pratham, an NGO working in the field of primary education, comes out with an annual survey called ASER that has some startling findings on Sarva Siksha Abhiyaan, a Centrally-sponsored programme that aims to put all children into school, even in the remotest parts of India. They found the number of days a teacher is actually teaching in class is abysmally low. They had a percentage for children who are in secondary school but can neither read nor write. There is no government agency that comes up with similar data. India is wasting precious resources if teachers are not found in classrooms after two decades of the existence of this "flagship programme'. The government did make an effort to come out with an "outcome budget' but, according to experts, it was not even worth the paper it was written on. It had never-ending tables with targets achieved in the form of numbers. Drinking water reports had data on the number of taps and villages covered but not the quality, quality and availability of water that is distributed. The outcome budget stops short of measuring important aspects like absenteeism and who is accessing these services created by these schemes. Anyone reading it will be no wiser if she wants to find out where to put the money the next year. Once government has evolved the mechanism of measuring these outcomes, it can take the next step: link performance with outlays for states. Infant mortality rate, extent of immunisation, literacy for women, feeding programmes should be systematically collated to form a clear index. Central share of the scheme's money should be transferred based on the performance of states on this index. The fuzziness on performance has another implication too: the government is not able to under-take mid-course correction. For example, the Supreme Court has asked the government to universalise the Integrated Child Development Programme. With no improvement in malnourishment figures for children, which are higher than that of Sub-Saharan Africa, there is clearly something wrong. The government is starting from scratch in trying to figure out what is going wrong. A fresh committee has been set up to brainstorm, without any data to arrive at clear answers. The number of anganwadis set up each of the last five years, state-wise, is available. But it has no information on whether the anganwadi worker actually comes there, feeds children in the 0-6 age group with supplementary nutrition, takes care of their health and immunisation needs and pays special attention to malnourished children. N.C. Saxena, who is a court-appointed commissioner for monitoring the mid-day meals and the ICDS programme, is a strong votary for measuring outcomes versus outlays. In an article, he goes as far as to suggest action against officers who indulge in bogus reporting of figures. For instance, in Uttar Pradesh, the number of fully immunised children being reported by the state government was almost 100 per cent in 2002-03. A rapid household survey found only 30 per cent of children to be fully immunised. "Such cases of flagrant over-reporting should not go unpunished,' he says, stressing on the need for independent agencies verifying data for the government and then disseminating it widely. Such steps will need a complete change in bureaucratic mindset. This signal from the finance minister, hopefully, will not go unnoticed if India is serious about inclusive growth.

A large part of identifying the beneficiaries, crucial for the success of the Rs 60,000-crore loan waiver to farmers, will be entrusted to banks. It is felt that this would be the best option for the government as banks are expected to have records of persons they have given loans to, and in the case of farmers, would also have the size of their holdings. Having set 2 hectares or 5 acres as the size of holdings for the waiver's beneficiaries, the government has the mammoth task of getting accurate lists ready so as to facilitate a complete rollout by the June 30 deadline. Commercial and rural banks and cooperatives would have an incentive to draw up lists as they would be paid money for loans which had suffered defaults. Official sources pointed out that most of the loans being targeted were anyway "basket cases' for the banks. With little hope of recovery, the banks should be more than willing to divert resources to identify farmers who can benefit from UPA's largesse. In this way, the government would not have to depend on land and revenue records, which were not always well maintained and could be open to manipulation as well. Though payment to the banks will be staggered, in the first year, the banks will be given Rs 40,000 crore. Agriculture minister Sharad Pawar told the media that in the next three years, the figure would be Rs 8,800 crore for 2008-09 and 2009-10 while the final amount to be paid in 2010-11 was expected to be Rs 2,400 crore. While the effectiveness of the loan waiver, and its potential political benefit, is being discussed, the Congress leadership is in an upbeat mood. Scenes of farmers celebrating and dancing have helped waiver enthusiasts argue that the Budget announcement was a popular hit. The massive giveaway, along with the pro-middle class decision to raise incometax exemption limits, could deliver a formidable advantage to the ruling combine. Those who feel somewhat differently point out that most of the really distressed farmers were engaged in dry-land farming. In normal circumstances, they were not eligible for high loan amounts and in contrast, farmers in irrigated areas, with holdings of similar size, would get larger loans. Dry-land farmers had to depend on private money lenders and these debts were outside the waiver. On the other hand, farmers in irrigated areas would now benefit from the waiver while also being in a position to raise regular loans from banks.

