Painkiller, not palliative

Painkiller, not palliative

Farm loan waiver

The recent announcement of loan waivers of upto Rs 2 lakh for farmers by the newly elected Congress governments in Madhya Pradesh, Chhattisgarh and Rajasthan has triggered a complex debate that is made murkier by the surround-sound of simplistic assumptions and competitive politics. The move was indeed a part of the election manifesto and Congress president Rahul Gandhi tweeted, “We asked for 10 days. We did it in 2”. The severity and desperation of farmers in the ongoing agrarian crisis ensured resonance for the loan waiver, as was evident from the voting pattern in the hinterlands.

The BJP’s counter-intuitive alternative for the farmers, like the ‘Drishti Patra’ (Vision Document) in Madhya Pradesh was perhaps too late (announced on November 17) and too layered and complicated for the farmers to decode, hence the traction for loan waiver. In 1990, the first-ever loan waiver had cost the exchequer Rs 10,000 crore; more recently, in 2017, the BJP governments in Uttar Pradesh and Maharashtra had announced loan waivers of Rs 36,000 crore and Rs 35,000 crore, respectively.

In pure economic terms, loan waivers don’t make prudent sense — besides the irrecoverable principal cost, it leads to bad credit discipline and affects future credit pricing of the eco-system. That said, governance in India can never be conducted through the cold calculus and prism of functional economics, as it requires a larger set of socio-economic, psychological and topical considerations and, in extreme cases like the current agrarian crisis, where even the survival of some are at stake, immediate alleviative measures become critical.

Whether the short-term breather needs to be in the form of a simple loan waiver or a more complex (though equally economically imprudent) scheme which essentially hurts the exchequer is a matter of semantics and irrelevance. Fact is, loan waivers are not an end in themselves, and should only buy time to initiate more fundamental and course-correcting mechanisms in the agrarian eco-system to extricate the beleaguered farmers.

NITI Aayog Vice Chairman Rajeev Kumar recently said loan waiver “is not a solution but a palliative.” However, while a loan waiver is certainly not ‘curative,’ it is also not just a ‘palliative’ for the hapless farmer, but ought to be viewed as a ‘painkiller’ necessary before inducing a more judicious surgery of reforms in our creaking agricultural sector that is in crying need of a second Green Revolution.

The MS Swaminathan Commission to identify the much-needed systemic reforms to address the agrarian crisis submitted five reports between December 2004 and October 2006, which are effectively collecting dust. The father of the first Green Revolution in the 60s had identified assured access and control over basic resources like water, electricity, credit, insurance, knowledge management, advanced climatic inputs, bio-resources, etc., yet all successive governments have allowed the situation to deteriorate to its present perilous levels.

The ‘India-Bharat’ divide ensures that the gravity of the Indian agrarian crisis does not reach urban India in adequate measure: it is believed that over three lakh farmers have committed suicide in the last 20 years due to inability to sustain themselves and their families. With 70% of the country depending on agriculture directly or indirectly, the disgruntlement, leading to exodus from the farms for menial, unskilled and desperate jobs in urban clusters, brings its own set of socio-economic, health and civic crises.

By 2022, the number of cultivators is likely to decrease to around 127 million, from 166 million in 2004. Failure of crops and resultant debt-burdens are the biggest reasons attributed for the farmers’ deaths, with the obvious bias in the
suicide numbers of the small-scale farmers who are most vulnerable to the vicious susceptibilities of the eco-system.

P Sainath warns that the agrarian crisis has reached “civilisational proportions” — the unaided farmer uprisings and protests across the country are symptomatic of the terrifying state and malaise. The harsh reality is that one bad crop or the inability to sell the output can be fatal. This led MS Swaminathan to admit that sometimes loan waivers are temporarily necessary. The gross insensitivity in simply decrying the loan waivers for farmers gets magnified when similar handouts of much larger proportions are afforded to the industry or when defaulters or frauds seek to negotiate for ‘settlement’ from across the sovereign borders.

No talk of Green Revolution 2.0

To reiterate, farm loan waivers are not the solution, but they are sometimes simply necessary in the immediate context. It is true that the phenomenon runs the risk of political one-upmanship — as all national parties have subscribed to the same. Besides the Congress promising and implementing the same, the BJP too had loan waivers in its recent manifesto for Telangana.

The real tragedy, however, is in the absence of political will or priorities to centre-stage the marginal farmer in a sustainable, systemic and fundamental way after the temporary reprieve of the loan waiver. There is almost a deafening silence on any talk or portents of the second Green Revolution.

In a country where agri-wastage is almost 30% or worth Rs 1 lakh crore, food processing is barely 10%. Similarly, the unfinished agenda of land reforms, with the opportunity to distribute ceiling-surplus and wasteland, is hardly part of the political conversation. Acknowledging the market inefficiencies, informal structures and realities is the first step towards addressing the agrarian crisis. This calls for enhanced investment in agriculture for ensuring viability, as also an effective mechanism of price support and insurance. Sadly, the agricultural investments have had the biggest decline in the last three decades, with a cut of 3.5% per annum in real terms.

Public pressure, passion and conversations have to focus on these agrarian reforms and hold the political parties accountable to a blueprint for resolving the agrarian crisis which, if unaddressed, will have devastating consequences for the nation. Loan-waiver is only a stop-gap necessity, not the entirety –- fretting over it is heartlessly convenient, insufficient and very insensitive.

(The writer is a former Lt Governor of Andaman and Nicobar Islands & Puducherry)