Business Today

Farm loan waivers: Why it won't end the long-standing Indian agrarian crisis

Can waiving loans solve the larger agricultural crisis that have plunged the farmers into despair?

twitter-logoDiksha Ramesh | May 3, 2018 | Updated 12:11 IST
Farm loan waivers: Why it won't end the long-standing Indian agrarian crisis

After Uttar Pradesh (UP) and Maharashtra, Punjab has emerged as the third state in India to waiver farm loans, a move that will benefit 10.25 lakh farmers, double the relief provided by the other two states.

However, can waiving loans solve the larger agricultural crisis that have plunged the farmers into despair?

Amid the Tamil Nadu farmers protest in Delhi, rural affairs expert and founder editor of PARI (People's Archive of Rural India) P. Sainath spoke to Rajdeep Sardesai on 'News Today' aptly stating the that trying to solve farmer suicides without considering the larger agrarian crisis is like trying to mop the floor with all the taps open and running.

Breaking down the agricultural crisis

To understand why the farm loan waivers are not a permanent solution, it is imperative to grasp the magnitude of today's agricultural state in India.

According to NSSO's 70th round Agricultural Census (2013-2014), among the estimated 90.2 million agricultural rural households, over 50 per cent suffer from severe debt and outstanding loans that translates to nearly Rs 42,000 per household.

While bankruptcy and indebtedness were the leading reason for farmer suicides in 2013-14, farming-related issues such as crop failure and inability to sell produce, family problems, illness and drug/alcohol abuse kill 3,667 cultivators - a number greater the 3,097 deaths due to lack of finance, says the NSSO report.

Farming - once a backbone of the Indian economy - is now simply a loss making business for farmers.

As per the NSSO data in 2013-14, Rs 6,426 was the average monthly income per agriculture household out of which 52 per cent is generated from non-farming activities like animal husbandry, wages and salaries and other business.

ALSO READ: Why it will take more than loan waivers to save farmers from debt trap

For smaller farmers, who completely depend on cultivation, the scenario was much worse. Their expenditure overran their income.

NSSO shows that farmers with 4-10 hectares of land easily made an income that was double their expenditure. However, farmers with less than 1 hectare perpetually lost money due the costs of production.

MP faces MSP trouble  

In the state of Madhya Pradesh, that witnessed violence between farmers and cops in the first week of June, the main reason for protest was due to a glut in production and no announcement of minimum support price (MSP) for onions and potatoes.

The issue of MSP spills into other states as well.

In Telangana and Andhra Pradesh, red chilies that should have a MSP of Rs 12,000 are being sold at a wholesale price of Rs 4,000-6,000. Sunflower and Moong Dal in UP and Bihar is being sold at Rs 4,000 when the MSP stands at Rs 5,200 (data by news flicks: Farms on Fire ).

Improper storage facilities and processing has even led to bumper harvest being sold at dirt cheap rates.

The unaccounted and unaccommodated

Waivers clear bank debt but fail to address the private debt holdings of farmers, which make up most part of farmer debt.   

Further, waivers are granted with a cut-off mark in landholdings not taking into account that many farmers own land way above the cut-off mark not because they are well off, but, because their lands are highly unproductive and unirrigated.

Such landless and small-time farmers require protection as benefits of waivers might not always trickle down to them.

To waiver or not?

Back in 2008, the UPA government announced a Rs 60,000 crore waiver for farmers. Nine years hence, the country has returned to square one, raising an important question: Why did it not work?

ALSO READ: How farm loan waivers helped politicians reap a rich harvest

In Sainath words, "they [waivers] are merely a tool, not a transformation; mechanism not a solution; relief not an answer to the greater problem."

What fell short from the government's part was to tackle the root cause of agrarian crisis and create pragmatic policy framework.

Today, if we see protests and demonstrations, it is merely to draw attention to the issue plaguing the agricultural sector.
"These strikes, protests and episodes are manifestations of the agrarian crisis and not the crises in themselves," says Sainath in a video by PARI.

Going forward with a policy outlook

In an article by Al Jazeera, experts attribute 'short-sighted' policies and negligence in agriculture over several decades that have led to the current state of despair.

The government has stopped public provisioning of agricultural inputs. Prices of fertilisers, seeds and other inputs have tripled over the years, which have not been checked and provided for by the Centre, explains Sainath in his video.

Real income of farmers remain stagnant (some cases declined) in contrast to rising prices, crushing the lives of farmers, he adds.

M S Swaminathan, pioneer of India's Green Revolution, describes the vicious cycle of bad monsoons, poor procurement price that have lead to farmer's borrowing from money lenders and financial institutions which they will never be able to pay back leading to a debt trap.

"Loan waivers, though temporarily necessary for the revival of farming, do not provide conditions for a secure credit system in the long term," he says in an interview to Al Jazeera.

Many experts have suggested the implementation of the National Commission on Farmers (NCF). It was chaired by M S Swaminathan, constituted on November 18, 2004 submitting a total of 5 reports by 2006 that suggested a 'faster and more inclusive growth' for farmers.

The Swaminathan Commission recommended MSP for grains, protection of small farmers and addressal of risks in overtaking agriculture as a profession.

The commission observed that farmers need to have access over resources such as land, water, bio-resources, credit and insurance, technology and markets and that agriculture needs to be shifted to the concurrent list instead of the state list at which it is currently at.

Only a broad-based, holistic policy with policy-makers looking at the agrarian crisis through the farmers' lens can cast a ray of hope in solving the issue.

As P. Sainath describes, when a calamity strikes, relief is urgent but going forward what needs to be in place is not merely anti-natural calamity measures but larger anti-indebtedness strategies to tackle the great agrarian crisis.


  • Print
A    A   A