UPA's mega poll sop for farmers has got bigger. The loan waiver for "small and marginal farmers' will now add up to a staggering Rs 65,000 crore even as the government is preparing to enlist banks as primary agents in identifying the scheme's four crore beneficiaries. The figure for the one-time settlement, which will benefit farmers who are willing to make a payment of loans to get a rebate, is yet to be finalized and discussions at the top echelons of government have seen the total write-off range up to Rs 100,000 crore. As of now, the figure has been revised to Rs 65,000 crore. The other key issue of identifying the beneficiaries, crucial to the waiver's success, will be largely entrusted to the banks. Banks to identify beneficiaries New Delhi: A large part of identifying the beneficiaries, crucial for the success of the Rs 60,000-crore loan waiver to farmers, will be entrusted to banks. It is felt that this would be the best option for the government as banks are expected to have records of persons they have given loans to, and in the case of farmers, would also have the size of their holdings. Having set 2 hectares or 5 acres as the size of holdings for the waiver's beneficiaries, the government has the mammoth task of getting accurate lists ready so as to facilitate a complete rollout by the June 30 deadline. Commercial and rural banks and cooperatives would have an incentive to draw up lists as they would be paid money for loans which had suffered defaults. Official sources pointed out that most of the loans being targeted were anyway "basket cases' for the banks. With little hope of recovery, the banks should be more than willing to divert resources to identify farmers who can benefit from UPA's largesse. In this way, the government would not have to depend on land and revenue records, which were not always well maintained and could be open to manipulation as well. Though payment to the banks will be staggered, in the first year, the banks will be given Rs 40,000 crore. Agriculture minister Sharad Pawar told the media that in the next three years, the figure would be Rs 8,800 crore for 2008-09 and 2009-10 while the final amount to be paid in 2010-11 was expected to be Rs 2,400 crore. While the effectiveness of the loan waiver, and its potential political benefit, is being discussed, the Congress leadership is in an upbeat mood. Scenes of farmers celebrating and dancing have helped waiver enthusiasts argue that the Budget announcement was a popular hit. The massive giveaway, along with the pro-middle class decision to raise incometax exemption limits, could deliver a formidable advantage to the ruling combine. Those who feel somewhat differently point out that most of the really distressed farmers were engaged in dry-land farming. In normal circumstances, they were not eligible for high loan amounts and in contrast, farmers in irrigated areas, with holdings of similar size, would get larger loans. Dry-land farmers had to depend on private money lenders and these debts were outside the waiver. On the other hand, farmers in irrigated areas would now benefit from the waiver while also being in a position to raise regular loans from banks.

A GLOBAL economic slowdown is underway. What began as a problem in a single sector in a single economy

It will provide only short-term relief THERE arefour crore small and marginal farmers who are unable to repay their crop loans to the banks. The Rs 60,000-crore budgetary allocation for waiving their loans will now enable a farmer to go back to the same bank, apply for another loan and await either of these two outcomes: a good crop or another loan waiver. While the gesture provides farmers relief in the short term, it would be harmful for the economy, especially the farm economy, in the long run. If we take the risk versus reward incentive out of an economic activity such as agribusiness, the enterprise quotient diminishes and hinders both growth and innovation.These key attributes, along with structural reforms and investment in agri-infrastructure, are needed to raise agricultural productivity and maintain the growth trajectory of the economy. The question we need to ask ourselves is why these farmers have not been able to repay their crop loans. Can Rs 15,000-per-farmer reward help them produce a better crop in the next season? The answer sadly is No. Small farmers face two main challenges: meeting their input needs (seeds, pesticides) and dealing with the weather risks to their crops. Issuance of input coupons for purchase of quality inputs for the next season would have been more beneficial. Bad weather plays havoc with agriculture. Dealing with weather risk calls for appropriate risk management tools such as weather insurance. This requires a network of weather stations at the block level for timely collation of data, a basic requirement for weather insurance products. Establishing a network of weather stations would have required only a fraction of the Rs 60,000 crore outlay. The budget will definitely encourage the creation of rural enterprises such as nurseries and cold chain establishment. The one-time budgetary assistance of Rs 75 crore for setting up mobile soil testing facilities is also a good step. However, the provision of Rs 60,000 crore for loan waiver which can at best provide short-term relief to farmers has robbed them of possible agri-infrastructure projects such as roads, marketing and storage facilities, and irrigation which could have yielded better returns on a sustainable basis. (*Country Head, Food & Agribusiness Strategic Advisory & Research) RAKESH TIKAIT Spokesman, Bhartiya Kissan Union It will not solve the deepening agri crisis THE Union budget 2008-09 is prima facie a pro-farmer budget, with the primary emphasis on writing off the loans of small and marginal farmers. It is a good step to provide instant relief to farmers who are heavily indebted, although it covers only 40% of total farmers. However, the debt relief will not solve the deepening agrarian distress. Nevertheless, we see the announcement of debt waiver as a victory of farmers' union, activists and pro-farmer media. It was a great battle and we are grateful that the finance minister took this step despite corporate pressure. We believe that this measure alone is not enough to address the farmers' problems. It is well known that the basic problem faced by farmers is their inability to get fair price for their produce. The policy makers have said nothing on this count. Nothing has also been said about ensuring better farm gate price for agriculture commodities or making available a price stabilisation fund to help farmers increase their income. The price offered for the commodities produced by them must not only fully cover their cost of production but also ensure livelihood security. Subsidy is another area of concern. Traders and producers are currently getting all the benefits while farmers have to suffer due to scarcity of fertiliser. The budget has also not made any announcement to strengthen the extension services of the ministry of agriculture to make it more relevant for the farmers. As a result, farmers are forced to depend on agents of pesticide and seed companies for technical advice. It seems that the government has made up its mind to hand over this system to the corporate sector. In this context, we are closely watching the Indo-US knowledge agreement and the multinational companies in seed business. In conclusion, although the budget is pro-farmer, the actual need of the Indian farmer is not just the removal of debt and interest. Many other important issues need to be addressed. These include access to market, fair price for produce, timely availability of fertilisers and seeds, direct subsidy and the public sector investment in agriculture business. We hope the government will consider all this in future. And the main need is to keep corporates far from farming business. K CHAKRAVARTHY Country Head* YES BANK