JOIN USWhy this double standard?
A few days after Cafe Coffee Day founder V G Siddhartha reportedly ended his life, five farmers attempted suicide consuming pesticide in the office of the district collector of Akola in Maharashtra. They were demanding speedy compensation for their acquired land. Almost at the same time, another farmer who had been sitting on a dharna in Haryana for the past four months died. He was protesting for a higher compensation for his land acquired by the state government.
While the death and attempted suicide by these farmers has largely gone unnoticed, a huge uproar by the industry had occupied the media space following the circumstances leading to the tragic death of the ‘coffee king’. Most industry captains linked his death to the ‘tax terrorism’ that prevails and, knowing that the investment climate remains subdued, sought more investments, tax concessions and, of course, wanted tax freedom. Many business journalists and columnists echoed the industry sentiments without even caring to find out that Siddhartha carried a massive debt burden, which at some stage had peaked at Rs 11,000 crore.
Nevertheless, while the industry may have genuine economic reasons for seeking more sops, including an economic stimulus package to tide over the continuing slowdown, the continuing spiral death dance on the farm did not evoke even an iota of concern, forget about any response in the media.
If the late Siddhartha was an entrepreneur who needed support in his difficult times, the fact that is not being acknowledged is that farmers, too, are entrepreneurs and given the state of distress that prevails all around are perhaps in dire need of handholding. If only these farmers had got the right amount of compensation and in time, they too could have unleashed their entrepreneurial skills. But an opportunity denied, is opportunity lost.
At a time when the industry is already getting an economic stimulus package of Rs 1.8 lakh crore every year, which has continued to pour in since the global economic meltdown in 2008-9, the nationalised banks stare at massive stressed loans of Rs 17 lakh crore, including roughly Rs 10 lakh crore of non-performing assets (NPAs).
In other words, the industry has received Rs 18 lakh crore in the past 10 years by way of an economic package, and still remains deep in crisis. Further, newspaper reports quoting the Reserve Bank of India (RBI) statistics say that almost Rs 8.36 lakh crore of bad debts have been written-off in the past 12 years, between fiscal 2007 and 2019. It’s time to see whether the slowdown is the reason for the slackening performance of the industry, manufacturing sector and exports or whether the huge bank defaults have led to an economic slowdown.
Between fiscal 2007 and 2016, the total amount written off by banks stood at Rs 2.88 lakh crore. But post-2016, huge amounts have been written off in quick succession — Rs 1.33 lakh crore in 2016-17; Rs 1.61 lakh crore in 2017-18, and a record Rs 2.54 lakh crore in 2018-19 —sucking the banks dry. Whatever be the reasons, the fact that the RBI is reluctant to make public the names of over 9,000 wilful defaulters is clearly an indication that the write-offs hide much.
Although the government appears keen to launch a clean-up process, and the introduction of an Insolvency and Bankruptcy code (IBC) in 2016 was considered to be one of the strong approaches to curb the menace, the efforts to dilute the regulations have certainly hit at the possibilities. At a time when the industry receives huge tax concessions ever year, as much as 5% of GDP according to Niti Aayog, there is no justification for the industry to cry hoarse when the tax sleuths come knocking.
Treated like criminals
Now contrast this with how the system works for farmers. Over the years, hundreds of farmers have been publicly humiliated and thrown behind bars for defaulting banks. While lakhs of crores are being written off for the industry, unable to pay even one bank instalment lands farmers in jail. The banks first confiscate his movable and immovable properties, and when the farmer is still unable to pay an outstanding instalment, the banks deposit blank cheques taken from farmers at the time of extending the loan, which converts the civil case into criminal.
Farmers are then sent to jail, with orders to pay back the original amount plus the interest on it. If only the farmers could pay the instalment, I don’t understand why he would have defaulted in the first place. And, when some state governments waived farmer’s bad loans, up to a maximum of Rs 2 lakh for small farmers, economists and economic writers are up in arms warning that the fiscal deficit will hit the roof. But when banks quietly write off corporate loans, I have never seen any mention of fiscal deficit widening and the question of where the money will come from.
For several years now, enough pointers were available indicating a slowdown in the economy. Farm incomes have plummeted to the lowest in 15 years, and some studies have shown that even rural jobs were badly hit. Accordingly, 32 million casual labourers in rural areas lost their jobs between 2011-12 and 2017-18.
Roughly 30 million of them were farm workers. But the bigger tragedy is that policymakers ignored the loud warnings emanating from distressed agriculture and only woke up when cars and automobile sales dipped for months together, cutting tens of thousands of jobs, and when FMCG sales, too, failed to show any growth. The answer therefore lies in revitalising agriculture, pumping in more money into a sector that promises to provide millions of livelihoods, and in the process create more domestic demand.
(The writer is a farm economy expert)