Farm loan waiver
THE acute agrarian distress demanded a firm response, ensuring the continuity of future credit was crucial, and farm loan waivers got ready political acceptance as a quick-fix solution. Structural flaws are among a host of critical red flags raised in a study conducted by the National Bank for Agriculture and Rural Development (NABARD), in collaboration with Bharat Krishak Samaj, on loan waivers by the governments of Punjab, Uttar Pradesh and Maharashtra. A large section of the deprived and distressed whose loans should have been waived was unable to benefit, it claims. Diversion of funds for debt relief, the data reveals, has meant reduced allocations to the sectors of power, water resources, public works, health and family welfare, impacting, ironically, those very people at the bottom of the rung for whom the scheme was designed.
An average Punjab farmer, it has emerged, borrows the largest amount — four times than his counterpart in Uttar Pradesh, five times the one in Maharashtra. The dependence on non-institutional sources is also the highest, barring the landless farmer category. It’s a reiteration of the persistent nature of farm distress and indebtedness in Punjab. The spate of suicides in recent days and arrest warrants for loan-defaulter farmers indicate the temporariness of any relief promised by the loan waiver scheme. Long-term solutions for making farming a viable profession remain elusive.
The monetary pressures for expensive populist schemes often lead to state governments resorting to accounting exercises that can be self-defeating. In the agriculture department, for instance, the study shows, budgetary allocations have been cut for soil and water conversation, research and education, forestry and wildlife. In the year a waiver is implemented, the capital expenditure is reduced by the government and lending by the financial institutions. Worsening credit discipline among farmers is also listed as a worrying unintended consequence of debt relief. Post the findings, an overarching review would be a prudent approach.
