Tangible Benefits to Rich & Intangible Benefits to the Rural Poor : A Comment on 2016-17 Union Budget

Veeraiah Konduri 

 

THE second full budget and third one by finance minister Arun Jaitley has been applauded for “revival of rural India”. In his budget speech, Jaitley said the buoyancy in tax income, an indicator of the market’s confidence in the Modi government, has helped them spend more than the earmarked amount while sticking to the fiscal discipline. The government blatantly concealed the fact that the buoyancy in tax income is only in terms of direct taxes which does not need any confidence of the market in the government of the day. Thus, the richest of the country retained their tangible benefits intact whereas rural India is lured with intangible benefits.
Real indicators of such confidence -- trends in corporate tax earnings and export earnings -- fell flat. Despite the fact that fiscal discipline and welfare spending are two swords that cannot fit-in together, it is only with the mastery of fudging the facts, true to their nature, they want us to believe so. The budget for 2016-17 got more favourable attention from media than the last budget of UPA-I which waived off farmers’ loan, the second such instance in independent India. As is evident, this is the first ever government that does not hesitate to tell a blatant lie on the floor of Parliament. One such lie is about allocation to rural job scheme MNREGA. When confronted by a vocal Shashi Tharoor, Jaitley stood up to defend his lie and said that this is the highest ever amount earmarked for MNREGA as, in the last decade, amounts that were allocated were not spent fully. On several occasions, BJP took credit, while referring to the revised estimates for the year 2015-16, that the spending surpassed the allotment, thereby concealing the fact that last year’s allotments were at dead storage level.
The key announcement that caught the eyeballs of analysts and media at large is the doubling farmers’ income in five years. This led the analysts to jump immediately to the conclusion that it is aimed at increasing non-farm opportunities rather than reviving the agricultural sector such as making cultivation sustainable. The latest NSSO findings define farmers as those who earn a monthly income of Rs 3,000 (which is far below the income limit that was set by some state governments to issue certificate that makes a student eligible for scholarship). The Economic Survey found the falling rate of productivity as the key reason for falling income of farmers. Though it looks correct dissection, it failed to read through the reasons for falling rate of productivity in agriculture. Unless the stagnation in irrigation infrastructure is addressed, it is impossible to increase the productivity rate and double the farmers’ income. After admitting the fact that 56 per cent of cultivable land is still dependant on rain, the budget announced a target of extending the irrigation facilities to another 28.5 lakh hectares. By keeping 140 lakh hectares out of irrigation facilities, how it is possible to double farmers’ income in five years, is only known to the government. Another scheme, Paramparagat Krishi Vikas Yojana (PKVY), announced in the name of encouraging traditional organic farming, does not fit in well with the fact that the farmers are constantly losing their Paramparagt rights over seed, soil and other indigenous resources of cultivation. The Indian farmers have become an unbridled market for multinational seed and fertiliser companies. Without addressing this issue, mere institution of PKVY would not be of much help to revive viable farming. There was hype about the allocation to animal husbandry which in fact spent less than Rs 113.5 crore in budget allocations and the so-called rise shown in 2016-17 is only Rs 295.35 crore. The allocation for research and extension, which is key to doubling farmers’ income in next five years, could not see any increase from the levels of 2015-16 budget estimates.
When we look at the budget from the point of view of welfare spending, the figures show that there is an overall increase of 6 per cent, due to the increased expenditure above the budget allocations for MNREGA and ICDS as well as some other welfare provisions. What the government left unsaid is that all allotments are contingent upon the global economic conditions. This is what the finance minister implied when he said in his initial section of the address that due to buoyancy in government earnings they could upwardly revise the allocations for several departments and ministries in their revised estimates. Another important aspect remains in the dark. That is the social welfare spending that has to come from the state government’s share. On the recommendations of the Fourteenth Finance Commission (FFC), the enhanced transfer of central funds supposed to be earmarked for welfare spending. Now the state governments are mandated to spend their 40 per cent share before starting to draw the central share. Thus, FFC not only transferred the funds but also put the burden of implementation of centrally-sponsored schemes on the shoulders of state governments. The so-called intended additional income that the state governments are supposed to have is nullified leaving little scope for improved spending on welfare schemes on account of FFC recommendations. Moreover with this current pattern, the state governments have to spend their matching amount of 40 per cent to avail the benefit of remaining 60 per cent from the central government. Thus, the states are forced to advance their expenditure which necessarily involves the drain from states’ resources. Only advantage of these recommendations is that with the amount, the state governments can coin their own schemes and can get credit as if they are spending for such schemes out of their pockets.
