Maharashtra govt’s loan waiver leaves many questions unanswered

Reeling under a loan burden, farmer Sharad Ingale, who hails from the drought-prone Khatav taluka of Satara district in Maharastra, has only one expectation from the government. It is not a loan waiver; he wants the government to accept the Swaminathan Committee’s recommendations in letter and spirit.

After unseasonal rains destroyed his potato, onion and other crops, Ingale is unsure about how his family is going to survive. He and other farmers have taken loans from banks, credit societies and private lenders. The State government’s loan waiver of up to ₹2 lakh is not going to be of much help to farmers such as Ingale.

Chief Minister Uddhav Thackeray announced the loan waiver scheme in the Legislative Assembly on Saturday — the last day of the Winter Session of the Legislature. “Crop loans outstanding till September 30, 2019, will be waived by my government. The upper ceiling for the amount is ₹2 lakh. The scheme will be called Mahatma Jyotirao Phule loan waiver scheme,” Thackeray said.

“Government must address the root cause of the problem. Farmers must get the right to decide the price of their produce; only then will farming be profitable,” said Ingale. He added that loans have become part and parcel of farmers’ lives and they will not be able to stop taking loans until farming becomes profitable.

Farmer Bablu Jadhav from Nashik says that farmers are stuck in a vicious cycle of natural calamity, government interventions, middlemen and traders.

Before the Thackeray government’s loan waiver, his predecessor Devendra Fadnavis had announced a ₹34,022-crore loan waiver in June 2017, which was supposed to provide relief to 89 lakh farmers across the State. Speaking at the time, Fadnavis had said, “It’s a historic decision. The waiver amount declared by our government is the highest.”

In reality, the Fadnavis government’s loan waiver did not yield much by way of results. In the last five years (2014-18), Maharashtra saw 14,034 farmers — that is eight a day — end their lives. In fact, over 4,500 committed suicide after a ₹34,000-crore loan waiver. Of the total farmer suicides in the last five years, 32 per cent was recorded after the loan waiver scheme was announced.

Farm labourers’ share in Maharashtra’s agricultural population is 52 per cent. Between 2014 and 2016, out of the total farmer suicides in Maharashtra, 32 per cent (3,808) were by farm labourers. However, loan waivers don’t cover farm labourers and they continue to reel under distress. In fact, more farm labourers have committed suicide in Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Jammu and Kashmir and Puducherry, even though these States have offered loan waivers to farmers in the last few years.

Eminent agriculture scientist MS Swaminathan told BusinessLine in April that the loan waivers reflect backward or non-viable agriculture. “When politicians talk of loan waiver, they are accepting that agriculture is not economically viable. They are giving a wrong signal that farming is not economically viable. But how to make it economically viable is your challenge. Loan waiver is a way of helping farmers the wrong way,” he added.

Viability test

“It (a loan waiver) should be a part of the insurance policy. If there’s no rainfall or there’s excess or deficit due to climate change, you may have to pardon the loan or rewrite it over the next few years,” said Swaminathan.

“But loan waiver, every party now seems to believe, is the way to go. It is not a long-term viable policy. It is a straightforward admission by the government that it is not able to improve the economics of farming”.

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