Why is Pawar worried about Tata's statement?


So the Indian Agriculture Minister is worried. An innocuous comment by a man caught in the throes of one of the biggest scams in Indian history seems to have awoken Maharashtra’s giant.

Apparently, Ratan Tata’s suggestion that India seems to be in danger of turning into a banana republic was a call to action for Sharad Pawar. That along with Jairam Ramesh’s notice to Lavasa, of course. Pawar’s daughter Supriya Sule and son-in-law Sadanand were major stakeholders in the Lavasa project when it was launched. However, the duo apparently divested their stake in 2004.

However, to say that the NCP patriarch is not keen on protecting and managing the environment would be fudging the truth. The only caveat here is that the term environment just has a different meaning in Mr. Pawar’s dictionary.

For starters, the minister recently told Parliament that the number of farmer’s suicides, as of November 2010, had declined from 881 deaths in 2009 to 270. Maharashtra, Andhra Pradesh and Karnataka continue to account for the most number of cases of farmers’ suicides.

Pawar’s home state still accounting for 234 of the 270 deaths this year. According to him, it’s the government’s debt waiver, debt relief and rehabilitation packages that are the reasons for this improvement.

That’s the official version.

Unofficially, or rather on the ground, the picture seems to be quite different. According to activists like Kishore Tiwari, who heads the Vidarbha Jan Andolan Samiti, the poor who default on loans are struggling against the tactics of banks. Some of these lenders have started seizing tractors and other movable property. He suggests that nearly 150,000 farmers are in danger of suffering starvation deaths or committing suicides, since the electricity department has cut their power supply. And that figure could just be the tip of the iceberg.

The regular list of problems such as awareness, water, electricity and equipment, continue to plague agriculture. But what has exaggerated the farmers’ woes is the failure of the banking and credit industry.

Traditional banking had failed over the years and left a vacuum that permitted the unorganized financial sector of goons and thugs to prevail. While that caused enough distress, a new ray of hope had seemingly emerged with the advent of micro-credit. However, 15 years down the road, it now seems that the micro-finance sector in India is on the verge of a massive meltdown.

A recent report in the Mint has argued that “foundations, venture capitalists and the World Bank have used the country as a petri dish for similar for-profit ‘social enterprises’ that seek to make money while filling a social need…But microfinance in pursuit of profits has led some microcredit firms around the world to extend loans to poor villagers at exorbitant interest rates and without enough regard for their ability to repay. Some firms have more than doubled their revenues annually.”

Interest rates, for these loans, at times have been as high as 36 to 60 percent compounded yearly, way over the 24 percent allowed. That, more often than not, was coupled with strong arm tactics for loan recovery.

In Andhra Pradesh, the situation, in fact, grew so grim that the government had to step in with a law making it mandatory to register MFIs with local authorities, regulating multiple lending and banning coercion.

Consequently, a large number of people unable to bear the burden of the loan and the interest rates defaulted-in effect sending the industry down a spiral. According to some reports, India’s microfinance industry has now appealed for $222 million in emergency funds to keep it afloat.

While the looming crisis of a vital cog in the financial machinery is a matter of concern, what it also highlights is the inability of the governments to tackle the essential problems that Indian agriculture continues to face.

It is such issues that the agriculture minister of the country should be concerned about. Citing pressure on cultivable land, he recently suggested that it was important for India to reduce its dependence on agriculture for employment. The argument is sound.

However, with all due respect sir, let’s understand that the way to reduce that dependence is through improving education and expanding its reach, revamping agricultural practices, efficient industrialization that creates jobs and offers fair pays for the stakeholders, holding corporates responsible and accountable for their failures, and honest and transparent land deals, to name a few.

It is not done through uprooting poor landowners in favour of shifting their status as manual labour in order to build hi-tech townships that cater to a few. That’s how we become a banana republic, and not by probing corporates who wittingly or unwittingly are caught up in the 2G muck.

(Manoj Kewalramani is a guest writer with Canary Trap. He has worked with top media houses like NDTV before becoming an Independent Blogger and Writer.)

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