Suddenly, a large number of individuals, groups and even political parties have moved in to issue ultimatums, threatening dire consequences if the government fails to take concrete steps in that direction.

The Shiv Sena in Maharashtra was the first to start a campaign for Karj Mafi to farmers. It had earlier promised full Karj Mafi to farmers in its manifesto 1994 but had failed to deliver after it won the election. In the 2004 elections, it tried to make a similar promise but it failed to evoke any response from the farmers. It is trying its luck once again.

The Union Minister for Agriculture, Mr Sharad Pawar, has publicly justified at least a partial loan-waiver, stating categorically that only the poor and the deserving farmers should benefit from any such measure. But he refrained from specifying the criteria to be adopted for the selection.

The Bharatiya Janata Party, in its recently-held conclave in New Delhi, also adopted a similar resolution, demanding a waiver of loans across the board with a limit of Rs 50,000. A Pune district-based NGO of environmentalists has jumped into the arena. Its leader, a former Union Commerce Minister, stigmatised for having followed anti-farmer policies on prices of both onions and tobacco during his regime, had gone on fast demanding loan waiver last year on the eve of the Central Budget. But he later withdrew the fast when the Union Government did not oblige him. He too is trying his luck again.

There is reason to believe that the intention of these people is not limited to claiming credit for the Karj Mukti in case it comes along. Their secret agenda is to sidetrack the mainstream farmers’ movement that has been agitating for decades for a general and total waiver of all loans to all the farmers. Those who think that only the deserving farmers should get benefit of Karj Mukti or that the waiver should not be total but limited to a certain amount have not really understood the case for it.

The case for a total and general Karj Mukti is based on the premise that all agricultural loans are illegal and immoral. Illegal because in all contracts for agricultural loans the Government is party to depressing agricultural prices, making it impossible for the farmers to repay the loans. Any action by a party to the contract to frustrate performance of the contract on the part of the other makes the contract void under the Indian Contract Act.

Do the farmers owe any money to the government at all? If one draws a balance-sheet of the amount due from the farmers and the loss caused by the Government to the farmers on account of its policies calculated to depress agricultural prices and impose “negative” subsidies, it will be obvious that the farmers’ liability is only a fraction of what the Government owes them. The Government is the net debtor to the farmers, and not the other way round.

On the record of the Government, the loss caused to the farmers due to its policies of negative subsidy, in 1996-97 alone is Rs 1,13,748 crore. The Task Force on Agriculture (2000-2001) estimates the loss caused to the farmers on this account between 1980 and 2000 at Rs 3,00,000 crore. Compared with this the total loans extended to the farmers, by any estimate, do not exceed even a third of that.

The best estimates of non-performing agriculture loans are given at a mere 7 per cent. Clearly, there is nothing illegal or immoral about writing off all the loans of all the farmers. An across-the-board waiver of a fixed amount of loan has been misused in the past. The experience of the loan waiver in 1990 of Rs 10,000 in the days of Mr V.P. Singh shows that it is the banks that benefit more from such limited and across-the-board loan waivers than the farmers. In 1990, the banks adjusted the amount of waiver to the loans that had already been repaid and denied the benefit thereof to the farmers for whom it was meant.

Is there not something unfair about waiving of loans of farmers who have not repaid them when others in similar circumstances have somehow managed to do that? This point raised by some only reveals the innocence of the interlocutors. If details of farmers’ loan accounts are scrutinised, it will show that the repayment has come mostly in cases where the farmers have a secondary source of income — a directorship of co-operative body or the salary of a primary teacher in the family.

It is near impossible to come across a case of a farmer’s loan at more than 4 per cent rate of interest being repaid exclusively from agricultural income.

But if the Government has some compunction about the consequences of a general and total write-off of farmers’ loans, it can follow one of the two courses. One, it can treat all farmers with outstanding loans as having filed insolvency petitions and examine each application case-by-case by appointing an adjudicator.

Two, in the case of every farmer, whether loanee or not, it could prepare a statement showing the crops produced, the quantity of production thereof, the coefficient of negative AMS (aggregate measurement of support) as submitted to the World Trade Organisation in 1986-89 by the Ministry of Commerce and arrive at the quantum of AMS, positive or negative, to which the farmer has been subjected.

In cases where the final result is negative, if the amount is less than the amount of loans owed by him, the Government should not only write off the entire amount of loans but also make up for the loss caused to the farmer on account of its own anti-farmer policies by reimbursing him the excess of AMS over the amount of outstanding loan.

Both the exercises are fairly complex and it would be a much simpler to write off all existing loans and make a formal commitment that never in future will the Government follow policy measures that end up depressing domestic agricultural prices below the price level prevailing in a free market.

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