With regard to the over-all impact of the welfare expenditure, the budget confirms both the lack of vision as well as unwillingness on the part of the government. The government refused to gain from the field studies that have proved the limited role of JAM (Jandhan Yojana-Aadhar-Mobile trinity which was espoused during the last year budget) in universalising welfare spending impact. In fact, the latest study from Karnataka is an indictment of the government and unabashed supporters of this unrealisable trinity. Moreover, the budget announced a scheme for sanctioning free LPG connections at a time when the supply of LPG cylinders are being reduced and contingent upon working of JAM.
The National Rural Health Mission, which is conceived to focus on the rural health infrastructure, is clubbed with National Health Mission, thereby opening up possibilities of discrimination towards rural India. This also opens up possibilities for losing the gains, however limited, more than what the rural India achieved under the aegis of National Rural Health Mission at a time when rural poor are plagued with under-nutrition along side communicable deceases such as malaria and tuberculosis. The budget aimed at expanding the footprints of insurance tied up health services delivery rather than providing the services by the state, thus indicating a clear shift from state-led services to market-led health service delivery. Thus from the goal of achieving universal and free access to health services, there is a boost for the market facilitated health care system in 2016-17 budget. This needs to be seen in the background of failure of private health insurance firms, which are cleverly tied up with the banking services in rural India. With the presence of government-funded universal access to health care in rural India, with all its limitations, played a critical role in restricting the entry of private firms into health insurance business. With this budget, government wants to withdraw that cover which consequentially results in improving the opportunities for the market oriented health care delivery system. This implies crippling of state-backed health infrastructure which is already facing severe crunch that too when India is lagging behind in six out of ten health targets under Millennium Development Goals.
Let us look at another important foundation of social welfare expenditure, i.e. food subsidy, particularly allocations for the implementation of food security act. The Parliamentary Standing Committee on Consumer Affairs has already warned the government about the implications of meagre allocations for implementation of food security act. It seems, as in case of many other such warnings, it has not reached the ears of North Block. Though the allocations for department of consumer affairs increased four-fold from Rs 321.13 crore in revised estimates of 2015-16 to Rs 1257.11 crore in 2016-17, the key component of food security, allocations for food and public distribution witnessed considerable reduction of allocations. The revised allocations for 2015-16 budget stood at Rs 1,62,249.41 crore where as the budget estimates for 2016-17 are downwardly revised to Rs 1,52,704.11 crore. Almost down by Rs 10,000 crore. More than half of the states have not started the implementation of food security act which was passed by Parliament three years ago. It shows scant regard for enactments. There is no word about this lag in the budget speech. The so-called price stabilisation fund could not attract the attention of the government even at a time when the price of dal which was around Rs 40-60 per kg jumped to Rs 200 and stabilised around Rs 175 in very short span of time. Moreover, the allocations for pulses import are a clear signal to the market to ransack the consumers.
Last but not the least comes rural development. Rural development has multiple facets that are linked directly or indirectly with the lives of the rural poor. Drinking water and sanitation is one such key aspect of rural development. Though the budgetary allocations present a rosy picture of increase from Rs 10,906.53 crore in revised estimates to Rs 14,009.70 crore, the actual central component for these schemes saw meagre increases. The amount that is to be transferred to the states as part of 14th Finance Commission recommendations has been added to the totals and shown as an increase of about 100 per cent. The water supply and sanitation budget is increased from Rs 4,265 crore in revised estimates to Rs 5,000 crore. Rest of the allocations goes to Swachh Bharat Abhiyan. This clearly indicates the misplaced priorities of the government in a year which is experiencing 13 per cent overall deficit rainfall according to the finance minister himself. This kind of misplaced priority is going to put further stress on rural drinking water supply. Thus the budget, which is hyped as one of the best budget in terms of rural India’s needs, fails to meet their needs leaving them high and dry.

