July 17, 2016

Kerala Budget Strengthens Petty Production

P Krishnaprasad

THE remarkable characteristic of the revised budget 2016-17 of Kerala presented by the finance minister Dr Thomas Issac is the thrust it gives to the task of modernisation of agriculture and production sector. This aspect has the potential to help the state in the long run to overcome the imminent stagnation and prolong crisis looming large on the economic and social sphere of the state in the context of the failure of neoliberal model of reforms and systemic crisis of world capitalist system.

The budget has been hailed for its emphasis on social welfare and it truly deserves so. The budget has ensured allocation for universalising rights for house sites and housing, drinking water, food security, education, health and social welfare including pension.  The special drive to overcome the financial orthodoxy of neoliberal structure by ensuring huge mobilisation of resources for capital investment from extra budgetary means – proposal of ensuring one lakh crore worth capital investment in the coming five years –has been depicted well in the budget speech. However when the state exchequer meets severe challenge in ensuring and enhancing revenue income, the finance minister has succeeded to meet the two way task of finding resources to preserving and advancing the social welfare measures and ensuring capital investment for modernising production and service sectors. 

The Gulf crisis and the limitations to overcome the protracted crash of prices of cash crops are the two issues pointed out by Dr Issac as severe challenges faced by the economy of the state. In this background, the emphasis given in the budget towards value addition for the vast resources of agro produce and also in developing market network for agriculture and industrial products, is the basic shift long awaited by the petty producers who are facing protracted pauperisation under the neoliberal reforms. And the budget depicts the path to accomplish this task by way of mobilising the petty producers through various collectives and cooperatives for production enhancement, establishing processing industries and developing market networks. This is the most fundamental contribution of the Pinarayi Vijayan government led by the Left Democratic Front in Kerala towards supporting and consolidating the pauperised peasantry and rural working class around an alternative path of development that stands against the neoliberal model of economic policies.

The budget has announced a network of seven agro parks in the state and allotted Rs 500 crore to support them. These agro parks are for the value addition of all major agriculture produces including coconut, rubber, paddy, spices, vegetables and fruits. And the budget has clearly stated that these Agro-Industrial Parks will be set up under collectives and cooperatives of farmers and petty producers to ensure value addition.  Another Rs 500 crore has been allocated to establish one Mega Food Processing Park at Wayanad which is the epicentre of peasant suicides in Kerala.  The budget has stated the importance of value addition and branding of coffee which is the major crop in Wayanad in the context of making the district carbon neutral, an important step in protection of environment and ecosystem. One of the significant steps is the allocation of Rs 10 crore to the Brahmagiri Development Society which is a pioneering social cooperative created by the government of Kerala in 1999 during the period of E K Nayanar government. The importance of Brahmagiri is that it has successfully established a state of art modern abattoir and meat processing plant of Rs 24 crore under the collective ownership of petty producers, the first of its kind in the country. This was possible with the financial assistance extended by the last LDF government in which Dr Issac was the finance minister. This way the Pinarayi Vijayan government has stood firmly with the peasants and agriculture workers by shifting the direction of economic policy of the state through its very first budget itself.  It gives immense responsibility to the organised peasant and agriculture workers movements in the direction of mobilising the petty producers under collectives and cooperatives and advance towards an alternative path of development comparatively free from market exploitation by the corporate companies.

Another important aspect is the emphasis given to build marketing networks. The budget has announced Rs 500 crore for procurement of rubber, Rs 385 crore for paddy, Rs 25 crore for coconut and Rs 25 crore for vegetables . Rs 10 crore has been allotted for Kerala Agriculture Market Project. In the same way, greater emphasis has been given to marketing of traditional industrial products. The price stabilisation fund for coir which was Rs 17 crore last year has been enhanced to Rs 100 crore. Another Rs 31 crore has been allotted for textiles and Rs 100 crore for modernising cashew nut factories. The concept of linking food security with marketing and allocating Rs 300 crore for modernising ration shops by transforming to multi-store retail networks with subsidised price is an important step in this direction. All these impressive financial allocations could pave way for facilitating sound market support for petty producers and industrial cooperatives and public sector units.

The budget has given maximum attention for sensitive sectors of production. In agriculture, the actual spending last year under the UDF government was Rs 307 crore and now in this budget, the allocation is Rs 600 crore, just the double.  Apart from this Rs 217 crore as central assistance and almost equal amount of the state allocation from local self government institutions make a substantial amount for agriculture. Animal husbandry and diary also got impressive allocation to the tune of Rs 383 crore. The substantial enhancement is Rs 468 crore for fisheries which was Rs 147 crore last year. Rs 200 crore has been allotted to Kudumbasree and the government will ensure credit at four percent interest for Kudumbasree enterprises.      

The allocation for irrigation is Rs 307 crore out of which Rs 130 crore is for small scale projects. Rs 100 crore has been allocated for one of the longstanding demand of the farmers for protection of crops and lives from wild animal attacks. This amount is specifically to effectively separate forest from revenue land so that wild animals cannot enter agriculture fields and residential areas. Another important step is the higher allocation and innovative projects envisaged in the budget for SC/ST development.

The All India Kisan Sabha had prepared and submitted a note to the chief minister and finance minister regarding the significance of the Left Democratic Front government in Kerala which offers the following observations. “The first communist government of 1957 headed by Comrade EMS was successful to enact the radical Kerala Land Reforms Act that helped to eliminate the feudal ownership over land and to distribute land to tillers. Thus the exploitation in the form of land rent either in cash or kind over lease land has been eliminated.  However, apart from land reforms, the remaining components of agrarian reform were not addressed comprehensively so far. In this context, the capitalist social forces have tightened their grip over sectors like procurement, agro processing, manufacturing of value added products and marketing of consumer products apart from input output manufacturing and marketing. Under capitalist system, the central form of exploitation thus has been shifted from land rent to price of commodities in the market and the peasantry is facing acute pauperisation.  Hence the topmost priority of the new LDF government led by Comrade Pinarayi Vijayan needs to be advancing the unfinished task of agrarian reforms for successful accomplishment of modernisation of agriculture by resisting and eliminating the dominance of corporate capital mainly over agro processing and marketing”. 

“In the above direction, there is vast potential for developing modern food processing industry in Kerala which could serve the purpose of both protection of petty production and ensure modern industrialisation to ensure large scale employment generation and enhancement of per capita income. And the existing relationship in production in agriculture, industry and services needs to be altered and reorganised radically in favour of petty producers, workers and non-monopoly entrepreneurs”.

Now through its first budget, the LDF government has succeeded to take the important step to translate the above concept into reality. Hence the peasant movement all over the country will be benefitted and this gives high responsibility to the peasant and agriculture workers movements in Kerala to rally the agrarian masses behind these pro farmer initiatives and ensure bringing material progress in the life of petty producers and rural working class. This will ensure strengthening the class struggle to overcome the acute agrarian crisis and fight the neoliberal forces all over the country.