As announcements go, there was little by way of surprise which greeted Finance Minister P Chidambaram's loan-waive announcement for small and marginal farmers. Given the orchestrated meetings of farmer's delegations with Sonia Gandhi and the Prime Minister over much of last week, any non-announcement would have given the Opposition a lovely handle to beat the UPA Government with.

Yet, there were a few things about the Budget that were a little out of the ordinary. First, the amount involved -- a total of Rs 60,000 crore -- was mind boggling. It was, in fact, double the amount that was expected. Considering that productive schemes, such as the Bharat Nirman programme, received Rs 31,280 crore and the National Highway programme got just Rs 12,966 crore, the quantum of the election sop seems disproportionate.

Second, the unconcealed glee of the Treasury benches on hearing the announcement told its own story. With taunts of "kulak" and "feudal" being hurled at the Opposition, it seemed a throwback to the bad old days of Indira Gandhi's socialism. The Congress MPs in particular seemed to imagine that this Rs 60,000 crore election expenditure has guaranteed the party another five years in power.

Finally, amid the excitement over the loan waiver announcement, what seemed to have got buried was the quiet, indeed surreptitious, phasing out of the ill-advised and wasteful National Rural Employment Guarantee Programme (NREGP). On paper, the scope of NREGP was doubled from 300 districts to 596 districts -- and it was preceded the day before by Rahul Gandhi demanding that its implementation be entrusted to the Centre. Yet, the amount sanctioned for the guaranteed 100 days of work for every citizen who asked for it went up from Rs 12,000 crore to Rs 16,000. The message was clear: There is no electoral benefit from this ill-conceived programme and it is best to shelve it without attracting too much attention.

It is still early days to judge the impact of the loan waiver scheme on the Congress' poll fortunes. That this relief measure is unlikely to address the roots of the crisis in agriculture is, of course, well known. It is also likely to be followed by considerable heartburn once it becomes known that private loans from the village mahajan are not included in the amnesty, and that the middling farmers will get a waiver if they pay off 75 per cent of their dues. In creating a massive hype and dressing up Chidambaram as Santa Claus in dhoti, the UPA may find that it may yet fall a victim to unrealisable expectation -- exactly what has happened to it with the Sachar Committee Report.

The Budget is bad news for India. The Government has enjoyed the luxury of profligate spending -- remember the Sixth Pay Commission Report, due this month, is going to throw public finances into a bigger mess -- because Indian entrepreneurship has flowered, because middle class Indians have worked harder and paid more taxes and because the state has got off people's backs. Imagine if the Rs 1,000 crore or so of wasteful expenditure in the Budget had been wisely and honestly invested in bridging India's infrastructural deficiency. It's the opportunity costs of reckless populism that India will rue.

There is a cruel truth that the entire political class has been running away from. Agriculture, it is clear, can no longer sustain such a large number of people. Its share of the GDP has been falling progressively but the number of people dependent on it hasn't fallen proportionately. The challenge before India is to organise a humane transfer of people's dependency from agriculture to other sectors. The priority is to boost the expansion in manufacturing and services to facilitate this transition. Simultaneously, there is need to do away with laws that prevent the consolidation of land holdings.

Chidambaram was right in saying that the nation owes a debt of gratitude to the Indian farmer. It is hardly befitting to show gratitude by running away from reality and turning a proud community into free loaders.

Courtesy: www.dailypioneer.com, March03, 2008