Nainital, September 24
Finance Minister P. Chidambaram’s rigid attitude and dismissive response to their suggestions on rural credit has left Congress Chief Ministers and party functionaries fuming.
The disconnect between the party and the government, and between the Centre and the states came to the fore during the day-long deliberations which followed Congress president Sonia Gandhi and Prime Minister Manmohan Singh’s opening speeches at the Chief Ministers’ conclave yesterday.
If the Chief Ministers crossed swords with Mr Chidambaram on the issue of rural credit, they clashed with party functionaries during a heated discussion on special economic zones (SEZs). The Prime Minister, too, became defensive when party functionaries questioned him on the status of free trade agreements (FTAs) with ASEAN countries. Dr Manmohan Singh hurriedly explained that India had only signed an FTA with Singapore and it had no agricultural component.
The Chief Ministers, giving a graphic account of the problems in the agriculture sector in their states, also sought several concessions from the Centre, ranging from a one-time loan waiver for debt-ridden farmers to a bail-out package for cooperative banks.
Party insiders said Mr Chidambaram rejected their demands, repeatedly asserting that the Chief Ministers should take responsibility since agriculture was a state subject. This drew an exasperated response from Haryana Chief Minister Bhupinder Singh Hooda, who proclaimed loudly, “In that case, why have we been called here?”
Indeed, the Chief Ministers targeted the Finance Minister, saying that the Centre’s decision to reduce the farm interest rate to 7 per cent, announced with great fanfare in his Budget speech, was not being implemented on the ground.
Mr Chidambaram’s explanation that this offer was
limited to nationalised banks and regional rural banks drew a sharp reaction from the Chief Ministers who want this facility extended to cooperative banks since they have a wide network in rural areas. They also wanted the Vaidyanathan report, which has recommended that cooperative banks’ non-performing assets be waived, to be implemented.
The Finance Minister rejected this outright, saying that since cooperative banks were controlled by the states, not the Centre, “they are your banks, you control them”. Mr Chidambaram, however, is pushing for greater RBI control over cooperative banks, something being resisted by the states.
Most of yesterday’s discussions on agriculture focused on rural credit as indebtedness has been identified as one of the major reasons driving farmers to suicide. Several Chief Ministers, including those of Punjab and Haryana, wanted these loans to be waived. Mr S.S. Surjewala, head of the AICC’s kisan cell, wanted the Centre to enact a comprehensive law on agricultural credit and suggested that the Money Lending Act be made more effective as private money lenders were responsible for over 50 per cent of the total rural credit.
There was an equally heated discussion on SEZs with AICC general secretaries Digvijay Singh, Margaret Alva and Ashok Gehlot objecting strongly to these projects. They stressed that farmers were not being compensated adequately for the prime agricultural land being acquired.
They even accused the Chief Ministers of misusing the scheme, making it a conduit for black money. They questioned Mr Hooda on the location of the SEZ near Gurgaon and Capt Amarinder Singh on why fertile agricultural land was being acquired for SEZs. The latter explained that this was because barren land in Punjab was scarce, and jobs had to be created in the industry as agriculture was no longer a viable vocation.
Mr Jairam Ramesh, Minister of State for Commerce, too, faced flak for the low import duty on cotton which had resulted in Chinese cotton flooding the market. His explanation that these imports were not hurting the domestic market since it was of inferior quality did not cut much ice. Mr Ramesh agreed to look into the matter only after the Prime Minister interjected.
