The Hindu Business Line : Not by loans alone

The country’s deepening agrarian crisis, reflected in the series of farmers’ suicides in recent years, prompted a worried government to constitute an expert group to suggest ways to lift farmers out of the debt-trap. Among the important recommendations it made are rescheduling of loans, interest rate waiver on farm loans for up to two years in the event of natural calamities, grant of fresh loans and formalisation of informal loans (often taken through moneylenders at usurious interest rates). A development programme on a budget of Rs 10,000 crore, to be deployed in 100 ‘distressed districts’ has also been proposed. Implemented honestly, these recommendations can bring relief to a large number of beleaguered farmers.

The report is clear that indebtedness is but a symptom and certainly not the root cause of the crisis. It follows, then, that while debt is a reality, measures to ameliorate indebtedness alone would be somewhat cosmetic rather than sustaining livelihood security. Indeed, the agrarian crisis is more seriousthan many would like to believe. Rural distress degenerating into agrarian crisis is not an overnight phenomenon. It is the result of long years of neglect — whether benign or by design — by the policy-makers and administrators. In some sense, we are paying for past omissions and commissions; but, unfortunately, the rural poor at the receiving end are forced to pay a heavy price. The admitted position that the farm growth rate has stagnated at a meagre 2.2 per cent over the last ten long years is proof that the country’s farm policies have failed to deliver adequately, despite claims to the contrary. Public investment in agriculture has been falling. Even after massive sums have been spent on creating “irrigation potential”, the actual area under irrigated crops has expanded little the last several years.

There are inherent risks in agriculture; and the activity needs to be de-risked. This imposes costs; but our government believes its commitment to ‘fiscal responsibility and budget management’ does not permit larger budgetary outlays. Even where outlays are made, outcomes are suspect because of tardy implementation and lack of accountability. While credit is a critical input, credit and its management alone will not produce sustained results. The key is to build capacity among farmers — the capacity to utilise credit effectively and to repay loans in time. Capacity building demands commitment and sustained efforts over the long term, in addition to creating input and output markets that advance the interests of primary producers.

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