[Reader-list] Drought of justice, flood of funds

[Rakesh Iyer]

Dear all

I sincerely believe that instead of giving awards to P.Sainath, the govt.
would do well to listen to him and actually implement some of his sayings in
its policies.

Do read this article.

Regards

Rakesh


Article:

P. Sainath * Ask for expansion of the NREGS, universal access to the PDS,
more spending on health and education — and there’s no money. But there’s
enough to give away to the corporate world in concessions. *

Sure, August is proving an unusual month. But what an extraordinary one July
was! We celebrated the delivery of the cheapest car in the world and the
costliest *tur dal* in our history within the same 31 days. And it took some
work to get there. The price of *tur dal* was around Rs. 34 a kilogram just
after the 2004 elections, Rs. 54 before the 2009 polls, Rs. 62 just after
and, now at over Rs. 90, bids for three-figure status.

The euphoria of July also saw Montek Singh Ahluwalia declare that the “worst
is behind us.” (Though it must be conceded that he said that even in June
and, possibly, earlier.) That’s good. I only wish he had told us when the
worst was upon us. It would have been nice to know. Otherwise, it gets hard
to appreciate improvement.

As a matter of fact, Prime Minister Manmohan Singh and Agriculture Minister
Sharad Pawar suggest that the worst could be ahead of us. And they don’t
mean the swine flu. Both appear to have written off much of the
*kharif*crop. They advise us to buckle up for a further rise in food
prices due to
the drought they now say affects 177 districts. That they’ve thrown in the
towel on the *kharif* crop is evident in their calling for a more efficient
planning of the *rabi*. Yet, the government had two months during which it
could have opted for compensatory production of foodgrain in regions getting
relatively better rainfall. But there was no effort at monsoon management.

Even today, there are very useful things that could be done to counter the
worst ahead. A positive step taken by the Rural Development Ministry now
allows small but vital assets like farm ponds to be created on the lands of
farmers through the NREGS. A pond on every farm should be the objective of
every government. (Incidentally, this would help hugely with the
*rabi*season. It would also ease the hostility of quite a few farmers
towards the
NREGS.) A massive expansion of the NREGS will also help cushion the lakhs of
labourers struggling to find work and devastated by rising food costs. But
it would call for throwing out the entirely destructive
100-days-per-household limit on work under the scheme. With the Prime
Minister calling for anti-drought measures on “a war footing,” this should
be the time to do it.

The price-rise-due-to-drought warning is a fraud. Of course, a drought and
major crop failure will push up prices further. But prices were steadily
rising for five years since the 2004 elections, long before a drought. Take
the years between 2004 and 2008 when you had some good monsoons. And more
than one year in which we claimed “record production” of foodgrain. The
price of rice went up 46 per cent, of wheat by over 62 per cent, atta 55 per
cent, salt 42 per cent and more. By March 2008, the average increase in the
prices of such items was already well over 40 per cent. Then, they rose
again till a little before the 2009 polls. And have risen dramatically in
the past three months.

The Agriculture Minister appears to have figured out that the stunning rise
in the price of pulses may have little to do with drought. “There is no
reason,” he finds, “for prices to rise in this fashion merely on a
supply-demand gap.” He then goes on to find a valid reason: “blackmarketing
or hoarding.” But remains silent on forward trading in agricultural
commodities. Many senior Ministers have long maintained that “there is no
evidence” that speculation related to forward trading has had any impact on
food prices. (The ban on trading in wheat futures was lifted even before the
results of the 2009 polls were announced in May. And existing bans on other
items have been challenged in interpretation.)

The price rise since 2004 could be the highest for any period in the country
barring perhaps the pre-Emergency period. For the media, of course, July was
far more interesting for the political price in Parliament over the gas war
between the Ambani brothers. When these two barons brawl, governments can
fall. Also, how could atta be more interesting than airline tickets (the
prices of which fell dramatically over several years)? Food prices might
have gone up but airline travel costs went down and those are the prices
that mattered.

