Farm Loan Waiver

@ScribeTricky: With the Baisakhi festivity gripping the north-western states, India, still being an agrarian economy, is all set for express gratitude to the Almighty for the bountiful harvest and pray for prosperity and good times in future. Baisakhi is all set to bring political storms this time.

Recent developments in three states, viz. Uttar Pradesh, Tamil Nadu and Maharashtra have brought the debate on the waiver of farm loans back under the political limelight.

A major issue in this regard still remains unresolved that is the issue of Tamil farmers staging Dharnas and demonstrations for their “needful” demand of loan waiver. A group of farmers, all from Tamil Nadu, has been agitating in New Delhi for a complete waive off their agricultural bank loans citing highly decimated produce for consecutive years.

The almost a month-long agitation took a drastic turn when the demonstrating farmers went naked in front of the Prime Minister’s Office to putting rats in their mouth. They even sat on the road at Jantar Mantar and ate rice off the ground. What a splendid show in a country whose primary profession happens to be cultivation? And how tight the slap was on the Neta-Babu nexus that has led to a situation as pathetic as this?

Eating rice off the ground is a ritual which is observed in temples mostly. It is an act of prayer asking help from the gods. “We flourish in life from nature and now we eat from nature. We have nothing to lose. We will sit here and pray till our death,” said a protesting farmer Thyagarajan.

“Political parties are requesting us to call off our protest because of the way we agitated outside the PMO. We can’t lose hope. We will continue our agitation until our demands are met,” said Ayyakkannu, leader of the farmers.

The farmers have been living near Jantar Mantar for almost a month now. They eat, sleep and bathe at Jantar Mantar. Sick farmers have been sent back home and replaced by others coming in. The farmers, however, claim that they will not budge until the Centre adheres to their demands, which include a complete waiver of farm loans and a drought relief package of Rs 40,000 crore.

Madras High Court had earlier directed the state government to waive all farm loans accessed through cooperative banks, irrespective of the size of the farmer’s landholdings. The court took the view that this classification was arbitrary in the context of loans, and wanted the big farmers to get the write-off benefits too putting an additional burden of Rs 1980.33 crores on the state exchequer. Tamil Nadu had recently released drought relief of about Rs 2,300 crores to farmers, crediting the amount directly into their bank accounts.

Uttar Pradesh

In Uttar Pradesh, the newly-elected BJP government under CM Yogi Adityanath announced on Wednesday last that it would write-off crop loans of up to Rs 1 lakh for about 21.6 million small and marginal farmers.

Maharashtra

In Maharashtra, the Devendra Fadnavis government said it was studying the UP model to see if a similar loan waiver scheme was feasible in the state, after the Opposition vowed to continue agitations till farmers got a reprieve.

RBI’s take

Expressing his displeasure at the spate of loan waiver announcements in different states, Governor, Reserve Bank of India, Urjit Patel on Thursday last said “it would undermine an honest credit culture and impact credit discipline.”
Development economists, however, feel that as long as strong systemic changes are ushered in through which the cost of cultivation is reduced and the price for farm produce is increased, the cycle of farm loan waivers would be inevitable.

Short-term measure

Development economists feel farm loan waivers are short-term measures but are nevertheless necessary in times of severe drought or floods. However, they said that there was a deeper systemic problem that has pushed farmers strongly into the debt cycle.

A former economist at the Madras Institute of Development Studies told TrickyScribe while pleading anonymity the price for farm produce has stagnated over the years. The cost of agricultural inputs, on the contrary, have soared.  “Unless the government reduces cost of production and increases agriculture profit, farmers will remain caught in the debt cycle,” he added.

“Unless the government reduces cost of production and increases agriculture profit, farmers will remain caught in the debt cycle,” he added.What kind of Baisakhi do we expect this year? Will it be a Thanksgiving as always or will it become a mockery of the agrarians with celebs performing bhangra and gidda for Page 3 parties?

What kind of Baisakhi do we expect this year? Will it be a Thanksgiving as always or will it become a mockery of the agrarians with celebs performing bhangra and gidda for Page 3 parties?

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