Farm credit write-off: A humanitarian relief
News analysis

Farm credit write-off: A humanitarian relief

Rural anger manifested loud and clear through the ballot boxes in the recent elections to assemblies of Madhya Pradesh, Rajasthan and Chhattisgarh. The discontentment of the rural masses in the three Hindi belt states, considered the citadel of the Bharatiya Janata Party, was quickly taken note of by the two national parties. While the Congress chief ministers in these Hindi belt states have announced loan waivers to agricultural loans, Prime Minister Narendra Modi’s special team is trying to work out a scheme to help the farmers. The scheme is under formulation and two proposals are being debated; one a universal income scheme and another, a per acre payment scheme to each crop season on the lines of a scheme now in operation in Telangana.

The point is that the two national parties have realized that the problem of the farmers and the rural sector needs to be attended to. Ignoring this burning problem can have not just disastrous political consequences but dangerous economic fallout and mass movements which may not be peaceful. The mood in the rural areas is disturbing and no more can it be suppressed through police action including firing, costing human lives. Inaction to the problem would mean losing power in other states too, a prospect which the Saffron party shudders to think of particularly so with 2019 Lok Sabha polls getting nearer and nearer. Nor can any responsible party continue to witness silently the mass suicides and miseries being faced by the rural households having serious survival and existential problems.

In fact, the same survival and existential threats are forcing the top leaders of the Congress and the BJP to look at the problems of the farming community and rural sector as a whole, more sympathetically these days. During NDA rule which ended in 2004, the problem existed but the Parivar leadership chose to go to polls with a campaign of feel good factor during the rule and the punch line of Shining India. Rural India and its formidable position in electing governments at the Centre were totally ignored. By accident or design, the Congress managed power at the Centre.

Perhaps aware of the situation and the clear signals given by the recent results of assembly polls have made Prime Minister Modi evolve a scheme at national level for the benefit of the farmers which may be announced shortly, to win back the farmers into the NDA fold. Congress under Rahul Gandhi wasted no time after the assembly polls to announce loan waivers by Rajasthan, Madhya Pradesh and Chhattisgarh.

There are many economists who argue that such loan waivers will not solve the problem of the farming community in the country. For, those who avail such loans are only an influential section of the farming community. They normally throw the data to show that writing off would be financially unviable. According to RBI data as on October 26, 2018, the outstanding credit to agriculture and allied services stood at Rs.10.6 lakh Cr. As such, the state loan waiving so far amounts to about 16 per cent of the outstanding amount.

But the non performing assets of the public sector banks do come to a tidy sum. Even full details of the captains of industry and business who are responsible for the NPA are yet not known. The nation knows about some of these individuals like Nirav Modi, Mallya, Choksi who owe the nation thousands of crores when they left the country. There seems to be comparatively less concern for the rulers, be it of any hue, to the NPAs created by businessmen. They get protection to the last minute. Even if they leave the country, the tendency is to underplay it. None of them face the plight of farmers who are forced to end their lives, leaving their families in dire straits.

The situation is not due to any mistakes or failures on the part of the farmers. They hardly get timely assistance from the authorities. Neither do they get fare prices nor a favourable market. The worst is when they manage to produce a bumper crop. There are other issues also of which are discussed in the latter paragraphs.

Let’s take the situation of today. Because the farmers worked hard and got a good harvest that has led to the present problems. The case of Dharmendra Narshi Patel, a farmer from Gujarat is a typical case. Believe it or not, he sold 3,590 kg of onion at the Agri Produce Marketing Committee (APMC) in Gondal on Christmas Day for Rs.1,974.50! Yes, for just Re.0.55 a kg!!!

Premjibhai Senjalia, a farmer from Raajbarika Village in Amreli district complains that farmers are forced to sell garlic from Rs.20 to Rs.80 per 20 kg in APMC. Some are waiting for a better price later and holding on to their produce. But few can hold on for long and finally succumb to desperate sales.

In Maharashtra, the situation is worse. Reports say that in Aurangabad’s Vaijapur Agricultural Marketing Committee farmers were getting as little as 20 paise for a kilo of onions!! The story is the same all over be it Madhya Pradesh or Uttar Pradesh. But the consumer is not benefitted. The state governments do precious little to help these farmers through procurement offering reasonable prices so that the farmers at least get the cost of production.

In Kerala too rubber growers and farmers engaged in cash crops production are in dire straits. The prices are very low and agricultural workers are moving to towns looking for other jobs. Karnataka farmers are also facing this terrible situation. In fact, this pathetic situation is the reality all over India. Since farmers are not organized and do not have a strong political platform, they suffer. Those who cannot hold on, take to suicides. Suicides by farmers are no more news and are dismissed as usual incidents by media too.

To the great economists and great planners a question needs to be asked. What should a government do when faced with this terrible reality? Provide interim relief and help them or allow them to commit suicides and perish? Any civilized government has a responsibility to provide these hapless citizens with immediate relief and face the situation. For that not just writing off farm loans but there is a need to provide interim relief on the basis of their holdings or size of the family so that they can subsist and survive. Giving relief to farmers at this juncture is a humanitarian act. It is not providing lollipops. Nor is this the time to give lectures on high economic principles and to stick to permitted budgetary deficits as prescribed by the IMF-World Bank combine.

The governments at the Centre and States do not bother the NPAs of the people engaged in big business. In spite of their NPAs they are given more loans to live in luxury. The governments find funds to implement Pay Commission recommendations and have no problem to agree to hefty pay and pension increases, which is an accepted practice every five years or so. Why this cruel treatment only towards farmers?

In Madhya Pradesh, Rajasthan and Chhattisgarh the farmers have shown the door to the BJP which seems to have made the other national parties attend to this problem. Congress has immediately decided to provide relief to the farmers of these three states. But it has not done so in Punjab in spite of electoral promises.

The present situation is that like the pathetic plight of victims of natural calamities. Relief is provided immediately to face the immediate needs to save the lives of the people and their families. Nobody tries to point out the economic principles and need for discipline. It is a calamity and thousands of farmers are forced to end their lives, unable to find any other solution. Unable to face the situation without any help more hapless farmers may look up to the noose as the only solution. The calamity in the rural sector and the consequent distress needs to be looked at as a humanitarian problem. The farm sector needs to be provided with relief and rehabilitation measures.

What is needed later is a comprehensive study to put in place a system in which the interests of the farmers are protected. Good news is that a beginning is made. It needs to be pursued. Farmers too should form their own political platforms and get into legislatures and find themselves a place at decision making levels which alone can provide a solution to this problem.

Today the rural sector needs humanitarian measures to get out of this debt trap, marketing crisis and suicidal price levels of their products be it rice, wheat, rubber, cash crops like pepper, clove, cinnamon and perhaps above all sugar cane. They are not seeking relief to buy planes, stay in five star hotels, luxury villas or expensive holidays. What they need is relief to subsist. It is time the government keep the economists away while dealing with this calamity. Give them relief.