Ashok Dasgupta Elections are due in many State Assemblies this year P. Chidambaram With Assembly polls due in a number of States during the year-end and the general elections in 2009, it is a foregone conclusion that the Union budget for the next fiscal, to be presented by Finance Minister P. Chidambaram in three days from now, will not be a harsh one, even at worst. For the simple reason that over the last few weeks, the people's aspirations of deriving some benefits by way of budgetary goodies have been raised so high through statements by various functionaries of the Congress-led United Progressive Alliance (UPA) government and its coalition partners that anything not matching up to their expectations would perhaps be viewed as a great betrayal. And that's something that the ruling regime can ill afford, especially when the government is set to unveil its policy programmes and statement of accounts, the fifth and final in its current Lok Sabha term. In effect, the government will not only have to but also be seen as compensating the

N. Ravi The challenge before the Finance Minister in preparing a pre-election budget is to balance the minimal tax sops needed to keep the markets in an upbeat mood with massive spending programmes that will find resonance with the electorate. Preparing for the election-eve budget, Finance Minister P. Chidambaram must have found the burden of expectations unusually high. Not only is he expected to provide the usual budgetary sops to please all but he is also called upon to correct the sense of drift that has come to mark the last one year of functioning of the United Progressive Alliance government and recapture the popular imagination. And this he has to accomplish without overly stretching either fiscal norms or his own credibility that will be called into question by a sudden show of solicitude at election time. Budgets are invariably characterised as pro-poor, pro-growth or pro-rich, depending on one's perspective and if such labels can normally be shrugged off, they become particularly critical at this time. In a sense, the Finance Minister will have to be riding the two horses of populism and fostering growth. For while this year's budget can be expected to lean heavily towards giveaways, it cannot ignore measures needed to sustain economic performance. True the mood of industry and the markets does not necessarily translate into the mood of the electorate as the National Democratic Alliance government found to its cost when its overdrawn

The NSC has transformed itself from the usual non-profit-earning PSU into a vibrant entity. Private sector seed companies have, till now, had a virtual monopoly over the production and sale of seeds, mostly hybrid seeds, of high-value crops. This was chiefly because the public sector seed producers, besides being fewer in number, remained focused right from the beginning on the production of seeds of low-value but high-volume crops (basically cereals), where profits were low though the quantities to be handled were large. Besides, public sector units (PSUs) made little attempt to keep pace with time. However, the much-needed change in the public seed sector is coming about now with the largest player, the National Seeds Corporation (NSC), adopting a corporate culture and deploying state-of-the-art technology to produce seeds even of high-value crops and hybrids. Indeed, as could be expected, this change in the work culture has transformed the NSC from the usual non-profit-earning PSU into a vibrant entity striving to find a place among the mini-Ratnas, if not the Navratnas. The headquarters of the NSC and four of its regional units in Bhopal, Jaipur, Secunderabad and Bangalore, have already acquired the ISO 9001-2000 certificate and the remaining regional units are in the process of doing so. No wonder then that, after a gap of 32 years, the NSC paid a 5 per cent dividend, amounting to a little over Rs 1 crore, to the government in November last. This was made possible by a massive 46 per cent growth in business in the past one year alone. Its post-tax profits jumped by a whopping 200 per cent in 2006-07. Indeed, the man behind this incredible transformation is the present chairman and managing director B B Pattanaik. "I would be able to declare a much higher dividend for the current year,' asserts an enthusiastic Pattanaik. He has not only motivated the aging employees of this 45-year-old corporation for better performance but has also taken several new initiatives to be in a position to rub shoulders with the well-run private sector seed companies, many of which now have business tie-ups with the NSC. "I am not interested in increasing competition with the corporate houses; I am more for partnerships,' says Pattanaik. About a dozen big houses, including some multinational companies like Monsanto and Cargill and domestic players like ITC, ECL Agro-Tech and Sheel Biotech, have forged strategic business alliances with the NSC. Most of these companies use the vast marketing network of the NSC for the sale of their seeds and other farm inputs. The Indian Oil Corporation, on the other hand, sells the NSC seeds through its network of Kisan Seva Kendras (farmers' service centres). Significantly, the NSC is now very much into the production of hybrid seeds, organic seeds and even tissue culture plantlets. It is multiplying the seeds of mustard hybrid DMH-1-DHARA evolved through biotechnological interventions by the Delhi University; as also those of the pigeon pea (arhar) hybrid, ICPH 2671, evolved by the Hyderabad-based International Crops Research Institute for Semi-arid Tropics (ICRISAT). Besides, the NSC would soon begin supplying gladiolus bulbs for flower cultivation. The NSC's tissue culture unit with a capacity to churn out annually about two lakh test tube-raised plantlets for