Where is the 'Aam Aadmi'?

‘Business as usual is no longer an option’ has become a catchword with the current financial crisis, but was initially mooted by the International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD) that presented its synthesis report in April 2008. Despite being a signatory to it, despite the acknowledgement of the larger agrarian crisis that the country has been facing and despite the similarity in purpose envisaged in the ‘inclusive growth’ slogan of the Eleventh Five Year Plan and IAASTD’s emphasis on ‘the reduction of hunger and poverty, the improvement of rural livelihoods and human health, and facilitating equitable, socially, environmentally and economically sustainable development,’ one does not find much mention of it either in the current interim budget of 2009-10 or other recent relevant policy documents.

The initiatives and achievement under agriculture, keeping the welfare of the ‘Aam Aadmi’ in mind, increased the plan allocation for agriculture by 300 per cent between 2003-04 and 2008-09 and launched the Krishi Vikas Yojana in 2007-08 to increase growth rate of agriculture and allied sectors to four per cent during the Eleventh Plan period. A good initiative that requires bottom-up planning from village to taluka to District Agricultural Plans and aggregating to form State and National Plans. Its implementation is tardy and an imposition of a target from the top makes the approach self-defeating.

Keeping 2003-04 as base, the government announced a package of doubling agricultural credit in three years and actually achieved a three-fold increase of credit by 2007-08. The fact that the Government had to come up with the Agricultural Debt Waiver and Debt Relief Scheme in June 2008 is itself perhaps indicative that the ground work to make agriculture remunerative was not done which also means that appropriate project appraisals were not done by the banks while doubling/tripling of credit. The debt waiver is a book-keeping exercise. It does reduce the mental burden of the farmer and makes him eligible for fresh loans, but not a single rupee from this Rs.65,300 crore would lead to investments that is required to spruce up the agrarian economy.

On the one hand, the long overdue increase in the Minimum Support Prices (MSPs) in recent years is a bit of relief that would help improve the returns to agriculture. On the other hand, the Targeted Public Distribution System (TPDS) will ensure food security to those below poverty line. While talking of poverty, the Government should have updated the consumption-expenditure with appropriate nutritional measures, dealt on multi-dimensionality of poverty and on identification to avoid exclusion of the poor, of course, some of these go beyond the budget. Another matter of concern that remains is the huge subsidy bill on fertilizers, which largely goes to the industry and only indirectly to the farmers. There has been no increase in the fund allocated under Rural Infrastructure Development Fund (RIDF) when compared with the previous year.

Education, health and some other social sector initiatives are indicated. The question that one is haunted is, as indicated in the United Progressive Alliances (UPAs) Common Minimum Programme (CMP), whether the promise of doubling of public expenditure as a proportion of the Gross Domestic Product (GDP) achieved. A silence on this indicates that the answer is no.

Some of the notable initiatives in recent years have been the Right to Information and the National Rural Employment Guarantee Scheme (NREGS). Though there are hiccups, the efforts are indeed laudable. The need of the hour is to complement the wage-employment scheme with an equally comprehensive self-employment scheme. This requires revamping of the Sampoorna Gram Swarozgar Yojana (SGSY) through institutional innovation to help organize the poor, financial innovation to make required credit accessible and administrative innovation to improve facilitation. This is also very essential under the current financial crisis because it would encourage a large number of smaller players. Such an effort will also have its multiplier effects not only in stimulating the economy but more importantly in improving the livelihood of the poor and also help us in easing the load on agriculture.

The finance minister rightly quotes Professor Amartya Sen while emphasizing on the need for security during this down turn. But, note that this has nothing to do with increasing defense related expenditure. Rather, such protective security should also address the poor returns to farmers which on a per-capita per day basis is even lower then a liter of bottled water. Notwithstanding the increase in the revenue and fiscal deficits, one is left with the question, where is the ‘Aam Aadmi’?

A similar version has been published in the Financial Express, with the title Debt waiver is a book keeping exercise.

Banking under Economic Crisis

It is now agreed, a la IAASTD, that 'Business as usual is no longer an option'. Lot of tax payers money is being infused to revive the global economy. However, bankers' who got used to doing business with larger players are taking time to get out of their usual mode of doing business. True, larger transactions reduces per unit costs but exposures are also greater. It is the excessive reliance on a few large players that is identified as one of the reasons for the current problem. The banks should consider wooing smaller players. This is a different ball game. It requires understanding, propagating and examining the viability of small projects. This can be done with poorest of poor people also. The understanding that doing business with poor will lead to losses is a myth. This has already been shown by Grameem Bank of Bangladesh (through the work of Nobel laureate Mohammad Yunus) and other similar experiments across the globe. Bankers have a stake in reviving the economy if they have to stay in business. The mantra is to do business with a large number of small entrepreneurs, but with viable economic projects. Small is Beautiful, see the E.F. Schumacher's Society. There is a vicious cycle of prosperity waiting. Please do not let the opportunity get out of hand. Grab it.

Financial Crisis, Mental Health and ...

The current financial meltdown, with its epicenter in the United States, has been having serious global repercussions. The 30-share sensitive index (Sensex) of the Bombay Stock Exchange which had peaked to 21,206.77 in January 10, 2008 has fallen to 7,697.39 at 1330 hours before stabilizing at 8509.56 by the end of the day on October 27, 2008. On the eve of Diwali (October 28, 2008), this belies hope.

This will have serious implications on the mental health of the population. Particularly so, for those directly involved in the financial/stock market. There are already indications that sale of over-the-counter anti-depressants have increased. A possible fallout is increase in incidence of self-harm (suicides). The earlier East Asian Crisis and earlier financial crisis are witness to such occurrences. In India, as well as elsewhere, the public health system, the medical fraternity (particularly Psychiatrists) and other civil society groups like The Samaritans, Mumbai. Sooner or later such incidences would come to the media's notice. Before reporting, they should have a look at the World Health Organization's Preventing Suicides: A resource for Media Persons.

True, despite the unprecedented fall in the Sensex, the levels are still around what was reigning in October 2005. Some say, the correction was necessary, as the higher levels was more on account of an hype in the financial sector, rather than being in sync with good fundamentals in the real sector. It is the unregulated greed that has led to this situation.

A question that comes to mind is why such a fall would be associated with mental health leading to self-harm. An anecdote cited in some discussions on farmers' suicides would help. A farmer while comparing his situation to that of a labourer indicated that the latter has been living under dire circumstances, and of course needs attention, but our situation is akin to a fall in level. Recourse to self-harm is complex and multifaceted. But, if reductions in level is one of the risk factors then this is definitely the case with the current financial crisis.

It is also worth mentioning that the current financial crisis, the ethnic strife that one sees within the country as also elsewhere in the world, and the larger agrarian crisis which manifested in a food crisis globally are not independent occurrences. They are part of the larger scheme of things, which as some commentators say, involves displacement of people as well as displacement of ideas.

The agrarian/food crisis and the ethnic strife do reflect that something is fundamentally wrong in the real sector; it is not people-centric. The problem was accepted, but instead of addressing the problem the solutions tried to address the symptoms. Or, to put it in a different perspective, the emphasis was on means rather than the ends. To conclude, one would state "Business as usual is no longer an option." (IAASTD)

PS: The Interactive Panel of the United Nations General Assembly on the Global Financial Crisis, 30 October 2008, United Nations Headquarters had presentations by Joseph Stiglitz, Sakiko Fukuda-Parr, Prabhat Patnaik, Pedro Páez, Calestous Juma, and François Houtart.