The Crop Insurance Election Carrot

Had our financial position not been the camouflaged bankruptcy that it now is, crop insurance would be a very proper plan for a people mostly living on agriculture and depending on the monsoons. Almost every year some part of the country suffers from drought while other parts have their expected rains. A scheme of crop insurance would be a just measure making the distribution of good and bad luck even throughout the country. Some of us (who are peasant-minded by birth) suggested a long time ago this crop insurance plan, particularly Sri K. Santhanam. But in those days the Government both at the Centre and in the States were not so bold as they are now with spending. Therefore the scheme suggested, however good theoretically, was then considered financially impracticable.

 Now during the electioneering year, when the ruling party has become distinctly nervous, and when money has become mere arithmetic, the idea of crop insurance has been mooted. It is a very good carrot for riding the donkey to the Congress poll. But, in fact, those who know what happens in the distribution of assistance to suffering peasants in the countryside know how this scheme will breed corruption and malversation on a continental scale. At all levels there will be officials and political touts operating the exploitation of this scheme, the funds for which will come from the tax-payers. The village officials, the lower revenue officials and the district administrative establishment will all be reaping a good fraction of the fund distributed. Of course the plan will depend on an enormous amount of printed money with all the inflation that it will mean.

 This election carrot will be a very costly affair for the nation. Had there been better management of our affairs these last fifteen years, this crop insurance would have been a very commendable measure for this country. But, as things stand, it will breed so much corruption and involve so much printed money, that it will be a bane instead of a boon. An honest and impartial committee of senior administrative officials would give this verdict. But political tricksters would say, “nothing like this very original offer to bring us rural votes.”

 Bribing the voters with tax-payers money present and future, putting the burden of the doles back on the poorer section of the people through higher prices for essentials has now come to be looked upon as quite respectable. But it is a despicable trick, all the same.

 As I was writing this, came the report about the New Delhi decision to devaluate the Rupee. This was a long-ago-settled consequence of the way in which the management of our affairs was going on. It is certainly a greatly disturbing and distressful measure. But it was inevitable, as the insolvency court is inevitable for the man who lives lavishly on borrowed money, hoping that it would increase his credit and that that would in turn bring him big earnings with which he could clear all liabilities. These pleasant calculations are bound to fail and take him to the court that clears off liabilities. Devaluation was inevitable and it has come. It is however not the end of the business.

 The Madras Market Fortnightly Report said (before the devaluation order):

The Planning Minister has just returned from the US to the land of limited production, industrial capacity under-utilization, and of hedges built round everything. He gets the impression and gave vent to it that this country is a beleaguered citadel. One cannot blame him. Today national income computed in terms of a deteriorating rupee has less significance than a decade ago. The main thing is to find out how many people live within their income, and how many save out of such income. The savings of the community are the country’s strength and its basic asset. If the capacity to save has been enfeebled, or indeed annihilated, among the income-earners, is it not important to create monetary and economic conditions that would restore the capacity to save? It is these savings that in the aggregate constitute the solvency of the county and will build up productive assets for the people.

 Ordinarily, Crop Insurance should have nothing much to do with a survey of economic conditions. But as the idea of offering crop insurance comes as an election carrot after conditions have matured to the crisis of devaluation of the Rupee, it is very relevant for considering whether there can be any reality in the proposal. Gigantic inflationary additions to recurring expenditure are unthinkable in the context of our devaluated rupee, our mounting Defence expenditure, and the climate of our industries.