propagation of the banana is coming up in Bhubaneswar and may become operational by the next month. For research and development back-up, the NSC gets support from the vast agricultural research network of the Indian Council of Agricultural Research (ICAR) and the state agriculture universities. This helps the NSC to add, on an average, around 20 new varieties and hybrids to its product range every year. Significantly, the NSC is now playing a catalytic role in the expansion of seed production, processing and storage infrastructure in the private sector under a government scheme involving 25 per cent subsidy for this purpose. About 120 projects for the creation of seed processing capacity worth 23 lakh quintals and seed storage capacity of 9 lakh quintals have already been approved. A total subsidy of Rs 6.94 crore would be paid to the private sector companies which are creating these facilities. For involving more and more farmers in the relatively more lucrative seed production business, the NSC is facilitating the provision of loans to them from the State Bank of India. Besides, it is ploughing back about 2 per cent of its own profits into the activities related to seed production by farmers and other measures as part of its corporate social responsibility initiative.

Skirting commitments on all controversial issues like Special Economic Zones (SEZs) and the Indo-US Civil Nuclear Agreement, the government today made it clear that pro-people, inclusive social and economic policies alone would be pursued in the last year of its five-year term. The President's address to the joint session of Parliament, traditionally a summary of the government's activities during the previous year and its priorities for the coming year, spelt out only those issues on which there was parliamentary consensus. Therefore, while showcase schemes like the expansion of the National Rural Employment Guarantee Programme and the Sarva Shiksha Abhiyan were held up as ways in which the government had embraced the poor, contentious issues like Left extremism, land reforms and labour legislation were not even mentioned in the speech. Much was made of Bharat Nirman, the National Rural Health Mission and the Jawaharlal Nehru Urban Renewal Mission. This was made possible, the government said, because of the performance of the Indian economy that has grown at close to 9 per cent per annum for four years in a row. "The historically high investment rate, of over 35 per cent of GDP, and savings rate, of over 34 per cent of GDP, symbolise a new dynamism in our economy,' the government said in the address, adding that this was all the more creditable against the background of high international oil prices and rising commodity prices. The government said the Indian consumer would continue to be insulated against high international costs of food commodities and oil, putting paid to any tinkering in the duty structure and subsidies in oil and gas. The government said outlays on agriculture, health and rural development had been tripled and together with education, these sectors account for more than half of the Central Gross Budgetary Support as compared to less than one-third in the Tenth Five-Year Plan. "This is a major structural shift in Plan priorities, aimed at reducing disparities and empowering people,' the address said. It added that attention had been focused on areas like agriculture and the target set in the National Common Minimum Programme, of doubling agricultural credit in three years, had been exceeded. However, the government did not commit itself on the implementation of the Radhakrishna report on rural indebtedness. Conscious that it was under fire on the issue of agricultural prices, the address said the government had effected "an unprecedented steep hike of over 50 per cent in the Minimum Support Price (MSP) for wheat and about 33 per cent for paddy in the last four years'. Specific sectoral successes like the legislation for unorganised labour, increase in the level of minimum wage from Rs 66 to Rs 80 per day, increase in the eligibility limit for payment of bonus to workers from Rs 3,500 to Rs 10,000 per month, and the National Rehabilitation and Resettlement Policy for people displaced from their land due to development projects, were also mentioned as landmark schemes. Despite the prime minister's repeated warnings on the performance of the power sector, the President's address only patted itself on the back for allotment of coal blocks with the capacity to support 68,000 Mw of power generation and the identification of nine sites in for setting up coal-based Ultra Mega Power Projects (UMPP) with capacity of 4,000 Mw each. Nor was there any mention of when additional spectrum would be allotted for the telecom industry, even as the government announced that the Indian telecom sector had emerged as the fastest growing in the world with the addition of over 7 million subscribers per month. On SEZs, the address said the government had already provided direct employment to about 100,000 people, with indirect employment estimated at twice as much. "They have attracted investment of over Rs 50,000 crore, and are expected to generate exports of Rs 67,000 crore this year,' the address said. Meanwhile, the third front declared that the President's speech skirted around major problems facing the country, including that of continuing farmer suicides and inflation. The United National Progressive Alliance (UNPA) leaders said they had support of UPA allies CPI(M) and CPI in their attempts to raise these issues in the public realm. According to the Samajwadi Party general secretary Amar Singh, CPI(M) leader Prakash Karat and CPI leader A B Bardhan will be participating in a UNPA-sponsored dharna on farmer suicides to coincide with the presentation of the railway budget on Tuesday.

