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Review of Union Budget 2004 Structural Issues Left Unaddressed - Part II Among others, the finance minister did address two most crucial issues ailing agriculture in India - irrigation and rural credit. He has promised to restructure the Accelerated Irrigation Benefit Programme along with stress on water harvesting and a massive scheme of restoration of 500,000 water bodies. The stress on the later has in a way highlighted the work done by NGOs like Rajendra Singh's Tarun Bharat Sangh and Sunita Narain's Center For Science and Environment in championing Participatory Irrigation Management (PIM). In continuation with the NCMP, giving priority to rural credit the supply of credit to agriculture would be doubled in the next three years. The FM announced building up a corpus fund of Rs. 8000 Crores, the Rural Infrastructure Development Fund under the noose of NABARD. The budget has entrusted the implementation of the same to public sector banks, RRBs and the co-operative banks. The other areas of focus have been agri-business, diversification of agricultural produce, risk mitigation (agri-insurance) and flood control. But many of the increased allocations: Rs. 2247 Cr for rural housing, Rs. 2160 Cr for water supply, Rs. 2800 Cr for irrigation and Rs. 1000 Cr for agricultural research are not a quantum jump compared to what the erstwhile FM, Messer. Mr. Jaswant Singh announced in February. Also meager amount has been allocated to more needy programmes, Rs. 325 Cr to Sarva Siksha Abhiyan and Rs. 300 Cr to National Midday Meal programme. Even discounting the obvious fact that many of these novel intentions will take time for execution in passing the critical litmus test of "exhaustive review" by the Planning Commission, how do you make institutional lenders including the banks channel credit to agricultural and rural sector? For long they have been sighing away as statistics shows a progressive reduction in the proportion of bank credit to agriculture to the total bank credit from 18 percent in 80s to 10 percent in 2003. Not only that quantum of direct as well as indirect credit flows from institutional lenders has worsened but also there has been a noticeable structural shift with small borrowers who take agricultural loans declined in numbers. Against this continued apathy, what is the government policy? Does it intend to force the bank to supply loans that too at lower loan rates? Further, as there is decline in absolute numbers with regard to the presence of banks in the rural areas, what then is the institutional mechanism that will ensure the supply of credit? These are the structural ground realities hits square on the face. Authored by - |
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