Of loan waivers and tax waivers

20 May 2008 - In Maharashtra, where the nation's most distressed farmers have been denied the benefit of the 'farm loan waiver,' the government is said to waive crores in entertainment tax that the Indian Premier League cricket matches would normally attract. Media reports in Mumbai on this score reckon that means a loss of up to Rs.10 crore in revenue. As even the pro-corporate newspapers of the city point out, the direct beneficiaries would be Mumbai's millionaires and billionaires. Film stars and corporate bosses who did not find it difficult to spend crores on buying teams and players. That too, for what the media are fond of calling "the world's richest cricket tournament." Simply put, if it goes through, they'll be getting tax waivers on the hiring of cheerleaders, among other things.

True, this is not the first time that entertainment tax has been waived on cricket matches in Mumbai or elsewhere. The BCCI and its affiliates have always enjoyed political patronage. The difference, which has got even members of the ruling front worked up, is that those raking in the crores in exemptions are for-profit-only groups and individuals. By law, any event, musical or cultural, performance or other, staged for profit must pay entertainment tax. But not the IPL, which will have held 10 matches in Mumbai including the Final.

It's an odd situation. The overwhelming majority of Vidharbha's farmers do not gain from the farm loan waiver - because they are too "big." That is, they hold more than two hectares of land. But the IPL waiver goes to some of India's richest millionaires and billionaires. They aren't too big. And the only reason Vidharbha's farmers have holdings that exceed the loan waiver's two-hectare cut-off is because they are dry-land farmers. Their fields are poor, un-irrigated and less productive.

The IPL waiver reports come within three weeks of the Comptroller and Auditor General's report on "Farmer's Packages" in the State. A performance audit the government of Maharashtra chose to present to the Assembly on April 27, the last day of the session. A day on which, as MLAs say, "there isn't enough time to count the pages, let alone read the many documents they push at that time." Clearly, they were not eager on a discussion of the contents.

The very first page of the CAG report tells us why. Despite the State government's Rs.1075-crore "package" for farmers "the suicides, however, continued unabated and the number increased to 1414 during 2006-07." The Prime Minister's visit in mid-2006 and the Centre's Rs.3750-crore package that followed in July also came the year the suicides increased. As we know from earlier reports, including some in this newspaper, they actually went up in the second half of that year.

Erratic spending

Here is the CAG on the official response: "No evaluation of the implementation of the packages, in terms of reduction in agrarian distress, was made." We also learn that tens of crores of rupees aimed at reducing farmer distress were, in fact, never spent. The value of the packages themselves was exaggerated by over Rs.200 crore. Crores were released under some heads with no reference at all to the actual requirement of funds.

Other funds, such as those meant "for increase in production," were released late. Cheques given to some 'beneficiaries' "were dishonoured for want of cash in the bank." The "self-help groups were paid subsidies in excess of admissible norms." Parts of other funds were not released at all. In head after head, funds were underutilised. This is how lackadaisical the governments were with packages worth a total of Rs.4,825 crore. So what's Rs.10 crore for the IPL?

But the CAG report, which is devastating from start to finish, does not stop at that. It has a clear premonition of things to come. On the "interest waiver" that followed the Prime Minister's visit, it says: "While reimbursing banks for interest waived on loans, sanction of fresh loans was not ensured."

That is exactly where most farmers now find themselves again after the "massive farm loan waiver." Fresh credit is very hard to come by. Distress has not come down. There have been over 360 farm suicides since January this year, about 200 of them post-loan waiver. In the official count, there were 153 in January and February. And of these, only 18 were considered "eligible suicides." That is, only 18 families had any hope of being compensated for losing a breadwinner. The figures for March and April will turn out to be much worse.

There was a hope, after Rahul Gandhi's plea in Parliament, that the two-hectare cut-off point would not be imposed on dry-land farmers in places such as Vidharbha and Anantapur. But it was. The very places whose misery had sparked the idea of a loan waiver now stand mostly excluded from it.

There is a very important point the CAG report brings out that tends to get glossed over most of the time. That the farmer's world is not driven by agriculture alone. Farmers, whose incomes have been plummeting, have been hammered by education and health costs. The commercialisation of those sectors has hurt them, as it has countless millions of other Indians, very badly. That is on top of the stick they've taken in agriculture.

"Distress amongst farmers on account of cost of education was not measured." The "allocation of funds (Rs.3 crore at Rs.50 lakh per district) for health was meagre ..." It mentions the government's own survey showing that the health issues were huge and required much larger action.

One of the most important things the CAG points to is the State government evading its own findings. In mid-2006, the government organised what was the biggest door-to-door survey of farm households ever done. It covered over 17 lakh households, that is, all farming households in the six "crisis districts" of Washim, Akola, Yavatmal, Buldhana, Wardha and Amravati. Over a fourth of those families - that is, more than two million people - were found to be in "maximum distress." And more than three quarters of the rest were in what the report called medium distress.

In other words, close to seven million people were in distress in just six districts. That was the finding of the most massive study, powered by over 10,000 field workers. And a report of the State government itself, at that.

Yet, says the CAG, "the selection of beneficiaries ? had no relation to the departmental survey conducted for the assessment of distress. As a result, the prioritisation of relief and rehabilitation works considering the distress level of farmers could not be ensured." Why did the State government ignore its own study? Because the results of that huge survey are, to this day, explosive. Also, de-linking the distress survey from the packages meant you could reward your friends who might never have been in crisis.

Catalogue of failure

One line recurs in different ways through the CAG report: "Authenticity of reported expenditure was doubtful in the absence of proper classification of accounts." Throughout, the report is a catalogue of failure too serious to be written off as "error." On inputs, which farmers were desperate to get at reasonable prices, there was poor assistance. Farmers were hit hard by a poor supply of seed when they needed it most. Seed requirements for several crops, suggests the CAG, were simply not taken seriously. "The estimates were not realistic as these were made based on the amount allocated to this component and not based on actual requirement."

The CAG report captures at the top end, the state of things on the ground. Being a performance audit, it confines itself to that task. It is not a field report. However, the portrait it presents of the government's performance is a sharply accurate one. A picture that sits perfectly with the chaos at the receiving end below.

In the end, this is more than just a report. It is a snapshot, or a series of snapshots, of how governments, particularly the one in Maharashtra, are responding to agrarian distress. The complete apathy, the corruption, the cover-ups, even the contempt for the farmer, that come across. This is a State where all the attention is on the brilliantly-lit, power-guzzling matches of the IPL. It is also a State where many regions face power cuts ranging from 3-16 hours each day. And countless children have completed their examinations without being able to study much. The huge power cuts meant darkness in their homes when they returned from school.

The report is about the packages in this State. But if we extend our thinking a bit, it should lead us to reflect on things much larger. On the crisis in the countryside, on those being marginalised or just driven away. On regions beyond this one and on our attitude towards those who grow our food but can less and less afford to eat it themselves. ⊕

P Sainath
20 May 2008

the hindu