Lifelines beyond farm loan waivers -Kirankumar Vissa

-The Hindu

In addition to reforming the credit system, agriculture should be made profitable

Rural agrarian distress is firmly at the centre of the national discourse today, triggered by the recent Assembly election results in the Hindi heartland as well as continuous farmer agitations in the past two years (picture). Just a month ago, the farmers’ march in Delhi highlighted the reality of their deprivation, anger and resolve. Quite remarkably, their presence rallied the urban middle classes to march in solidarity, and leaders of major political parties to pledge support.

Cry of distress

A farm loan waiver was among the first steps taken by the three new governments in Rajasthan, Madhya Pradesh and Chhattisgarh, and has understandably set off a debate about its usefulness. In fact, this is only the latest round of loan waivers. Since 2014, there have been similar moves in Telangana, Karnataka, Andhra Pradesh, Maharashtra, Uttar Pradesh and Punjab, which are States run by various parties. The political system is essentially responding to a cry of distress by addressing the direct point of pain. It is their mounting debt burden that is pushing farmers to despair and suicides. The NSSO Situation Assessment Survey of Agricultural Households (2013) shows that 52% of farming households are indebted, with rates as high as 89-92% in some States. The quantum of debt has increased enormously, especially from informal sources. Indebtedness has become the elephant in the room that cannot be ignored.

A loan waiver is only an element of immediate relief. It is an acknowledgment that farmers have been pushed into debt due to the systemic failures of the government. The burden on farmers on account of just three items (lack of compensation during drought and disasters, the failures of the crop insurance scheme, and the deficit due to prices falling below the announced Minimum Support Prices) runs to tens of thousands of crores every season. Farmer organisations can justifiably claim that it is the nation that is indebted to the farmers, and not the other way around.

Bill to tackle indebtedness

But the key questions are: how can one ensure that its benefit reaches small and marginal cultivators who are the ones who really require relief? And how does one guarantee that the same situation is not replayed five years later? Repeated loan waivers used every few years as election sops may be in the interest of political parties but are not in the interest of farmers. Immediate relief should be accompanied by a long-term systemic solution to indebtedness.

The unique aspect of the ongoing farmers’ movement is that their demand goes beyond a one-time loan waiver — they want enactment of a law for freedom from indebtedness. The Bill, which has been developed by the All India Kisan Sangharsh Coordination Committee, incorporates two key elements of reform: a functional institutional credit system which is accessible and accountable to all cultivators, and protection from debt trap in bad years.

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The Hindu Business Line, 31 December, 2018, https://www.thehindu.com/opinion/op-ed/lifelines-beyond-farm-loan-waivers/article25866797.ece?homepage=true

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