Focus on farmers' welfare

THE phenomenon of suicides by farmers that Karnataka has been witness to over the past few years represents the tragic human dimension of an acute crisis in agriculture. This crisis was accentuated by the widespread failure of the rains in most parts of the State over the last three years. The single most important cause of farmers' distress is the stranglehold of debt at high rates of interest. With the gradual withdrawal of institutional credit from the countryside as a result of the liberalisation of the banking industry, farmers have had to fall back on non-formal sources of credit at very high rates of interest.

Several measures were announced in the Common Minimum Programme (CMP) by the Congress and Janata Dal (Secular) government to address the problems of the rural sector. Many of these were translated into concrete action in the Budget. Over 70 per cent of the State's population is employed in agriculture, which contributes 25 per cent of its gross domestic product (GDP). The outlay for agriculture was almost doubled, from Rs.412 crores allocated in the 2003-2004 budget to Rs.820 crores in the present one.

A series of other relief measures for farmers was also announced in the Budget. The most significant of these was the announcement lowering the rate of credit. Even cooperative institutions charged high interest rates, from 12.5 per cent for crop loans and 13.5 per cent for long-term loans. The 2004-2005 Budget announced the reduction of the interest rate to be charged by cooperative banks and societies to 6 per cent simple interest. Credit institutions have been told not to charge compound interest and penal interest on crop loans. A Rs.49 crore relief package was used to waive the outstanding dues of farmers who had paid interest in excess of the principal loan amount. Additionally, Rs.83 crores was set aside to make good the commitment made by the previous government to waive interest on crop loans.

Other financial packages for the agricultural sector includes Rs.210 crores for crop insurance, Rs.100 crores for a farm price stabilisation fund and Rs.100 crores for a watershed development programme and the Raitha Sanjeevani, and an accident insurance scheme for farmers. The World Bank is financing a Rs.690 crores watershed development project and a Rs.670 crores tank management programme.