Farm loan waiver – is it the way forward?
“This coming election, if we are voted to power rest assured your loans would be waived off.”
These slogans are no longer rare, rather than the support they have become a political game.
No one bothers to find out why there is a massive
accumulation of these loans. Why there is a
failure of the crop this season? Would it happen
again? If so, what can be done to prevent? None
of these questions ever get answered. Political
agenda and welfare of farmers may seem to
coincide; instead, they are far side-lined.
According to NITI Aayog, almost 25% of the
farmers don’t receive this loan waiver benefit.
Loans getting waived off can't be the norm,
mechanisms have to be in place to find what
caused the default in the first place. Is the
government trying to invest in infrastructure?
Why are farmers not moving to crops that are
best aligned with the area of cultivation? Is the
motivation of cultivation just for minimum
support price? Indeed, post liberalization of
1990’s the agricultural sector of India had to
face many issues.
Increase in population and hence increase in food production and more land taken for
construction, the division of property into smaller plots, shifts in the workforce, among people
have turned agriculture to be a very unattractive sector to be into. Aforementioned has
inevitably resulted in a rise in costs, a drop in disposable income has increased the debt among
the small and marginal farmers. Only 15% of
small and marginal farmers have access to
formal institutions for credit. Therefore, they
have to turn to informal sector borrowing at high
costs and in turn, leads to a vicious circle that
ultimately the farmers can’t escape. Farmers
suicide is not unheard of, but rather than blindly
waving of their loans, the government should
look into ways that can break the cycle and bring
welfare to these sections of the society as well.
References:
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https://www.thehindu.com/business/agri-business/why-do-farmers-need-more-thanloan-waivers/article25860374.ece
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https://www.rediff.com/business/interview/only-10-of-farmers-gain-from-loanwaivers/20181219.htm
https://timesofindia.indiatimes.com/business/india-business/loan-waiver-not-asolution-to-farm-distress-niti-aayog/articleshow/67162249.cms
https://www.livemint.com/Opinion/28FyhnOCm4cFP1PCcJLYsN/Solutions-beyondfarm-loan-waivers.html