Should we not give farm loan waiversIJ Is it not a queer logic against political wisdomIJ The Uttar Pradesh Government has waived Rs36,000 crore worth loans. Now, farmers in Madhya Pradesh and Maharashtra are up in arms. There are forces which are trying to cash in on this. The total waiver would cost three lakh crore rupees — a huge sum for an economy trying to find its moorings.
Farmers have strong logic. If big houses’ loans of Rs1.5 lakh crore, which benefits some individuals, could be waived off, why not for lakhs of farmers and their familiesIJ
Again it is ‘sound logic’. It should remain just at that. The money waived either for big houses or farmers was given to them by hard-earned deposits of citizens. Did banks have the right to waive itIJ
The farmers’ waivers are done by State Governments, as in Uttar Pradesh, or as in the past by the Centre. It is taxpayers’ money that needs to be used for furthering growth and development of the country. Thus, it is a convoluted economic prudence.
There is a human angle as also statistics. Over 54 to 58 per cent, as per official statistics, of the people, are dependent on farms for their livelihood. This works out to approximately 75 crore people. The farmers have problems of high input cost and low and sometimes negative returns. It hits this large population and the economy starts tottering again.
The so-called 1991 ‘economic reform’ and the 1995 WTO Rules of the Agreement on Agriculture targeted the ending of farm subsidies. It caused enormous misery for the farm sector and abated innumerable suicides. The National Crime Records Bureau (NCRB) says 256,913 farmers committee suicide between 1995 and 2011.
What Uttar Pradesh Chief Minister Yogi Adityanath did could be humanist, but it’s not a long-term solution. The country needs to chalk out a strategy for the farmers, away from the banks and the politics of waiver.
Reducing interest rates is a blow to the sick banking industry, funded fully by the common man through their deposits, or ‘recapitalizing’ with taxpayers’ money. Both are imprudent. low interest rates hit the common depositors.
Banks are failing for their uncontrolled profligacy. If charges continued to rise the depositors would prefer to opt out of banks.
It would solve three problems — interest rates need not be tweaked, recapitalisation at taxpayers’ cost could be avoided, and people would not have to pay extortive bank charges. The glorious side is that the banks would have less to worry about managing the funds, which will not be there and since they would not be able lend to large houses, their bad assets would be wiped off.
Yes, if people move out of banks that grew with small savings, ultimately the banks would have to fight for their existence —a normal economic fall-out.
The banks need to redo their mathematics and do away with extortive charges on each transaction. If they have failed for their bad management, they cannot tax the people and take economy on an inflationary ruinous path.
The nation has to give a deeper thought to the farmers and the agricultural sector. Flip-flop policies over the past 26 years, treating industry separately from the farms and levying of queer charges by all services, including railways — where you lose more than half of the money for cancellations, though trains go overfull — or airlines where you do not get a refund, super high tolls, extortive income tax, profession tax and plethora of others are putting a brake on consumer expenditure.
It has made prices rise and lowered purchasing capacity. It has hit farms, industry, and core sector all alike.
The nation needs to do a re-think. Farmer and farming has to be at the centre of the discussion. The Narendra Modi Government is seized of it but cobweb of rules, procedures and complicated economic situation has prevented it from having the desired solutions.
It is imperative to keep the economic costs low and farmers in a happy state for peace and growth and to put the country on the path of being a super-power. Industrial growth is linked to happiness in the farm sector. It can check migration, put development at fast pace and a properly tended farmers would not need loan waivers.
The economy was slowing even before demonetisation. Demand was coming down. If this has to be reversed, it can be done on a holistic approach of recalibrating and integrating economy. Piecemeal approach has caused enormous problems. A new thinking on subsidies and direct benefit transfer (DBT) is required. All subsidies are not bad.
Prime Minister Narendra Modi needs to initiate the process of finding a new path towards a benevolent farm policy targeting sustenance to the smallest farmer. It has to be intertwined with a forward-looking industrial approach and creating the critical industry-agriculture balance. n