The Hindu Business Line : ‘Farmers need debt relief more than input subsidy’

Guntur, Feb. 6 The Union Finance Minister, Mr P. Chidambaram, should go ahead with the proposed debt relief scheme in the coming Budget and should have no rethinking on the issue, according to Dr Y. Sivaji, the former member of the Rajya Sabha and the honorary President of the AP Tobacco Growers’ Association.

In a statement issued here, Dr Sivaji said that after nearly 17 years the Union Government was thinking of offering some debt relief to the farmers by waiving agricultural loans of small and marginal farmers, subject to some ceiling.

He said, “The debt relief scheme was last implemented in 1990, when the Government headed by Mr V.P Singh was in power. Agricultural debts of small and marginal farmers, to the extent of Rs 10,000, were waived then, resulting in a burden of Rs 14,000 crore on the exchequer. But it was a great relief to the farmers.”

Dr Sivaji, as a member of the Rajya Sabha, was on the parliamentary consultative committee at that time and he played a key role in the formulation of the scheme.

“Ever since we have been urging the Union Government to offer such relief to farmers again, in view of the mounting rural indebtedness, and at last we understand that the Government is in favour of such a proposal,” he said.

Referring to the reported statement of the Andhra Pradesh Chief Minister, Dr. Y.S Rajasekhara Reddy, made in New Delhi that farmers needed input subsidy more than debt relief, he said he did not want to join issue with the Chief Minister, as he was striving for the welfare of farmers. “But I must point out that input subsidy, such as the one on fertilisers, is indirect subsidy and the intended benefit does not fully reach target group. There is no regulatory or monitoring mechanism in the country and there are no checks and balances the system. Therefore, debt relief should be given priority and input subsidy can be taken up later by the Chief Minister,” he suggested.

Detailed draft

Dr Sivaji said he had sent a detailed draft debt relief scheme to the Prime Minister and the Finance Minister, suggesting that debts up to Rs 50,000 be waived for the small and marginal farmers in the country. The total burden would not be more than Rs 40,000 crore and the States should share it in the co-operative sector.

The financial institutions would also not suffer, as they would be compensated by budgetary support spread over four years.

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