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Posted at: Dec 17, 2018, 12:57 AM; last updated: Dec 17, 2018, 12:59 AM (IST)

Quick fix for key vote bank

Promising the moon to the farmers on poll eve is the easy part. Failing to live up to their expectations after the govt is formed is a different story. In Punjab, the cash-strapped dispensation finds itself hard-pressed to waive farm debts
Quick fix for key vote bank

Ruchika M Khanna

The agrarian crisis and the resultant farmers’ upsurge keep political parties on tenterhooks, especially before any election. No wonder quick-fix solutions are explored to keep the farmers in good humour and ensure their electoral support.

The crop loan waiver scheme is one such solution that has been promised by the Congress to farmers to win them over. And it seems to be working, at least for now. From Punjab (from where the Congress began its resurgence last year) to Rajasthan, Madhya Pradesh and Chhattisgarh, the party has achieved success at the hustings — with the crop loan waiver promise playing a key role. Farmers in these states have pinned high hopes on the waiver as rural indebtedness has worsened across the country. In Chhattisgarh, where farmers were promised that the Congress, if voted to power, would buy their paddy at Rs 2,500 per quintal (way above the MSP of Rs 1,750), poor growers have held on to their paddy stocks, hoping for high remuneration.

Implementing crop loan waiver within 15 days of assuming power (as promised) and ensuring high prices for crops is a Herculean task. Promising the moon to the farmers before the elections is the easy part. Failing to deliver after the government is formed and has taken stock of the finances is an altogether different story. In Punjab, the Congress recorded a landslide win on the back of the farm loan waiver. Twenty-one months after it assumed power, the ruling party finds itself in a bind. The farm loan waiver was scaled down to crop loan waiver (loans taken before each sowing season); originally promised for all farmers, it became a waiver for only small and marginal farmers; and only those are getting relief who availed loans from institutional sources (banks), while non-institutional loanees remain out of the ambit. 

The total institutional debt of farmers in the state is Rs 80,000 crore, availed by almost 32 lakh farmers. Besides this, farmers have availed loans worth Rs 20,000 crore from arhtiyas (commission agents) and money-lenders. The total debt being waived by the Congress government in Punjab is just Rs 7,000 crore (Various studies show that the average rural household debt varies from Rs 3.5 lakh to Rs 4 lakh). 

Steps such as imposing cuts and deleting names of some beneficiary farmers are unlikely to help the Congress politically in the next election. On the contrary, it can harm the party as those who were deprived of the benefit have turned against the government. Several ruling party MLAs admit that the crop loan waiver has become an albatross around their neck. 

According to data obtained from the Agriculture and Cooperative Departments, the government has cleared crop loans worth Rs 3,600 crore so far, availed by identified marginal farmers (those having less than 2.5-acre landholding). These loans of cooperative and commercial banks were availed by 4.17 lakh farmers. The government is set to launch the next phase of this scheme, wherein loans taken by small farmers (less than 5-acre landholding) will get a total waiver of Rs 2,009 crore. A total of 1.41 lakh beneficiary farmers (who have taken loans from cooperative banks) and 58,000 such small farmers who availed loans from commercial banks have been identified. The social audit of these beneficiaries is being done and the process of paying off their crop loan will be initiated soon, say government officials.

However, even farmers in Punjab are not satisfied with this crop loan waiver. There are allegations that only those small and marginal farmers are being given the benefit who owe allegiance to a particular political party. Also, the loan waiver does not solve the inherent problems in the agrarian sector — it’s just short-term relief. No wonder farmers are up in arms against the state government. Come January 1, debt-ridden farmers and their families plan to gherao banks in all districts in protest against the latter’s role in getting cases registered against loan defaulters.

Sukhdev Singh Kokri Kalan, general secretary of the Bhartiya Kisan Union (Ugrahan-Ekta), said they had no option but to take the fight against the government to the streets. 

“The creation of viable economic infrastructure for giving a boost to the farming sector is linked to the policies adopted by the Centre. The state government has a limited say in these matters. When such infrastructure is not there, distressed farmers have to take loans to meet not only their daily needs, but also the ever-rising costs of farming. When they cannot repay the loans, they are named and shamed and even sent to jails. The need of the hour is farm income support,” he said, adding that farm loan waiver had a limited impact on Punjab.

Going against the grain

  • Punjab Government rejected Pradhan Mantri Fasal Bima Yojana (PMFBY) earlier this year, citing conditions in the Central scheme such as 40 per cent crop damage to get claims, 10-year benchmark for assessing normal yield level while deciding on the insurance premium, and affected crop lying in the market yard not being covered under the scheme. The state government had said it would come up with its own crop insurance scheme.
  • Under PMFBY, the state and Centre pay 49 per cent each as premium while the rest (2 per cent) is paid by farmers. Even though the premium to be paid by the farmers is low, they have rejected the Central scheme. 
  • Dr MS Sidhu, noted economist, says the scheme is not suitable for Punjab, where 99 per cent of farmland has assured irrigation and 88 per cent farming is of wheat and paddy. “But we do need a crop insurance scheme, mainly to deal with floods and the pest attack.”
  • The state Agriculture Department, in association with the Farmers’ Commission, has made a draft scheme, which will need the CM’s nod. BS Sidhu, Agriculture Commissioner, said the state government was committed to bringing an insurance scheme. 

Punjab’s farm debt dossier

Rs 80,000 crore 

Institutional loans availed by farmers 

Rs 20,000 crore 

Non-institutional loans

The Congress had promised total farm loan waiver in Punjab, which was scaled down to crop loan waiver for small and marginal farmers 

Rs 30,000 crore 

Total amount of crop loans availed 

Rs 7,000 crore 

Crop loans being waived 

  • Rs 3,600 crore Crop loans waived in first two phases
  • 3.07 lakh Beneficiary marginal farmers who took loans from cooperative banks
  • 1.1 lakh Beneficiary marginal farmers who availed loans from commercial banks
  • Rs 2,009 crore Crop loans being waived in third and fourth phases
  • 1.41 lakh Targeted beneficiary small farmers who took loans from cooperative banks 
  • 58,000 Targeted beneficiaries who borrowed money from commercial banks
  • For these phases, the revenue audit of beneficiaries has been completed, while the social audit is being undertaken
  • Rs 1,400 crore Crop loans (approx) to be waived in fifth and final phase, including residual cases from previous phases


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