A V Rajwade: The more things change?

WORLD MONEY/ ...the more they remain the same. Mere changes in policy do not solve problems

I joined the State Bank of India (SBI) as a probationary officer almost exactly 47 years ago, in July 1957. SBI had then been in existence for just two years. As probationers, we were required to study the rural credit survey committee's report.

It focused on the deficiencies of the then-existing rural credit system, and recommended state take-over of the Imperial Bank in order to give a fillip to institutional- and, therefore, lower-interest-credit to agriculture. This was the genesis of the formation of SBI.

Almost half a century later, once again one of our goals is to increase the supply of credit for agriculture by 40 per cent in one year, and double it in three.

Is want of adequate institutional credit the crux of the problem? Or, as Shankar Acharya pointed out in this paper in two different articles, "The reasons [underlying the problems of agriculture] are many and include declining public investment by cash-strapped states, grossly inadequate maintenance of irrigation assets, falling water tables, decaying rural roads, unresponsive research and extension services, soil damage from excessive urea use [encouraged by high subsidies] and a distorted incentives structure which impedes diversification from foodgrains.... Loading this creaking system with politically-driven increases in credit is simply paving the way for more bad loans and more fiscal bailouts of credit institutions in future."

Nilotpal Basu of the CPI(M) argued recently about the need for "providing technical, marketing and credit support for employment-intensive sectors" in rural India. Fifty years ago,

D R Gadgil had suggested "for small farms arising out of holdings of land distribution, two sets of policies. The 'potentially viable' farms should be made viable within a short time through 'adequate policy measures in relation to credit, supply [of inputs], marketing and so on.'"

Not much change, is there? Worthy objectives, of course, but the weakness is the lack of an institutional structure to implement them. That would require an honest, wise, knowledgeable and disciplined administration. What we have is a corrupt, often ignorant, indolent and callously indifferent bureaucracy.

Is this lack of attention to implementation a general weakness of the Left? Ram Manohar Lohia, in his autobiography, attributed the failure of his party to make much political ground to his lack of focus on organisation.

Madhu Limaye wrote that for a long time, as a parliamentarian, he thought that passing laws would solve problems: it did not.

But coming back to agriculture, what has made a real change to the fortunes of innumerable rural folk after the Green Revolution? A milk revolution, not driven by Delhi, but from Kaira in Gujarat.

One reads that e-choupal may also make a big change. Again, no thanks to Delhi. As far as official policies in general go, we do not seem to have learnt much. The more the world changes, the more we seem to be where we were.

In the 1970s, George Fernandes tried the experiment of using earthen pots for serving tea in the railways. The experiment failed. Laloo Prasad Yadav is trying it out again, as also the use of khadi for railway upholstery. Presumably, earthen pots and khadi, preferably woven from homespun yarn, create more employment.

In a similar vein, jute bags are to be made compulsory for packaging sugar and grains, presumably to protect employment in that industry. I am wondering, of course, whether, one of these days, the use of stainless steel utensils would be banned.

In my childhood, the utensils were of zinc-plated brass and every few weeks the kalhaiwala used to come for re-plating. With the introduction of stainless steel, surely thousands of kalhaiwalas have lost their livelihoods.

So, banning the use of stainless steel utensils would be an employment-creation measure. But, on second thoughts, I need not worry "" unlike the jute workers, the kalhaiwalas are not organised. Are not many of these make-work measures on par with deliberately breaking windows of homes to create jobs for carpenters?

To be sure, as Keynes argued, there may be a case for make-work measures at public cost that adds to the aggregate demand, rather than merely diverts demand from one segment to another.

Subsidies are another example "" they have a few visible gainers and many more invisible losers. Maharashtra is the latest to announce free power, which will cost the exchequer Rs 1,100 crore "" no wonder NCP supremo Sharad Pawar claimed in a recent interview that, "I am against free power.

All those states that are promising free power will see the system collapsing in two years" "" and the NCP is an equal partner in the Maharashtra government.

Free power obviously benefits the better-off agriculturists, traditional supporters of the Congress and the NCP (the really poor ones do not use power in any case).

But somebody else will surely have to pay for it, whether it is crumbling infrastructure, no educational, health or water facilities in thousands of villages and so on. But these losers are not always visible, nor are they organised.

Yadav's free travel facility for unemployed youth going for interviews, gives a general licence to the younger generation to travel without paying fare! Is that the lesson we should be giving them? Why not sleepers so that they are fresh enough for the interviews?

If, in the process, the rights of fare-paying passengers are trampled, so what? Surely, it should be the interviewer, not the railways, who should meet the cost.

E-mail: avrco@vsnl.com