Agricultural distress or voter stress? A tale of useless loan waivers

The game is on and whether Pappu wins or Feku loses at the electoral stakes, the farmer has eternally continued to lose, no matter who or which party comes to power. There is speculation as to whether it will be an Interim Budget or a Full Budget but with the high stakes involved, the BJP will try its best to ensure that this Budget gives as many freebies as it can dole out, however keeping in mind the fiscal discipline it has maintained consistently over the last five years.

Learned people in various committees and commissions have prepared voluminous reports but why does the agriculture sector continue to be in distress? Why are farmers committing suicide especially after the World Bank–inspired 1992 wave of financial reforms? Let us examine whether we need a second Green Revolution or an Evergreen Revolution or a Universal Income Transfer Scheme. If the Telangana model of Direct Investment Support (DIS) is followed, it will cost the government, Rs. 2.8 lakh crore and only have a short term impact as following the loan waivers, smallholder farmers who constitute 85% of the farmers have lower access to subsidised farm credit and crop insurance, leading to a decline in agricultural productivity, while State governments suffer from falling agricultural revenue due to the higher cost of informal sector loans while market borrowings of State governments increase as do interest rates of market loans. As per newspaper reports, the amounts involved in various crop loan waivers, in different States are:

Karnataka  - Rs. 44,000 crore, MP- Rs. 38,000 crore, UP- s. 36,000 crore, Maharashtra-Rs. 34,000 crore, Chhattisgarh-Rs. 6,100, TN- Rs. 1800 crore, Punjab-Rs. 1500 crore, AP-Rs. 3600 crore, Telangana-Rs. 3000 crore and Assam-Rs. 650 crore. Odisha is to follow suit and also some more States! It is literally raining farm loan waivers.

Gone are the sermons of fiscal prudence and the need to curb market borrowings. The IMF and World Bank may rave and rant but these can be handled much later. Right now what matters is the 2019 general elections and the survival of the fittest or fastest or those who are totally flexible to re-hashing electoral promises ad nauseum for the gullible public.

Interim Budget announcement

The farmers are waiting for an electoral bonanza-another credit waiver from the Central Government, after 1990 and 2008. But wait, there is no credit waiver from the Centre but the Prime Ministers Kisan Yojana promises to transfer Rs. 6000 per year in three equal instalments of Rs. 2000 each to smallholder farmers (with land-holdings less than 2 hectares or 5 acres) so as to enable them to continue farming inspite of natural calamities, etc. This will be wef 1Dec. 2018 so that one instalment of Rs. 2000 is payable for Dec. 2018 to March 2019. This covers the three seasonal kharif, rabi and summer crops possible by diligent farmers. This will relieve Farmer Distress and will be directly sent to the Farmer’s bank a/c so that various agents cannot nibble away their cuts. Also, Rs. 60,000 Crore has been allocated for the MGNREGA scheme payments for the next year. More than 12 crore farmers will be benefitted.

 Both these schemes, if intelligently implemented by the district administrations in each of the 713 districts in the country will be a boon to smallholder farmers and the spate of suicides should now stop.  The flow of agricultural credit is high at Rs. 11,680 crore, interest rate subvention of 2% and another 3% for prompt payment continues while animal herders and fisherpeoples are also included in the Kisan Credit Card scheme. All these are helpful for the farmers. Also about 1% of farmers, whose loans are re-scheduled due to natural calamities as per NDRF Scheme, will be benefitted by having the re-phased loan extended by one more year and will also be eligible for the usual interest sops of 5 %, available for Kisan Credit Card holders. The MSP for 22 major crops which promises farmers 1.5 times of the input costs, is applicable for 22 major crops to take care of the Swaminathan Committee, 2004/2006 recommendations which were studiously ignored by the Central Government till 2018.The Soil Health Card Scheme does not really help Farmers as enabling him to know the MPK levels of his soil is not followed up by what specific fertiliser combination the farmer should purchase and for which crop. There is no credible advisory service available as the KVKs are somnolent and not farmer-friendly at all.

The creation of a separate Department for Fisheries will hopefully give more thrust to inland, marine and brackish-water fisheries schemes and boost incomes of fisherfolks. Including interest benefits for animal herders and fisherfolks under the KCC scheme is beneficial. More workers should be weaned away from crop-based farming and switch over to fruits and vegetable farming in peri-urban areas, dairy-farming, sheep and goat-rearing and also fisheries schemes. In all these activities women do a lot of the work but who will protect their interests? But remember that Agriculture is a State subject and the State Governments should build up on these Central Government initiatives rather than twiddle their thumbs and fritter away the GST tax revenues (42%) which accrue to them.

Remaining Invisible

The Interim Budget provides Pension benefits for the lower category labourers in the organised sector and also schemes for the workers in the unorganised sectors. There are also schemes for women to foster women empowerment. But the Budget has nothing for women farmers as lands are not registered in their names and also ignores agricultural labourers as they are not treated as famers! Why provide benefits for absent landlords and money-lenders instead of the genuine farmers? The SPM Kisan Yojana should be implemented carefully so that the interests of women farmers and agricultural labourers, who do farm on leased lands, are protected.  But an important part of the Interim Budget was the Way Forward (10 Steps) which the country cannot ignore when the Actual Budget is presented and both Jaitely and Goyal who worked on the Budget should be complimented for this.

(Dr. K G Karmakar, ex-MD, NABARD and former faculty member of SPJIMR)