FINANCE MINISTER Arun Jaitley made it abundantly clear when he said: “...states which want to go in for farm loan waivers will have to generate funds from their own resources. Beyond that, Centre has nothing more to say.” But when it comes to writing off corporate loans, I have never seen the minister ask the states to take the financial burden. The banks write it off directly. This smacks of double standards.
Chief Economic Adviser Arvind Subramanian said that writing off bad loans of the corporate sector makes economic sense. “This is how capitalism works,” he said. Wonder why capitalism doesn’t work the same way for farmers!
Writing off massive bad debt of corporates is projected as necessary for economic growth. But writing off bad loans of farmers is blamed for disrupting credit discipline. There is no economic rationale for this economic discrepancy. Socialism for corporates, and capitalism for farmers!
After the protest in Madhya Pradesh, Maharashtra has decided to waive loans of 1.34 crore farmers. Uttar Pradesh had announced a waiver of Rs 36,359 crore a few months ago. Punjab is working out a formula for waiving loans of small and marginal farmers. According to a Bank of America Merrill Lynch report, roughly Rs 2.57 lakh crore of farmers’ loans, or 2 per cent of India’s GDP, is expected to be waived in the run-up to the 2019 general elections.
State Bank of India chairperson Arundhati Bhattacharya, who often expresses pain at how writing off farmers’ bad loans will add to credit indiscipline, didn’t blink an eye when she pleaded for a Rs 4 lakh crore bailout for telecom majors who are now saddled with ‘unsustainable’ bad loans. Nor did Merrill Lynch tell us what percentage of GDP will be eroded with this bailout package.
Over the years, agriculture has been passing through a terrible agrarian crisis. With farm incomes stagnating and with public sector investment in agriculture declining, farmers had silently borne the brunt. The never-ending spate of farmer suicides, estimated to exceed 3.18 lakh in the past 21 years, is merely a symptom of a deeper malaise that afflicts agriculture. It was known, but successive governments merrily ignored the warning. In fact, agriculture was deliberately sacrificed to keep the economic reforms going.
The Economic Survey 2016 brought out in public the dark underbelly of agriculture. The average income of a farm family in 17 states stood at just Rs 20,000 a year. Policy makers instead shifted the focus on increasing crop productivity and reducing the cost of production, not realising that even in Punjab, despite having 98 per cent assured irrigation and with the highest cereal productivity in the world, the farm suicide rate has spiralled.
Farm bad debt over the years has soared. This has to be wiped off if agriculture has to be made economically viable. It is time to also go beyond Minimum Support Price (MSP) since only 6 per cent farmers get the benefit; the rest remain dependent on the volatility of markets. The answer lies in setting up a Farmers’ Income Commission with the mandate to provide an assured monthly income of Rs 18,000 to every farming family.
Sharma is an agriculture and food analyst.
