The Hindu Business Line : Inclusive growth

The article “Pitch for inclusive growth” has argued that the farm loan waiver is a measure for achieving inclusive growth “since higher prospects of agricultural growth has a multiplier effect on all other sectors of the economy” (Business Line, March 10).

First of all, it is not correct to think that the waiving of farm loans will automatically ensure agricultural growth, as there are still innumerable farmers in the country indebted to money-lenders and living a hand-to-mouth existence.

Second, interest on loans or, for that matter, the principal amount is just a part of the input cost of the farmers (of course, it is doubtful whether Indian farmers include this in the cost of production, because of their widespread lack of literacy and awareness).

Waiving of farm loans might have come as a one-time shot in the arm for the farmers.

But the same cannot be expected to have a multiplier effect on the other sectors of the economy.

It is the production and rising income of farmers that have to increase to stimulate growth in other sectors.

If the gross domestic product (GDP) registers a considerable rise by virtue of achieving the optimum use of resources (men and material) and production too, then there is a possibility of achieving inclusive growth — a goal that nowadays, is so often talked about but not yet really reached.

S. Ramakrishnasayee Ranipet

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