Farm price, NSS loan window worry Kerala planners

Written by M Sarita Varma | Thiruvananthapuram | Updated: Dec 31 2007, 05:15am hrs
Its the crucial component of remunerative farm price that Kerala tried to place in the Draft 11th Plans inclusive growth jigsaw. While agreeing, without the habitual ideological recoil, to wear PPP (public-private participation) shoes for infrastructure, the Left Democratic Front (LDF) government is clearly uncomfortable with the Plans primary sector fineprint.

Even in its modest Rs 7,605-crore annual Plan for 2008-09, the state has lavishly pushed up its industry infrastructure outlay for PPP by Rs 100 crore. However, the cash crop-dependent Kerala is disturbed about the 11th Plans overall agricultural roadmap. The states suggestions range from micro-level issues of contract farming to poor macro-focus on using trade policy tools in insulating farm exports from currency fluctuations.

Credit flow to farmers will stop growing if remunerative crop price is not assured, says chief minister VS Achuthanandan, pointing out that the Draft forgets to mention assured prices. Minus the price guarantee, contract farming licencesshowcased in the 11th Planmay squeeze the farmer, he cautions.

The impact of weak dollar has been the hardest on farm exports, like tea, cardamom, cashew and pepper. Small units are closing, leaving people jobless. While the exchange rate and trade policy are in the Centres hands, their impact on agriculture is for the states to fend. Its the onus of Plan to address this duality, say Kerala planners.

Second, in Keralas state-specific planning arithmetic, the biggest resource-side blow has been the Centres choke on the small-savings tap. When it comes to Plan realisation in infrastructure, resource-famine is as consequential an issue as sectoral allocation, says TM Thomas Isaac, Kerala finance minister.

The Centre used to allow loan equivalent of the monthly net small savings collection so that states like Kerala relished the National Savings Scheme (NSS) as a ready credit window to feed Plan expenditure. Cash-flush outfits in the state, like the Amritanandamayi Mutt or Toddy-Workers Welfare Boardsonce potential small savings clientsare now looking the other way since the Centre tinkered with the ceiling on individual accounts. For example, the state budget estimate (2007-2008) had factored in Rs 2,700-crore NSS loans. But the NSS kitty this fiscal is likely to collect a paltry Rs 180 crore.

To cross these resource hurdles, the Planning Commission should offer some flexibility on the sources of borrowing, Kerala has urged. If resource worries are not exorcised, the familiar ghost of non-Plan expenditure eating up the states Plan expenditure may return to haunt it's development.