Farm loan waivers: Political expediency at its worse

Over the last few months, there has been a spate of farm loan waivers by various states across the country. The Yogi Adityanath-led Uttar Pradesh government announced farm loan waiver amounting to Rs. 36,369 crore, while Devendra

Fadanavis-led Maharashtra government declared farm loan waiver to the tune of Rs. 34,022 crore. In fact, Fadnavis had initially declared that the state government would not provide any loan waivers to the farmers this year, but he succumbed to the mounting pressure from the opposition parties for farm loan waiver in the wake of rising incidents of farmers’ suicides in the state due to crop failures and indebtedness. The Tamil Nadu government led by J Jayalalitha had provided farm loan waivers of Rs. 7,760 crore in 2016. Much earlier, the Manmohan Singh government at the Centre had provided farm loan waiver amounting to Rs. 72,000 crore in 2008.

Although there is a need to provide relief to the farmers in the event of crop failures due to drought, hailstorms and other natural calamities, providing farm loan waiver is at best a temporary solution. Such short-sighted stop-gap measures cannot address the fundamental issues dogging the agriculture sector in India. These write-offs strain the financial resources of the states and increases their indebtedness, apart from promoting financial indiscipline among farmers, because even farmers who are well-off financially and who would otherwise repay their loans would avoid repayment in expectation of loan waiver by the government of the day.

The need is to formulate long term solutions to the problems facing the agriculture sector in general. The problems are many: rising input costs, un-remunerative prices of agriculture produce, deteriorating soil quality, depleting water table level, fragmentation of land holdings, low productivity, erratic monsoons and other natural calamities.

All these issues need long-term solutions and not stop-gap measures. The long-term solutions lie in ensuring remunerative prices for agriculture produce, providing insurance cover to crops, building irrigation infrastructure, connecting rivers, changing cropping patterns, promoting modern and efficient farming practices, adopting dry land farming, etc.