Farm loan waiver: How to nip it in the bud -Naveen P Singh

-The Economic Times

Despite substantial increase in agriculture production and productivity levels over the years, farmers’ indebtedness has not changed significantly. According to the National Bank for Agriculture and Rural Development (Nabard) All India Rural Financial Inclusion Survey (Nafis) 2016-17, 52.5% of agricultural households were indebted.

Considerable efforts have been taken in channelising institutional credit to farmers and raising farm credit disbursement targets, with allocations increasing by Rs 1 lakh crore in every Union Budget over the past three years. But non-institutional credit still hovers around 40%, and the majority of small and marginal farmers rely on moneylenders.

The share of marginal and small agricultural households in total non-institutional borrowings is around 52.40%. Moreover, access to institutional borrowings increases as land size increases and vice versa. Since 2014, India has seen large-scale loan waivers as a populist device and a short-term tool addressing the plight of delinquent farmers.

Starting from waivers in Andhra Pradesh and Telangana of Rs 24,000 crore and Rs 17,000 crore, respectively in 2014, and in Tamil Nadu of Rs 6,095 crore in 2016, a wave of farm debt relief spread across states. In 2017-18, Maharashtra waived off Rs 34,000 crore of loans, Uttar Pradesh Rs 36,000 crore, Punjab Rs 10,000 crore and Karnataka Rs 8,000 crore. Most recently, the newly elected governments in Madhya Pradesh, Rajasthan and Chhattisgarh also started the process in December 2018.

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The Economic Times, 7 January, 2019, https://economictimes.indiatimes.com/news/economy/agriculture/farm-loan-waiver-how-to-nip-it-in-the-bud/articleshow/67410788.cms

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