Farm loan waiver: relentless protests force Raje's hand

Rajasthan has become the third BJP-ruled state, after Maharashtra and Uttar Pradesh, to waive farm loans. The government made the loan waiver announcement late on September 13 after reaching an agreement with farmers who had been agitating since September 1.

Thirteen days of unrelenting but non-violent protests, road blockades and show of resilience forced the Vasundhara Raje-led Rajasthan government to agree to some key demands made by farmers in the desert state. The agitating farmers had put forth a list of 11 demands. They included a complete farm loan waiver, implementation of the recommendations of the M S Swaminathan Commission, the withdrawal of the 2017 ban on cattle trade, a solution to the menace of stray cattle, and a pension for farmers.

The Rajasthan government has agreed to a few demands, but will first form a high-level committee to execute the solutions and to study the loan waiver process in other states. It agreed to write to the central government, recommending the implementation of the Swaminathan Commission report. Moreover, the government also agreed to the other demands of farmers, including the purchase of crops at increased minimum support price (MSP), increasing farmers’ pension from Rs 500 to Rs 5,000, removing the ban on the sale of cattle imposed by the state government.

Agriculture minister Prabhulal Saini confirmed, “We have agreed to waive loans up to Rs 50,000 for farmers. A high-level team will consult stakeholders in other states and chart out the process of loan waiver and its impact in Rajasthan. We have also issued notification for a bonus of Rs 200 for four crops — soybean, groundnut, moong and urad — besides agreeing to the demand for increasing the MSP”.

Kisan Mahasabha, an affiliate of the CPI (M), led the farmers’ protests in 14 districts of the state, including Sikar, Jhunjhunu, Churu, Sriganganagar, Hanumangarh and Bikaner. Amra Ram, national president of the All-India Kisan Sabha and a former MLA of the CPI (M), was at the forefront of the farmers’ agitation in the state. “It is a historic victory. It was also decided to reduce the ban on sale of calves from three years to two years. We are hopeful that the committee (on loan waivers) will submit its report soon,” Amra Ram told DH.

Even before the CPI(M) sat on dharna, the Congress had left no stone unturned to bring the ruling BJP down. State Congress president Sachin Pilot called the ruling party “anti-farmer” and criticised CM Raje for not speaking a word when around 20 cases of farmers suicide in the state were reported from all over the Rajasthan in the summer of 2017. The anguish of the voters could be seen in recent by-elections to the Panchayati Raj institutions in Rajasthan in which the opposition Congress won 12 out of 24 seats.

But after the Raje government bowed to the farmers’ demands, suddenly his stature has risen in Rajasthan. This is not the first time farmers have staged protests in Rajasthan. Despite the fact that the movement gained little attention in the national media, its impact is visible. The loan waiver will certainly have its effect on the economic and political front in the state.

However, it is also undeniable that this is mainly a Jat-led agitation as farming is the main occupation of Jats in Rajasthan. Although the rhetoric at a Communist peasant gathering is politically correct, there is a caste underpinning to it. In a way, it is an early bugle call that the game of politicking in India’s largest state by area has begun.

Ahead of the 2018 Assembly polls, the farm loan waiver promised by the BJP is going to change the dynamics of voting as 70% of the voters in the desert state are farmers. With the success of this agitation, the stature of the CPI(M), which first made its presence felt in Rajasthan in 1969, has risen. Its first agitation was for the lands irrigated by the Indira Gandhi Canal to be redistributed to the landless. In the 2008 Assembly elections, the CPI(M) managed to win three seats in the state. However, in the 2013 Assembly election, the BJP won 165 seats out of 200 and the CPI(M) did not win even one.

As per the political analyst Ashfaque Kayamkhani, who is based in the Shekhawati region, “Despite the CPI(M) not having political power, the area has supported the party for long as a party headed mostly by Jats. The Shekhawati region is dominated by Jats, and Jat farmers of Sikar get attracted to the CPI(M) even as the BJP and Congress neglect them.”

Economic factor

In its policy statement last month, the Reserve Bank of India pointed out that implementing farm loan waivers across states comes at the risk of inflation and fiscal slippage. In Rajasthan, farmers were demanding waiver of all loans, amounting to Rs 49,500 crore, but the government was adamant that as per records, the loans amounted to only Rs 19,700 crore.

As per the agreement, farm loans up to Rs 50,000 would be written off, putting an additional burden of Rs 19,700 crore on the Vasundhara Raje government. The farm loan waivers announced by UP Chief Minister Yogi Adityanath and his Maharashtra counterpart Devendra Fadnavis cost the two state governments Rs 36,000 crore and Rs 34,000 crore respectively.

Experts on agricultural policy say that the BJP government had no option but to accept the demands of the farmers, “They had no option as the pressure was building up on the BJP in Rajasthan. But in the long term, the move is not good for even the farmers. It can lead to a serious handicap for the state government, which does not have the resources to pay for the waiver. The Raje government has to obtain a loan, or else cut several welfare schemes and downsize developmental schemes,” V S Vyas, a former member of the Prime Minister’s Economic Advisory Council, said.

When governments waive loans to keep farmers happy, the axe usually falls on tax-payers.