Halfway between the northern coast of Norway and the North Pole in an archipelago called Svalbard, three enormous caverns have been blasted 130 m into the permafrost. Called the doomsday vault, it will be a Noah's Ark of food in the event of a global catastrophe. Among the world's 45,000 most important seeds stored in this Svalbard Global Seed Vault, there will be quite a bit of India too. Seeds of sorghum, pearl millet, chickpea, pigeonpea, groundnut and six small millets will be transferred by the International Crops Research Institute for the Semi-Arid Tropics (ICRISAT) from its headquarters in Patencheru, near Hyderabad to this location, 1000 km from the Arctic. William Dar, Director General of ICRISAT, is at Svalbard for the opening celebrations tomorrow. He will join European Commission President Jose Manuel Barroso and Nobel Peace Prize-winning environmentalist Wangari Mathai in this global initiative. Norway is footing the $8.9-million bill for building the Arctic archipelago where, ironically, no crops grow. Secured behind an airlock door, the three airtight chambers can house duplicates of samples from the world's more than 1,400 existing seed banks. The Norwegian archipelago was selected for its inhospitable climate as well as its remote location. The seeds of wheat, maize, oats and other crops will be stored at a constant temperature of minus 18 degrees Celsius, and even if the freezer system fails, the permafrost will ensure that temperatures never rise above 3.5 degrees Celsius below freezing. This project is important as some of the world's biodiversity has already disappeared, with gene vaults in both Iraq and Afghanistan destroyed by war and a seed bank in the Philippines annihilated by a typhoon. Seed banks have begun contributing: potato seeds from Peru; 30,000 samples of different beans from Colombia; 47,000 seed samples of wheat and 10,000 types of maize from Mexico and thousands of rice varieties from Philippines. Pakistan and Kenya, both wracked by serious unrest, have sent seed collections too. By the time of the inauguration on Tuesday, the Svalbard Global Seed Vault will hold some 250,000 samples, which will remain the property of their countries of origin. According to Dar, ICRISAT's participation adds a special significance to the project

The UPA government is yet to set up an expert group to undertake a survey to identify people below the poverty line (BPL), even as the 11th Plan is already underway. The survey is normally conducted by the Ministry of Rural Development (MoRD) in the first year of every Plan period. However with the government's delay in setting up the group, work is expected to begin only in 2009, the third year of the 11th Plan. In fact, the government is yet to set the criteria to measure poverty for the 11th Plan. In the last three Plans, different criteria have been used to identify the poor

Surely car owners who get cheap petrol and rich farmers who get free water and power can't be aam? With the general elections due next year, there are obvious pressures on the finance minister to provide goodies for the aam aadmi. There are calls to abandon, or at least postpone by a few years, the fiscal deficit ceilings prescribed by the Fiscal Responsibility and Budget Management Act, so that funds are not a constraint. (If most of us believe that many politicians are corrupt, they reciprocate by believing that the best way to get the vote is by bribing the voter.) Given the concern about the aam aadmi in the bleeding hearts of our political masters, I have often wondered who exactly this aam aadmi is

Chidambaram may try to shift attention from high prices of essentials If everybody, including political parties, is talking about farmers it must be election time. Close to election, it has become more or less a trend for the government of the day to announce sops for the agriculture and rural sectors in its budget proposals. So even while the common man has to swallow the bitter pill of the "inevitable' petrol and diesel hike before the 2008-09 budget, there is a promise of a "populist budget' for farmers and the aam garib aadmi this year. Low growth rate With several States going to the polls this year ahead of the next year's Lok Sabha election, there may be an attempt to shift the attention from the high prices of essential commodities, low growth rate (2.3 per cent in the 10th Plan) in agriculture, the disconnect between a high Gross Domestic Product and the rural sector, with problems of displacement, migration, unemployment, suicides by farmers and impending food crisis. This budget is most likely to