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Farm loan waiver

जागरण संपादकीय ब्लॉग
जागरण संपादकीय ब्लॉग
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The issue of debt waiver for farmers has been a central topic of discussion. The spate of loan waiver announcements after the recent assembly elections, though hardly unexpected given the state of our polity, has further polarized public opinion on a subject where convergence between diverse social segments has always been a holy grail.

Indian society is varied and stratified, perhaps far more than any other country. The urban educated section is almost universally aggrieved by what is believed and quite fairly so, a flagrant populist measure of writing off farm loans by various governments. One cannot question the merit of the argument that such actions are financially onerous and fiscally imprudent. To set aside debts amounting to astronomical sums running into hundreds of thousands of crores drains the exchequer, jeopardizes the banks, cripples the economy and sets an unfair reference point.

I tend to draw an analogy with what the judiciary had once opined with regard the voluntary disclosure scheme relating to direct tax. The honorable Supreme Court had expressed that an honest taxpayer felt cheated and hence imposed reasonable restrictions on the executive to formulate amnesty schemes. In times of blanket sweeping debt waivers, please spare a thought for the farmer who had repaid or even someone who had not availed the credit facility! Is he not entitled to begrudge the subsequent sops being doled? If we expand our ambit of compassion, bank debtors from different spheres shall qualify who can cite their respective constraints to deserve an equitable consideration. Whether or not their case is as plausible as the agriculturists, can we still fault them for expecting a similar concession or carping in the event of denial? Unfortunately most of them can only cavil for there hardly exists a pressure group as formidable as the farmers. We all know electoral politics draws life from numbers.

Well a fundamental hypothesis will prima facie question or rather rubbish the idea of farm loan waiver. However, the devil as we know lies in the detail. There are primary issues affecting agriculture that remain unaddressed. Why have farmers reached a point where they face an existential crisis? It is undeniable that agriculturists today are mired in a debt trap and it is the unviability of their occupation that has pushed them into this morass. Loan waiver may not be the remedy as has been the past experience where at immense cost to all other elements, gains even for the beneficiary have at best been short lived. Be that as it may, it is high time that problems of agriculture and agriculturists are alleviated.

The difficulties are chronic and challenges daunting. Agriculture engages about 60% of the Indian population while contributing around 16% of the GDP. Now if we factor in the size of our population, nowhere in the world is such a mammoth number dependent on agriculture for subsistence. It is inherently not feasible. Alternative employment alone can wean of population from agriculture so as to reduce the burden. For all the talk of economic might, GDP growth, the factual situation is that sufficient jobs have not been created. Employment remains one of the foremost concerns in our society. Rural development models need to be reexamined. Lets not equate development with urbanization alone and the concomitant exodus from villages into cities, which entails its own hazards. People have to be gainfully engaged in their domicile.

Another often mentioned worry is the realizable value of the produce. Despite the assurance of the minimum support price at 50% above the cost, the troubles are far from allayed. The cost computation remains contested and the ground reality of farmers being coerced by circumstances to sell at below the MSP is not lost out on anyone. The much vaunted crop insurance scheme is also being decried. The elementary problem though is of the difference between the farm price and the consumer price that is often day and night. The intermediaries still hold sway.

Besides there remain chronic deficiencies in the agriculture framework. Transportation, warehousing, cold chain facilities are yet to evolve to levels required. Planned cropping and productivity enhancement are perhaps perpetual endeavors and remain a work in progress.

Can the alternative to loan waiver be some kind of subsidy in the form of direct benefit transfer or state guaranteed crop price or input cost concession? At concept level such measures assume a similar financial cost as the debt waiver. These can be temporary interventions in times of extreme exigency or distress but cannot possibly be a sustainable support tool. As dispassionate as it may seem, in a free liberal democracy, eventually the principle of laissez faire has to apply, yes even to agriculture. However it is incumbent upon the state to initiate and implement effectively and efficiently the requisite structural and institutional reforms. The executive cannot derelict its responsibility of making agriculture financially profitable for the farmers. If it remains a loss-making proposition then as in any commercial activity, losses will only be financed by debt and in case of continued unviability, recovery of such debt will be the first casualty. All related government policy including the import and export of farm produce has to be calibrated bearing in mind the viability of our agricultural sector.

In a federal structure as ours, notwithstanding the status of agriculture as a concurrent subject, political outfits of all hues should perhaps consider formulating a national policy on farming. It will be futile to indulge in a UPA/NDA, Congress/BJP, and Manmohan/Modi debate. The problems are chronic and ascribable to decades of oversight. There possibly can be no shortcuts and solutions certainly don’t lie in broad based loan waivers. The huge sums of money can be better deployed to bring about far reaching improvements.

Urban distress and rural angst are the twin challenges for the executive. The numbers of people afflicted are so large that from the perspective of social harmony and stability, immediate redress is essential. They say that worse than helplessness is hopelessness. The state needs to act before the farmers plunge into the latter.

 

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