Model Land Leasing Act: Turning the Clock Backwards

Veeraiah Konduri

 

WHEN the BJP government announced, in its latest budget, that it is determined to double farmers’ income in next seven years, the nation looked with awe. Critiques pondered over how that could happen in such a short time. The analysts scanned the budget documents to find out the allocations for agrarian infrastructure. But the government silently worked its way to create a new agrarian structure that coerces the small and marginal farmers to part with their precious piece of land and become daily wage labourers in the by-lanes of urban landscape. This is what the expert committee appointed by the NITI Ayog, headed by former chairman of the Commission for Agricultural Costs and Prices T Haque, recommended in its report. The expert committee also  went a step ahead  not only by designing a Model Act of land leasing but also asking the state governments to amend their tenancy laws in tune with the proposed Model Act.  This will have serious implications to the protections the tenants won over a long period of struggles. The best model of such protection is before us in West Bengal which is under constant attack since the Trinmool Congress came to power five years ago. If this Model Act is adopted by Parliament, it is going to deal a big blow to the small and marginal tenants.
The timing of the report is interesting. The month of April is 100^th anniversary of the famous Champaran Satyagrah which brought farmers and their issues to the center stage of the freedom movement after a brief period of lull. Champaran Satyagrah was for liberating the farmers from a kind of corporate farming prevalent then which forced the farmers to cultivate indigo. Similarly, after 100 years of struggle to liberate the farming community from the clutches of customised farming, the government is now determined to turn the clock of agrarian reforms to pre-independence era. Neither the report nor the recommendations are substantiated by the rigor that usually underlies a government policy. The report is a barometer to gauge the attitude of the government towards an issue that is a question of life and death for about two-thirds of the country’s population.
Constant efforts were made to create an understanding that the agrarian crisis is a crisis of productivity which is caused by the stringent tenancy laws. Turning the heat on existing tenancy laws is the running theme from mid-term review of 10^th Five Year Plan to 12^th Five Year Plan as well as in the Draft National Land Reforms Policy, 2013. The expert committee report is also harping on the same theme. All these reports failed to deal with the issue in detail. The experts committee provided a bird’s eye view of what are the features of tenancy laws of various states and then moved on to conclude that these features are forcing the landowners to keep their cultivable land fallow. This could be gathered neither from the Situation Assessment Survey reports of National Sample Survey nor from the Agricultural Census that tells us the size of land that was kept fallow due to various tenancy laws in different states. This kind of faking policies, without any rational is only to further the reforms and deepen them that will have serious repercussions on the nation at large, has become the hall mark of the central government.
The report relegated the historical context in which the tenancy laws came into existence. The land reforms package in India in the immediate years of independence is fueled by the ideals of equity and social justice which are the cornerstones of our Constitution. The salient features of land reforms programme in India consists of abolition of intermediaries, tenancy regulation, land ceiling laws and land consolidation. The first of them, abolition of intermediaries was done in the immediate aftermath of independence as it proved to be an impediment in the agricultural production. The tenancy reforms are basically aimed at protecting the tenants from eviction and rent exploitation. These aims led the states to enact tenancy laws according to their specific conditions and to whims of ruling classes. For example, the Hyderabad Tenancy and Agricultural Landholdings Act, 1950 was an immediate outcome of the heroic Telangana Armed Struggle. This act conferred rights to six lakh households over 75 lakh acres of land. Similarly, the Andhra Pradesh (Andhra Area) Tenancy Act, 1956 was aimed at protecting the tenants from eviction as well as regulating the rents. Similar provisions are evident in the tenancy laws adopted by several state governments. Certain states like those in the northeast altogether prohibited land lease. Similarly the tenancy reforms of West Bengal is the singular story of success that established linkage between the tenancy reforms and agricultural productivity and the same was revealed in agrarian research by many. Instead of considering the rich data available about the efficacy of properly worked out tenancy laws in enhancing productivity and protecting the stakeholders in lease agreement, the expert committee decided to be influenced by selective use of data which suits its predetermined conclusions.
