‘If haircuts for corporate loans are possible, why not farm-loan waivers’

Rajiv Kumar, Vice-Chairman, NITI Aayog, feels that loan waiver is an option for farmers in distress.

Agriculture issues are haunting the Narendra Modi-led government leading to some State governments announcing farm loan waivers. “There is no other way out,” Kumar told BusinessLine adding “If you (banks) are prepared to take a haircut for your corporate loan of ₹10,000 crore, then there is no reason why you cannot give farm loan waiver.”

Agriculture sector grew by 3.4 per cent in 2017-18 against 6.3 per cent in 2016-17. Many economists feel that the sector is in distress as input cost is going up, but farmers are not getting price according to cost. While some States such as Uttar Pradesh, Maharashtra and Punjab have announced conditional loan waiver, Karnataka is working on the same.

Asked if he agreed that the farm sector was in distress, Kumar said, “There is no doubt that farmers are in distress because their cost of production is going up, quality of their land is becoming poorer, they keep adding more and more chemical nutrients. They (farmers) are not diversifying from land-intensive crops to more high-value yielding crops. Also, there is limited access to the final market despite the government’s effort to bring in e NAM or abolish APMC.”

For the above reasons farmers are not getting good returns, Kumar said, adding “All these need to be looked into. I think the government’s intention, as announced in the Union Budget, is to raise the farmers’ income. There is a very clear and well targeted shift.”

For increasing the farmers’ income two things need to be done, Kumar said, adding: “First, get them better remunerative prices and second, reduce the cost of production. For this I am convening a meeting of States’ Agriculture Secretaries on July 9 and exposing them to Subhash Palekar’s zero budget natural farming technology, which actually brings down cost by more than 50 per cent and improves the land quality, water retention etc.”

Citing examples of West Godavari District, Andhra Pradesh and some places in Maharashtra, where this is being implemented, Kumar said, “These are the kind of efforts being made for reducing the farmers’ cost. Besides, a strong effort now is being made to promote Krishi Vikas Kendras.”

It is better to tell the farmers to shift to more higher value produce, he said pointing to the efforts being made by the Ministry of Food Processing, which is actively promoting ‘agroprenures.’

Different approach

“Farmers’ current situation is not so good and it must be recognised. But, you cannot have business as usual by dumping more high-cost chemicals inputs, raising the cost and not giving them access to market. You need a different approach now for the agriculture which will make sure that productivity increases and farmers’ income rises with rest of the economy,” he said.

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