convey the last ditch attempt of the Congress-led United Progressive Alliance (UPA) government to redeem itself from the scars caused in the countryside by farmer suicides and dispossession of rural families on account of Special Economic Zones and other industrialisation projects. Without doubt, the Debt Relief Package for Institutional Loanee Farmers (as reported first in The Hindu) and the expansion of the National Rural Employment Guarantee Act (NREGA) Programme will be at the centre of Finance Minister P. Chidambaram's budget proposals. Fertilizer policy Besides, it is expected that he will unveil a rationalised fertilizer policy to encourage balanced use of fertilizers, especially muriates, to revive farm soil. Some succour is also essential for the wives of indebted farmers who committed suicide. There is a growing demand to strengthen the National Agriculture Insurance Scheme (NAIS) and to have a Health Insurance Scheme for farm households, as various surveys showed that most the credits in the informal sector were not only farming related but also to meet the requirements of health, celebrations and even life-style. From all accounts, the pilot weather-based crop insurance may be expanded. Fund requirements It is estimated that the total fund requirement for the expansion of the NREGA from the present 330 districts to 600-odd will be about Rs. 16,000 crore. On the other hand, the debt relief, covering an estimated 35 per cent farmers who had availed themselves of bank loans, is estimated at Rs. 40,000 crore in the first year. The Union government will pay off the dues to banks. A Price Stabilisation Fund is also proposed to be set up with contributions from the government, banks and farmers. Well-placed sources hinted that the Finance Minister may cull out unspent funds from social sectors such as rural development, education and health to partially meet the requirement of the Farmers' Debt Relief Package. It is anybody's guess if the Minister will reduce the interest rate on farm loans from the current 7 to 4 per cent as recommended by the National Commission on Farmers. There is also a demand to raise the credit limit under the Kisan Credit Card scheme. There is an expectation that enhanced budgetary support will continue for the flagship rural programmes, including the swarozgar yojana (self-self groups), Pradhan Mantri Gram Sadak Yojana, Indira Awas Yojana and the Drinking Water Supply programme. The highest increase, however, is expected in the Land Resources Programme under the Integrated Wasteland Management Programme. In the agriculture sector, allocation has to be enhanced for the Rashtriya Krishi Vikas Yojana to enhance production and productivity and to the National Food Security Mission to increase the output of rice, wheat and pulses. Both schemes are new and yet to take off. Irrigation schemes, horticulture mission and agriculture research will get the customary support, as growth in farm "allied sectors' comes from these areas. The National Rainfed Area Authority is most certainly likely to get financial support. Food subsidy The food subsidy bill is likely to cross the Rs 30,000 crore-mark. This is due to the wide difference between the minimum support prices (MSP) paid to farmers and the central issue price of grains sold through the Public Distribution System, as well as on account of the food grains import bill. The subsidy bill to go up further as the food grain stocks are expected to dwindle by April 1, possibly resulting in more imports. With apprehensions of an avian influenza pandemic, a comprehensive rehabilitation package for the poultry industry and bird flu-affected farmers, as part of a Bio-Security Policy, will be announced in the budget, if not earlier. However, the package may include only such poultry farmers, who get linked to institutional poultry farms and the industry. It remains to be seen how the government's packages will play out for the thousands of those in the informal sector who do not have the income and the collateral to avail themselves of institutional loans. Funds utilisation It is expected that in this last year of the UPA government's regime, the emphasis will be on consolidation, with focus on better implementation, monitoring and utilisation of funds. In particular, the Congress has shown signs of being zealous of taking credit for the central funds made available to States, to reap a harvest during election time. The biggest challenge, however, is making agriculture viable for the 82 per cent small and marginal farmers and bailing them out of the clutches of the informal system of borrowing.