While framing the Constitution, the question of land and land relations was left to the legislative and administrative jurisdiction of state governments. The state governments, whose class composition during the first three decades of independence was dominated by landlord class, the key collaborator of bourgeois class, made its fullest attempts to scuttle the implementation of land reforms across the country. The bourgeois class extended its tacit support to such subversions. The then Plannning Commission, in its report, realised this hiatus and noted that “lack of political will is amply demonstrated by the large gaps between policy and legislation and legislation and its implementation. In no sphere of public activity in our country since independence has the hiatus between perception and practice between policy pronouncements and actual execution been as great as in the domain of land reforms.” Without considering this fact, we are not going to do justice in dealing with this issue and the expert committee neither cared for considering this fact nor even bothered to inform the nation about the size of acreage which was kept fallow just because of these tenancy laws and how much land is kept fallow due to lack of irrigation facilities or viability of farming.
Disregarding these historical political factors that exacerbated the agrarian crisis is not going to resolve the root causes of this crisis but deepens them. The governments moved away from the idea of land reforms as they were visualised during the freedom movement and this hiatus is more evident since the country embarked upon the economic reforms programme. The key to reforms package is to leave every thing to the market and government playing only a facilitating role. Despite a quarter century of reforms programme, that is yet to be translated into reality in case of agrarian policies of the country. That is why successive governments are keen to prepare the ground for eventual structural break and that is being used by the BJP government to meet its goals of deepening the reforms. Once the market is allowed to play on its own rules on the question of land, the key source of direct and indirect living for two-thirds of the countrymen, it is going to create havoc in their lives. Small and marginal tenants, who are already on the verge of extinction, are going to completely disappear from the scene. Yes, it is a fact that the small and marginal farmers are not able to gain security or protection or advantage from the government’s various schemes and packages. Taking this as alibi and in the name of protecting the tenants’ rights, the central government is silently laying foundations for contract farming on national level in whose case, creating a safety net for ownership of absentee land owners/ landlords is the key. Thus, the whole discussion of the expert group focused mainly on this aspect.
The essence of reforms is to keep every thing to the discretionary authority of market from the authority of government that was elected by the people. The earlier tenancy reforms are government mediated whereas the landmark recommendation urges for market mediation in terms of land lease. That is the crux of its argument when it recommends that the land rent is to be determined by parties to the lease agreement, that is land owner and lessee mutually and the state would not have any role in this. This is nothing but transforming the formally or informally regulated land lease market into an unregulated one where the weaker partner is bound to suffer. Unlike the assumption that the ground rent rates are increasing because of the landless are competing for tenancy, recent studies reveals that the large tracts of land is being cultivated  by the upper layers of agrarian classes. What came out from a personal interaction during my latest visit to my village is to be noted here. A handful of farmers from a tiny village in Guntur district are cultivating more than 2,000 acres in Gadchiroli district. A similar experience from a far flung village in T Narsapur of West Godavari also vindicates the fact of increased reverse tenancy where a landlord who officially owns 80 acres as per revenue record, cultivates 100 acres of land as tenant.
The report says, “The objective of post-independence land reform for creating an agrarian economy with high levels of efficiency and equity has been achieved only partially. More particularly, restrictive tenancy laws enacted in the 1960s and 1970s seem to have affected agricultural growth, equity and investment in rural non-farm development adversely.” This is clear indication of assumption based conclusion rather than fact based conclusion. The report also categorically backs the absentee landownership which was the crux of land reforms adopted during the post independence days. Instead of ensuring the constitutional mandate under Article 39 which says (b) that the ownership and control of the material  resources of the community are so distributed as best to subserve the common good; (c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. The proposed recommendations and the Model Act are going to ensure not only enormous concentration of land in the hands of a few but also concentration of tenancy in the hands of a few. This is one of the findings that came out in a recent study by Sundarayya Vignana Kendram. Among the tenant land, more than 50 per cent is being cultivated by landlords and rich farmers in coastal districts of Andhra Pradesh. The spurt in reverse tenancy particularly became a noted feature since 1990s. The recommendations of the expert committee also decided to give boost to this trend, which is initially promoted by various studies sponsored by the World Bank Group in India. As the report advises the small and marginal farmers to let out their small pieces of land under tenancy and opt for wage employment where as similar advice is offered to the large land owners to let their uncultivated land out on tenancy and opt for non-agricultural entrepreneurships. This is what the report recommends when it terms that the model leasing act will promote occupational mobility and reduces the share of population dependent upon cultivation and other agricultural economic activities back in the villages. This is how the BJP government wants to double farmers’ income by reducing the population dependent on agricultural economy by a half! (END)