Beyond debt relief: What next for farmers

The agrarian distress has aggravated in the last few years as evinced from several recent demonstrations in various parts of the country. The plight of farmers marching hundreds of kilometres in poor conditions point out to the fact that there has been no meaningful improvement in quality of life of our large populace (around 60%), dependent on agriculture and allied activities, in the past 70 years.  

The reaction to this crisis at times is a knee jerk one, such as waiver of agricultural loans, as seen in a few states recently. Its limitations are many. There is a large number of those engaged as agricultural labourers and sharecroppers who are excluded from such waivers. Many farmers (estimated at around 40%) continue to borrow from informal sectors like village moneylenders, who in turn charge exorbitant rates and use the most inhuman methods for recovery, often leading to farmer suicides. Debt relief helps only a small fragment of farming community in a very limited and temporary way.

Read More: Farmer's loan waiver shouldn't be part of poll promises: Raghuram Rajan

A better version of support to farmers is schemes like Rythu Bandhu Scheme, through which the Telangana government is providing Rs 4,000 per acre per season to 58 lakh farmers. This monetary help is forwarded to support farm investments twice a year for rabi and kharif seasons. Another scheme is the recently-introduced KALIA (Krushak Assistance for Livelihood and Income Augmentation) scheme by the Odisha government that provides financial aid of Rs 10,000 per family (Rs 5,000 each for kharif and rabi seasons) covering 30 lakh small and marginal farmers.

While direct cash transfer is a better option than debt relief to incentivise the farmer and enable them to meet pre-operative expenses - and is proactive rather than reactive in nature - this in itself is no solution to the gigantic problem of farm sector.

For a comprehensive solution, a few important steps need to be undertaken, which are as follows:

• Improvement in technology for improving farm productivity. Our R&D budget of agri GDP is 0.4%, which is extremely low as opposed to the developed nations' 2-3%. Labs to land has to improve substantially.
• Disintermediation of agri-produce marketing and development of direct-to-market infrastructure. At present, it is the middlemen who pocket the large part of price, benefitting neither the producer nor the consumer.
• Significant enhancement in development of storage and warehousing at affordable price so that farmers are not forced for distress sale of their produce
• Extension and support services such as decentralisation to Panchayat level and availability during non-office hours when a farmer has the time to interact after working in the field, could also go a long way to help them.
• Appointment of an agricultural commission consisting of all stakeholders to look comprehensively into all aspects of farming.

Poverty anywhere is threat to prosperity everywhere. If the farming concerns are not addressed on time, measures like debt relief while alleviating pain temporarily can add up substantially to the cost to the society in the long run.

The author is a former banker at State Bank of India

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