Financial Planning Wisdom: Give man a fish.. You feed him for a day .. Teach him fishing you feed him for lifetime.
Debt waivers are like giving man a fish . It feeds him for a day. On the other way, increasing economic productivity is teaching a man, fishing . With that , he could be feed for lifetime.
Growth of debt leads to lack of economic growth. They are inversely proportional. On the other way, lack of economic growth or productivity will result to indebtedness.
Debt of farmers is a result of rising costs of agricultural inputs and falling prices of agricultural produce. Both the rising costs of production and decline in farm prices are certain outcomes of trade liberalization and economic reform policies driven by agribusiness corporations.
1. Deregulation of Inputs
Deregulation of the input sector, the entry of seed MNC’s, and the creation of seed monopolies has increased the costs of inputs and the risks of crop failure. In 2002, farmers of Bihar lost Rs. 400 crore due to the failure of an MNC’s hybrid corn. Farmers of Andhra Pradesh and other States ran into losses of Rs. 100 crore due to the failure of Cotton Seed supplied at Rs. 300 / kg by public sector farms, which costs them Rs. 1600/kg while they bought them from an MNC. In spite of the high costs, that MNC’s Cotton performed miserably in the first commercial planting in 2002. The deregulation of the input sector has allowed seed MNC's into Indian agriculture for the first time.
In India's history, our seed security and sovereignty was based on the time tested and adapted farmers varieties, which accounted for 80% of the seed supply. In addition, these varieties tested in the public sector seed farms for our diverse agro climatic zones are appropriate for our socio-economic conditions.
MNC's have been selling untested, ill adapted, high cost seeds which need high cost chemicals and intensive irrigation and is practically unfit for Indian Environment.
II. Deregulation of Imports leading to failing prices of agricultural produce
The second leak in the farmers income is the collapse in farm prices due to deregulation of trade. This leading to dumping activities from developed countries. The level of dumping has increased since 1995 when the W.T.O came into force, even though the proclaimed aim of W.T.O is to "reduce distortions in trade." While the full cost of U.S wheat in 2001 was $ 6.24/bushel, its export price is $3.5/bushel. In the case of soybean, the cost was $6.98/bushel; the export price was $4.93/bushel. For maize, the full coast was $3.47/bushel; export price was $2.28/bushel. The cost of production of rice was $18.66/bushel and it was sold internationally at 14.55/bushel. From 1995 to 2001 dumping jumped from 23% to 44% in the case of wheat, 9% to 29% in the case of soybeans, 11% to 33% in the case of maize, from 17% to 57% in the case of cotton. Removing of Quantative Restriction in this dumping activity made the Indian farmer vulnerable to the distortion of international prices. Annual looses of farmers cross Rs. 1.2 trillion/ year.
Well 60,000 crore is a big money, as debt waiver. However, the losses are bigger than that. The question is how many fishes we can give and how far it will solve the real problem.
Isn’t that making them economically productive, and concentrating in their growth (teaching them fishing), is a better option?