In the recent past, our budget-much to the delight of many -has become less of significance and more of a ritual, a mere statement of annual accounts. Which, indeed, what it is. But this year it has become the talk of the town. This animated interest has been engendered by the Finance Minister's proposal to waive completely all agricultural loans disbursed by scheduled commercial banks, regional rural banks, and cooperative credit institutions up to March 31, 2007 to marginal farmers having landholding up to 1 hectare and small farmers of 1-2 hectares that remained overdue as on December 31, 2007 and which remained unpaid until February 29, 2008.

He has also proposed a one-time settlement scheme to other farmers whose loans are overdue on December 31, 2007 and which remained unpaid until February 29, 2008, under which a rebate of 25% will be given against payment of the balance of 75%. This Rs 60,000 cr waiver scheme has become the center of the debate. Many have dubbed it as mere palliative, for it has not touched the core of the problem. Indian agriculture, the mainstay of livelihood for 65% of the population-as the Prime Minister observed-is plagued by four deficits: "one, the public investment and credit deficit; two, the infrastructure deficit; three, the market economy deficit; and four, the knowledge deficit." He further concluded that "taken together they are responsible for the development deficit in the agrarian and rural economy." That being the reality, and there being no real attempt to bridge any of these deficits, it is no exaggeration to say that the current waiver scheme cannot really alter the plight of farmers, certainly on a sustainable basis.

Again, the scheme is meant only for the institutional borrowers, while those farmers who have borrowed from traditional moneylenders at exorbitant interest rates have to bear on as the silent sufferers of the burden of debt. It is these farmers, who-overburdened by the debt-are committing suicides, and the scheme thus means nothing to them. There is another argument, which, of course, is right: since the scheme is available only to those farmers whose landholding is not exceeding 2 hectares, it won't relieve the distress of farmers hailing from dry-land tracts-where the landholding is usually above the prescribed limit, though the yield and the resultant economic returns from such tracts are much less vis-à-vis the farms of similar size, or even of lesser size, from irrigated tracts-for they are highly vulnerable to frequent droughts and other weather-related setbacks.

The Analyst Magazine, Budget 2008-09, Commercial banks, Regional rural banks, Cooperative credit institutions, Indian economy, Indian banking sector, Income tax, Economic policy, Indian agriculture markets , Rural branch network, Indian banking sector.