By Devinder Sharma Union Finance Minister P Chidambaram should address the woes of those ailing farmers in the budget. General elections are around the corner. It is therefore more of a political compulsion than the requirements of a prudent fiscal policy that should have automatically diverted public funds for the ailing agrarian sector. Unfortunately, the game plan all these years has been to ignore agriculture and instead pamper the bloated rich of big business to grow richer. No budget is complete without the Finance Minister reminding the country, with possibly a catchy phrase thrown-in, the Herculean task his budget will perform in addressing the agrarian crisis. P Chidambaram is no exception. He often quotes a couplet from the writings of some of the best-known poets, saints and thinkers of south India. After all, 60 per cent of the population is still directly engaged in farming. Despite all these efforts to rescue agriculture, the annual budget has truly been a carnival for the rich and beautiful. As the veteran economist Kamal Nayan Kabra reminds us: "Indeed, the corporate income tax foregone by the government is trivially less than the total amount spent by both the central government and the 28 state governments on all rural development schemes.' Accordingly, in 2004-05 Rs 2.06 lakh crore was the revenue loss from the numerous tax concessions, exemptions and incentives, the total excise, customs and personal income tax and corporate income tax exemptions. In 2005-06, these exemptions amounted to Rs 2.35 lakh crore. For the debt-ridden farmers, and despite reports of farmers suicides regularly pouring in from various parts of the country, the Finance Minister will gloat while announcing that he has managed to meet the target of providing Rs 2.25 lakh crore as farm credit in 2007-08. Ironically, this is less than the total revenue loss of Rs 2.35 lakh crore incurred a year earlier from tax exemptions for India Inc. Isn't it therefore strange economics? What millions of farmers get is simple gratitude (and credit), whereas a few hundred rich walk away with almost an equal amount as direct income (money saved by way of tax exemptions is like money earned). Why can't the industries be asked to avail more credit, and let the direct income be for the farmers? I have often wondered as to how does the economist justify more credit to farmers who are already reeling under the burden of non-repayment of credit. Well, everyone knows that farmers are committing suicide because they cannot repay back the loans. Mounting indebtedness is the reason behind the death toll on the farm. Why can't the Finance Minister make an honest effort to pull these farmers from the credit trap? Why can't the Finance Minister actually provide farmers with more steady and assured monthly income? After all, like all of us what the farmers too need is a monthly take-home income package. The first step that needs to be taken is to write-off the outstanding dues of small and marginal farmers owning less than 5 acres of land in irrigated areas and 20 acres in un-irrigated regions. There is already a talk of writing-off Rs 65,000-crore, including Rs 25,000-crore, which the nationalised banks fear would be the non-performing asset. The accumulating losses that the farm sector has been incurring year after year are much higher than this amount. Such bad debts need to be immediately struck off so as to provide a new lease of life to the debt-ridden farmer. In fact, the UPA government should have done this soon after it came into power in May 2004. At the same time, lowering the interest rate for farm loans to 4 per cent across board is also required. In China, the interest rate for credit to small farmers has been abolished. Along with this, what is more important and does not require any fiscal outlay is the need to abolish the draconian law that was enacted during the British Raj. Between 1904 and 1912, the British had framed Public Demand Recovery Act, under which farmers could be jailed for defaulting the State for a paltry sum. So much so that even the jail expenses were to be borne by the farmers. The banks have very cleverly used the same provisions for debt recovery in agriculture. Striking out the bad debt needs to be accompanied by a new farm policy that guarantees against making this a recurring exercise. Unless the government ensures that the National Food Security Mission and the Rs 25,000-crore fund it has set aside for agriculture as per the recommendation of the National Development Council are diverted to a nationwide Low External Input Sustainable Agriculture (LEISA) programme, the cycle of mounting indebtedness and then writing-off loans will not end. Replacing the current system of fertiliser subsidy wherein the government reimburses the industry for production expenses can make a beginning. Fertiliser subsidy, which is expected to touch Rs 50,000-crore in the near term, should in future be provided directly to farmers. What is acting as a roadblock for implementing this recommendation is the lack of political consensus. Farmers should be encouraged to utilise this subsidy for shifting to organic means of production. Such an initiative will drastically reduce the cost of production, rejuvenate the soils, provide income to farmers and also reduce greenhouse gas emissions.