People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 12

March 23, 2008


The Dazzle Of Debt Waiver And The Need For Prudence And Vigilance

Benoy Konar

VISUALISE this scenario. It is almost a take-off on a film script. Dacoits start to decamp with a few lakh of rupees and they are being hotly chased by the people. The dacoits then take wads of loose currency notes worth thousands of rupees and strew them in air. The people become busy fighting amongst each other to lay a hand on the currency notes as they flutter down. In this ruse, the dacoits make good their escape.

This is not a western movie. It is exactly the same game that can be called UPA government�s budget 2008. As I see it, there is first this embarrassment of the �alliance,� and then again, there is this pain-in-the neck Left. Eager to assume office following the past Lok Sabha election, they had to declare a National Common Minimum Programme in order to garner the support of the Left and this is indeed a festering sore today. For the UPA cannot move away from the policy of liberalism, a policy held so dear in the hearts of the forces of imperialism! On one side, there are developments like unrestricted import in agriculture, reduction in subsidies until one is scrapping bottom of the barrel, unrestrained price hike of fertilisers, and on the other refusal to increase the procurement price of crops, and reduction of purchase of agricultural crops by the central government.

Just think of it. Everyday 48 kisans on an average are committing suicide unable to bear the burden of debt in the states of the south and west. The kisan may not get appropriate procurement prices, but the price levels of rice, wheat, pulses, and edible goes up continuously for the consumers. The hoarding of crops in now being engaged in not just by the village moneylenders but also by big capitalists. When the crop is harvested, these elements pay the kisans a little more than that paid by the government, stash the produce in their storage houses, and thereby make the prices reach sky-high. The supporting price for wheat would not exceed Rs 850 per quintal. Yet, wheat was then imported from the USA at the rate of Rs1600 per quintal. The rate of agricultural production goes down and the kisan distress goes up. The National Sample Survey reveals that such is the distressed condition of 40 percent of kisans that they are eager to leave agriculture if they are able to gain an alternative form of livelihood. On the other side, the number of the rich who possess more than Rs four thousand crore, has increased from 25 to 48 in a year. The place of our country in the index of the human development report of the UNO is after 127 nations. Yet, in the index of the growth of the very rich, we occupy the fifth position. Every year, these people have to pay less tax, and this year is no exception. By providing a massive amount of tax concessions in the SEZ, the industries of other areas are put to jeopardy. This year�s budget has given big exemptions on the CENT VAT. The big hotel business has been kept out of the tax net. Nearly Rs 20 thousand crore of unpaid bank loans taken by the rich are declared as written off. On the other hand, food subsidy has been reduced if we consider the rate of irrigation. The allotment for foodstuff has been halved in the PDS. Allocation for irrigation and agriculture has been cut. The allocation in health and education has not reached even half of that promised.

The kisans comprise 64-65 percent of the nation�s population. Therefore, an attempt has been made to sell dreams to them by announcing an institutional debt waiver of Rs 60 thousand crore. While no effort is made to remedy the reasons why kisan debt is on the rise, arrangement was made to increase such debt�while making an announcement of debt waiver. This is akin to putting on a bit of liniment on the skin that has been ripped apart with whip strokes. However we do welcome the liniment. Nevertheless, we doubt whether it will at all be put on. The debt waiver has been announced. However, is there an appropriate provision in the budget itself? The answer is an emphatic �no�. In that case, where would the funds come from? It has been hinted that, following the theory of liberalisation, the shares of profit-making PSUs will be sold, the country thus immensely harmed, and thereby the funds will be generated. It the Left would stand up in objection, it could then be gleefully declared that the Left does not as want the good of the kisans! Thus, it is an effort with the help of indigenous and foreign capital to woo the kisans. The debt waiver is announced, but the banks will be reimbursed not in a year but over three years and in three installments. The largest bulk of agricultural loan comes from the cooperative banks and credit cooperatives. The banks would become destitute and bankrupt in implementing the debt waiver, if the entire compensatory amount of money is not received in full at one time. Most banks do not have the capacity to absorb the loss. Even if some banks do have the capacity, where would they get the interest on the debt waiver for two years? No way out is mentioned.

Secondly, even if it is a dry un-irrigated land, the owner having more than two hectares of land would not get the benefit of the waiver. Yet, hundreds of kisans committing suicide in states like Maharashtra and Andhra Pradesh do own land measuring more than two hectares. It is understood that the debt waiver law would not include in its ambit loan given by moneylenders.

Third, those kisans who have already paid back bank loans and who are eligible to be included in the waiver scheme will remain deprived of it. Those who had paid the loans to the banks before the budget was placed are now pleading with the cooperative banks to declare them as defaulters. Thus, there is every danger of corruption spreading its wings further.

Fourthly, if it is noted that there would be deprivation from the waiver scheme if one pays back bank loans, the tendency to keep loans outstanding will receive encouragement amongst the kisans. Because of this, the cooperative banks will be come bankrupt, and the kisans will be in the total grip of the moneylenders. That would be portentous of a disaster for the kisans. If those who have paid back loans are included in waiver scheme it would create a certainty amongst the kisans that they would not stand deprived when such waiver schemes are announced in the future. This will encourage the kisans to pay back loans to the extent it is possible for them to do so. The cooperative banks, too, will be able to survive.

Earlier after 1977, the Janata party government implemented a debt waiver scheme under pressure from the Left. In 2004, the BJP-led NDA government announced a waiver of loans worth Rs 15,000 crore. However, there was no budgetary provision. That was an instance of sheer deception. This time, too, the debt waiver scheme has been announced without there being kept any budgetary provision. If the kisan movement is not vigilant, the kisans would be deceived again this time. Thus, the kisan movement must immediately raise the demand that the funding to compensate the debt waiver must be made not through sale of shares of profit-making PSUs but by imposing taxes on big capital or on the corporate sector. At the same time, a demand must be raised that the kisans who had paid back bank loans earlier to the announcement of the debt waiver, too, must be brought within the scheme. The kisan movement expects that the Left MPs will become vocal on this issue in the parliament. If there is no vigilance, the announcement of the debt waiver scheme will degenerate into the film script regarding the dacoits who made good their escape. Vigilance is the need of the hour.