Populist budget indicate November elections

By Sanjay Kapoor
New Delhi, Feb 29, Hardnews: Indian finance minister's budget for 2008-2009 had elections written all over it. Going by the freebies that FM has given to various sectors of the economy, it seems evident that the government may go into the election mode as soon as the budget session gets over. If they play according to script, there is a significant possibility of general elections being held together with other state governments later this year- that is after the Election Commission completes the delimitation of parliamentary constituencies.

There is also a growing possibility that the Prime Minister Manmohan Singh may also use the bounce from the budget to push through the civilian nuclear deal with United States of America. Recent visit by Democratic leaders like John Kerry and Biden made it clear that the deal had bi-partisan support and India is unlikely to get a better discount in the event of democrats coming to power. The deadline, ostensibly rejected by the Indian government, is around July-August. That is the time when the Parliament would convene once again during the monsoon session.

The optimism in the Congress is also flowing out of patch up worked out with Uttar Pradesh Chief Minister Mayawati. Although, it is still very early how this understanding is going to unveil itself, but preliminary discussions that have taken place between the two sides suggest that the party of the oppressed (BSP) would help Congress return to power. This is a big plus.

But what is going to make a big difference to the fortunes of the ruling coalition is the debt waiver announced by the FM. This came as a bonanza for 40 million farmers with FM announcing a complete loan waiver to around 30 million small and marginal farmers and a one-time loan settlement to 10 million more.
The implementation of the debt waiver for farmers with less than two hectares of land and debt relief, amounting to Rs.600 billion ($15 billion), will be completed by June 30 this year.

Chidambaram's fifth consecutive budget presented in the Lok Sabha provided a total annual outlay for the agriculture ministry of Rs.144.76 billion.

"By the loan waiver scheme, the country is discharging a deep debt and sense of gratitude to farmers," Chidambaram said, adding that the growth rate of agriculture was estimated at 2.6 percent in the current fiscal.

While the budget waives off loans completely for small farmers - about Rs.500 billion - the more affluent have got a one-time loan settlement facility with a 25 percent concession. This is likely to be Rs.100 billion.

The finance minister said agriculture loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions up to March 31, 2007, and due for Dec 31 that year would be covered under the waiver scheme to address the problem of indebtedness.

Chidambaram gave Rs.6.44 billion for the national agriculture insurance scheme.

He said agriculture loans restructured and rescheduled by banks from 2004-06 and other loans normally rescheduled under guidelines of the Reserve Bank of India (RBI) could also be covered by the waiver scheme.

The corpus of rural infrastructure development fund will be raised to Rs.140 billion, while a target of Rs.2.8 trillion for agriculture credit has been set for the coming year.

Duty on crude and unrefined sulphur will be reduced from five percent to two percent to help raise domestic fertiliser production to meet the growing demand from farmers.

With specific focus on coconut cultivation, Chidambaram announced the allocation of Rs.11 billion for the National Horticulture Mission, while Rs.750 million was given to the ministry of agriculture for providing mobile soil testing laboratories in 250 districts.

Chidambaram earmarked Rs.200 billion for irrigation projects, showing an increase of Rs.90 billion over the last fiscal, a core area identified in the Economic Survey 2007-08 presented Thursday.

According to the Economic Survey 2007-08, a second green revolution was necessary, particularly in rain-fed areas, to provide sustainable incomes to the country's distressed farmers.

Over the years, the share of agriculture in gross domestic product (GDP) has sharply reduced to 18.5 percent in 2006-07 from 36.4 percent in 1982-83 -- though it continues to support over 500 million people and provides employment to 52 percent of the country's workforce.

The survey said the growth rate of food grain production decelerated to 1.2 percent in 1990-2007, lower than the annual growth of population pegged at 1.9 percent.

An official estimate says that over 60 percent of the country's cultivable area depends on rain for agriculture. In order to raise the productivity of rain-fed areas, the government in 2006 set up the National Rainfed Authority of India (NRAI).