So the price of aviation turbine fuel became a far more to-be-covered thing
as private airlines threatened a strike demanding public money bailouts. At
the time of writing, it appears the government will try and make things
cheaper for them. These airline owners include some associated with the IPL,
which got crores of rupees worth of tax write-offs last year. Maharashtra
waived entertainment tax on the IPL. And with so many games held in Mumbai
that proved a bonanza for the barons paid for by the public.

There’s always money for the Big Guys. Take a look at the budget and the
“Revenues foregone under the central tax system.” The estimate of revenues
foregone from corporate revenues in 2008-09 is Rs. 68,914 crore. (
http://indiabudget.nic.in/ub2009-10/statrevfor/annex12.pdf) By contrast, the
NREGS covering tens of millions of impoverished human beings gets Rs. 39,100
crore in the 2009-10 budget.

Remember the great loan waiver of 2008, that historic write-off of the loans
of indebted farmers? Recall the editorials whining about ‘fiscal
imprudence?’ That was a one-time, one-off waiver covering countless millions
of farmers and was claimed to touch Rs. 70,000 crore. But over Rs. 130,000
crore (in direct taxes) has been doled out in concessions in just two
budgets to a tiny gaggle of merchants hogging at the public trough. Without
a whimper of protest in the media. Imagine what budget giveaways to
corporates since 1991 would total. We’d be talking trillions of rupees.

Imagine if we were able to calculate what the corporate mob has gained in
terms of revenue foregone in indirect taxes. Those would be much higher and
would mostly swell the corporate kitty for the simple reason that producers
rarely pass on these gains to consumers. Let’s take only what the budget
tells us (Annexure 12, Table 12, p.58). Income foregone in 2007-08 due to
direct tax concessions was Rs. 62,199 crore. That foregone on excise duty
was Rs. 87,468 crore. And on customs duty Rs. 1,53,593 crore. That adds up
to Rs. 3,03,260 crore. Even if we drop export credit from this, it comes to
well over Rs. 200,000 crore. For 2008-09, that figure would be over Rs.
300,000 crore. That is a very conservative estimate. It does not include all
manner of subsidies and rate cuts and other freebies to the corporate
sector. But it’s big enough.

Simply put, the corporate world has grabbed concessions in just two years
that total more than seven times the ‘fiscally imprudent’ farm loan waiver.
In fact, it means that on average we have been feeding the corporate world
close to Rs. 700 crore every day in those two years. Imagine calculating
what this figure would be, in total, since 1991. (Er.., what’s the word for
the bracket above ‘trillion?’) Ask for an expansion of the NREGS, seek
universal access to the PDS, plead for more spending on public health and
education — and there’s no money. Yet, there’s enough to give away nearly
Rs. 30 crore an hour to the corporate world in concessions.

If Indian corporates saw their net profits rise in April-June this year,
despite gloom and doom around them, there’s a reason. All that feeding
frenzy at the public trough. The same quarter saw 1.7 lakh organised sector
jobs lost in the very modest estimate of the Labour Ministry. That’s not
counting the 15 lakh jobs said to have been lost in just the export sector
between September and April by the then Commerce Secretary.

And now comes the drought. A convenient villain to hang all our man-made
distress on — and sure to oblige by adding greatly to that distress. A huge
fall in farm incomes is in the offing. If the government wants to act on a
war footing, it could start with a serious expansion of the NREGS (about the
only lifejacket people in districts like Anantapur in Andhra Pradesh have at
this point, for instance).

It could launch, among many other things, the pond-in-every-farm programme.
It could restructure farm loan schedules. It could start getting the idea of
monsoon management into its thinking. It could curb forward trading-linked
speculation that was driving one of our worst price rises in history long
before the drought was on the horizon. And it could declare universal access
to the PDS. That cost could probably be easily covered by, say, cancelling
the dessert from the menu of the unending corporate free lunch in this
country.