Bikky Khosla | 25 Dec, 2018
after taking charge, the new Congress government in Madhya Pradesh announced a farm
loan waiver and thus delivered on its poll promise to the state's farmers. This
was followed by Chhattisgarh which announced a waiver
worth Rs 6,100
crore for its more than 16 lakh farmers, and then by Rajasthan which announced another
waiver that would cost Rs 8,000 crore to the state government. So, farm loan
waivers are nowadays raining like never before, but the question is: are
farmers really gaining.
to a recent media report, eight state governments have promised to waive farm
loans worth Rs 1.9 trillion since April last year. No doubt it is a whopping
amount, but considering the hardship our farmers have been through, we may still
argue in support of such a move. However, we all know things are not that
simple. Farm loans are usually more politically motivated and less well thought-out
and therefore show many fault lines.
2008, the Central government announced a one-time mega loan waiver package to write
off loans of 3.7 crore small and marginal farmers, a move which has often
been touted as a significant factor in Congress's stunning victory in the 2009
parliamentary elections. The scheme was later audited by CAG which revealed
many flaws ranging from wrong inclusion and exclusion of beneficiaries to
outright institutional corruption.
reforms require a vision which our political leaders seldom display. No doubt the farm sector
distress is more real than anything else at this moment, but waivers
are not a silver bullet, particularly when they are announced in haste, without
planning and only for political gains. The real solution to India's farm
distress lies in overhauling reforms in the sector, and for this someone has to
bite the bullet on some tough decisions for the sake of good economics.