Rooted in logic

The cynical way to consider the recent generous hand-outs for India's vast agro-rural sector is to suggest that they are being done with an eye to early elections.

There is little doubt that this is true. But a closer look will reveal that there is lot more to the incentives and packages than just electoral politics. Indeed, some of the measures are reform-oriented and ought to have been taken long ago.

Tuesday's announcement allowing the private sector to procure foodgrain for export directly from the market at official support prices would be a case in point.

So can the permission granted to the Food Corporation of India (FCI), the official foodgrain procurement agency, to tap the capital markets to raise funds at cheaper rates and force the banks to reduce the unreasonably high interest it charges on food credit. These are all logical decisions.

There is little justification in alienating the private trade from the foodgrain market or in allowing the banks to fleece the FCI and, in turn, the exchequer by charging interest rates that are higher than the market-determined rate.

The higher cost of food credit is ultimately reflected in the food subsidy that the government bears, so the saving on this count will be substantial.

Several of the other announcements also appear to be well-conceived measures to speed up modernisation in the farm sector, especially with the induction of modern technology, including information technology.

The launching of call centres for farmers and agricultural channels on the Doordarshan and the tele-network of the Indira Gandhi National Open University (IGNOU) can be counted among them.

Other similar moves include proposals for setting up more Krishi Vigyan Kendras (agricultural science centres) and e-linking soil and water testing facilities.

What is significant here is that these are measures that ensure substantial and far-reaching benefits at relatively low cost.

Of course, as in all pre-electoral hand-outs, there are elements of the package that could be considered either populist or downright utopian.

The creation of a Rs 50,000-crore Agricultural Infrastructure and Credit Fund (AICF), announced in the first of the 'mini-Budget series' on January 9, could easily count among them.

So could the Rs 12,390 crore scheme for providing urban facilities in rural areas. Both proposals are difficult, if not impossible, to implement.

For a start, it is hard to understand where the large sums of money they require will materialise. But in themselves, these schemes cannot be considered harmful "" even if they do not work out, as they probably will not, the rural sector does not really stand to lose anything.

On the contrary, it has everything to gain from the whole exercise. What is even more noteworthy is that this process is still underway and, going by agriculture minister Rajnath Singh's pronouncements, more farmer-friendly measures are in the offing.

Given the vast challenges that Indian agriculture faces in the new world trading order, a greater effort towards reducing its structural deficiencies can only be considered a good thing "" elections or no elections.