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The Politics of Loan waiver and Plight of the Farmer

The practice of loan waivers and the politics around it are not uncommon in India. Let us confine our discussion to the recent past to drive home the point better. When the TDP in Andhra Pradesh and TRS in Telangana promised loan waiver ahead of 2014 polls, there was hue and cry in government and economic circles over its wisdom and the long term negative impact it could have on the fiscal discipline, banking system and the economy at large. The fact that they could implement it only in part is a different matter.

The issue was taken to a different dimension when Narendra Modi, after criticizing such populistic schemes vehemently took a u-turn and promised loan waiver in UP elections in 2017 and BJP’s Maharashtra Govt followed it. Both these big states promised waiver to the tune of Rs 70,000 Cr in farm loans. Punjab Karnataka, Rajasthan etc followed suit. Very recently, Congress promised loan waivers in Chattishgarh, Rajasthan and Madhya Pradesh and came to power. All these states put together promised Rs 1.9 trillion since April last year. Now, Rahul Gandhi demands a nation-wide loan waiver.

What is clear is, every party is guilty of these promises whenever it finds that it is behind its political rival in elections and all the parties consider this promise as a safe bet for winning over the farming community which is the most numerous and decisive vote bank. The fact that it has been the most common populistic promise every political party could make again and again clearly shows that it can not in anyway solve any of the problems faced by the farmers.

Farmer welfare in India has always been in slogans only right from Nehru to Modi for the very basic reason that they never tried to address the basic challenges facing Indian agriculture, but always relied on temporary balms to temporarily assuage the anger of ignorant farmers. None of the prime ministers of India right from the aristocratic Nehru to the Chaiwala Modi came from the farming community. (The very brief tenure of the ‘farmer PM’ Chowdhury Charan Singh was no better as doesn’t represent the real soul of the Indian farmer) When this dependence on the third party for understanding the farmers’ issues is perpetual, it doesn’t augur well for the country which is still predominantly agrarian atleast in terms of population and when the challenges are mounting in geometric proportion both in number and magnitude.

What is the real challenge for farming in this country? It lies in the interface of low-productive technology, unempowered farmer, unempathetic government and the relentless market forces. All the so-called policies till now have treated each of these factors in isolation and their interplay is ignored. As a result, none of the initiatives could have the desired effect. Market yards have no infrastructure to store the unsold produce. Lack of market intelligence results in either glut or severe shortage of the same produce in different months. New technologies never reach small farmers. For every one organized market mechanism, there are ten unorganized and exploitative mechanisms. Govt machinery’s callous attitude kills many innovations. Govt doesn’t care about brining climate resilience into our agriculture in spite of the devastating effect the green house effect is causing, as much as it cares to make it mandatory listening to Vajpayee’s poems in scientific meetings.

Is there any respite to the farmer’s plight? Does he have to be always at the bottom of the ladder when it comes to distribution of income in the society? Does the price escalation of the produce on year-on-year basis ever matches  atleast the increase in the cost of inputs? Will the fact that the income from the agriculture is the only income in the country showing negative growth, ever change? Is there any solution to this paradox of dwindling income for farmers and high cost of produce for the consumers? Can the tenant farmers ever be treated like the farmers in the Government’s scheme of things? In a nutshell, will the farmers’ suicides ever stop?

When the obvious answer to all the questions is a firm NO, there will always be clamour for the temporary relief. Loan waivers will continue to flourish and every party will be privy to it without exception, the only difference being in their tone when in power and out of power.

Then, doesn’t it have a negative effect on the fiscal discipline, banking and the economy? It will, just like the NPAs and the populistic Mudra loans have their effect on these parameters. Am I being pessimistic and regressive? I don’t want to be. I am ready to change my opinion, if you convince me when the farmers’ income is going to be doubled.

- Sekhar

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