Communist Party of India (Marxist)

19^th Congress

Anil Biswas Nagar

Coimbatore

March 29 to April 3, 2008

Resolution Adopted at the XIX Congress

On the Agrarian Crisis on March 30, 2008

This XIX Congress of the CPI(M) draws attention to the all-round socio-economic crisis of the Indian countryside. It is a crisis of production and productivity, of incomes, employment and food security, and of the maintenance of basic living standards among the people. The most tragic manifestations of the rural crisis are, of course, destitution, starvation deaths, and the phenomenon of suicide by more than 160,000 farmers in the last decade.

Solve the debt crisis

The debt waiver scheme announced in the Budget, though welcome, is grossly inadequate in the context of the severe debt crisis  faced by farmers and the rural poor,  a crisis caused by financial liberalization policies since 1991. Although the UPA Government has claimed that rural credit has more than doubled since it took over, it admits that the large majority of farmers are outside the formal banking system. The increase has benefited mainly large landholders, corporations and companies. The hold of moneylenders and merchants on the credit system has tightened. Instead of reversing the policy of closure of rural branches of public sector banks -- thousands closed between 1993 and 2006 -- the Economic Survey 2008 has made the most dangerous proposal that private and foreign banks with 100 per cent FDI be permitted to start operations in rural India. It hardly needs to be said that such profit-motivated operations will be free of social obligations and will further snare farmers in the debt trap. The XIX Congress strongly opposes such a proposal.

The XIX Congress demands the re-establishment of social and development banking as official policy; the extension of the rural banking system by opening more rural branches; specific targets for credit supply to small and marginal farmers and the rural poor; the reduction of interest rates on loans to the peasantry and rural working people to 4 per cent per annum; the removal of inadequacies in the debt-waiver scheme announced in the Union Budget 2008-09 by raising the ceilings on landownership for eligible households and including informal-sector loans in the waiver; and the waiver of loans taken by landless agricultural labourers as part of the debt-waiver scheme. The waiver of loans should be upto February 29, 2008 on the day the scheme was announced. 

In the context of widespread crop damage, low yields and the ruin of vulnerable cultivators, the Farm Income Insurance Scheme should be implemented rapidly in all disaster areas and subsequently be extended to all districts of the country and to all crops.

Expand  and increase MSP; Control input costs

The XIX Congress notes with concern the  cuts in agricultural subsidies as well as the steep rise in the costs of cultivation, including huge increases in the cost of seed, fertilizer, irrigation, water, electricity, diesel and farm machinery. On the other side, the fall and wide fluctuations in output prices, intensified by the lifting of quantitative import restrictions, has affected a wide range of food and non-food crops. Minimum Support Prices (MSP), though raised as in the case of wheat, have not compensated for the actual costs of production per unit of output for most crops in a majority of States.

The XIX Congress demands that the Government immediately announce higher procurement prices, linked to the costs of cultivation, for paddy and other farm output. It demands that the system of MSP cover all 26 crops covered by the Commission on Agricultural Costs and Prices; that the Government ensure that the costs of all inputs are controlled; that the Government reverse the abolition of quantitative restrictions and raise tariffs on the import of agricultural and agriculture-related products.

Increase  public investment in agriculture,

 rural development and infrastructure

The XIX Congress expresses deep concern at the shocking decrease in the growth rates in agriculture to 2.5 per cent per annum. A major cause is the decline in public investment in agriculture, which intensified over the early phase of economic reforms and in the period of the NDA government. Public sector gross fixed capital formation in agriculture as a proportion of agricultural GDP fell from about 5 per cent in 1979-80 to about 1.5 per cent by the end of 1990s. After the formation of the UPA government, there was a small revival in public investment in agriculture, and by 2005-06 it was about 3 per cent of agricultural GDP (and about 0.54 per cent of total GDP).

Current levels of investment, however, are clearly inadequate. It is estimated that the additional financial requirements for implementing the recommendations of the Swaminathan Commission for rural investment are of the order of 3 per cent of GDP. This is an essential investment in the country's present and future. Although the Government has adopted the National Policy on Farmers, it has neither provided for adequate financial allocations towards these interventions nor committed itself to a schedule for implementation.

The XIX Congress demands that government increase its allocations to agriculture to ensure implementation of the recommendations of the Swaminathan Commission for expansion of infrastructure and extension services and calls upon its Party units to launch struggles on these demands.