Wanted: A ?New Deal? For India?S Farms ; Finance Minister P. Chidambaram Is Under Tremendous Pressure to Deliver a Budget That Keeps Everyone Happy. There Is, After All, the Small Matter of 10 State Elections Later This Year and the General Elections in 2009.

Summary

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Finance Minister P. Chidambaram is under tremendous pressure to deliver a Budget that keeps everyone happy. There is, after all, the small matter of 10 state elections later this year and the general elections in 2009. The feel good mood of the previous years has given way to anxiety about the future and even manufacturing and services, the growth drivers of the recent past, are showing signs of flagging. This incipient slowdown is actually a function of two factors rising interest rates and the appreciating rupee. There are no major structural issues that need to be addressed.

The agricultural and rural sectors, on the other hand, are desperately in need of a large, and sustained, supply of oxygen. A vast majority of India's population still depends on the farm sector, which now accounts for less than 20 per cent of the country's GDP. So, it's a no-brainer that a 21st century Indian equivalent of Franklin D. Roosevelt's New Deal is required to ensure that all of India shines equally brightly. The World Bank's World Development Report, 2008, argues that much higher public investment in agriculture and rural infrastructure is the only way to raise the incomes of the 300 million rural poor in India. So, Business Today hopes that Chidambaram will devote a substantial chunk of his Budget speech to, and reserve an equally substantial chunk of Budget rupees for, agriculture and rural infrastructure. Already, there are indications that the UPA government may announce a mega, Rs 32,000- crore debt relief package for farmers in the Union Budget. There is every likelihood of this package becoming a bottomless money sink. Why? Because most small and marginal farmers still don't have access to institutional credit and depend on local moneylenders for their needs. How the government goes about providing relief at the level of the individual farmer will determine the success of this scheme.

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Wanted: A ?New Deal? For India?S Farms ; Finance Minister P. Chidambaram Is Under Tremendous Pressure to Deliver a Budget That Keeps Everyone Happy. There Is, After All, the Small Matter of 10 State Elections Later This Year and the General Elections in 2009.

We feel the Finance Minister will be better off paying h...

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