When Maharashtra revenue minister Chandrakant Patil announced a farm loan waiver on June 11, independent legislator Bacchu Kadu lit a ‘Sutali Bomb’ (a firecracker). It was his way of celebrating the announcement. But he also knew that with a debt burden of nearly Rs 4 lakh crore, the waiver could dent the state’s coffers.
Farmers called off their strike, launched on June 1, after the government agreed ‘in principle’ to waive loans of all farmers who depend only on agriculture income.
Raju Shetty, founder of Swabhimani Shetkari Sanghatana, said farmers’ organisations were firm from the beginning that the loan waiver should cover all farmers, and not just those who hold up to five acres as was announced initially. “The government told us that it was worried that undeserving elements—those who claim to be farmers just because they own huge tracts of land and whose first source of income is not agriculture—would benefit from a general loan waiver. We agreed with the government’s view,” said the parliamentarian. “That is when we decided that the beneficiary should be a farmer whose only source of income is agriculture.”
Shetty said the loan waiver will come to around Rs 30,000 crore and will benefit 65-70 per cent of the farming community that relies only on agriculture. The total farm loan component in the state is over Rs 1.10 lakh crore, one third of which will be waived following the announcement.
About 31 lakh of Maharashtra’s 1.34 crore farmers have defaulted on their loans. Farmers with less than five acres will be eligible to apply for fresh crop loans and will receive Rs 10,000 each to buy seeds. The government has also announced that the price of milk will be raised to give higher rates to farmers and 70 per cent of the profit would go to farmers’ cooperative involved in milk collection.
Vidarbha farmers’ leader Vijay Jawandhia said that this loan waiver, like the one announced by Dr Manmohan Singh in 2008, could largely benefit just western Maharashtra farmers. “If we go by what the government has announced, farmers who have land up to five acres will immediately benefit from the waiver. And, they will decide the criteria for remaining farmers by July 25,” he explained. “More than 50 per cent farmers in Vidarbha have landholding above five acres. Thus, they have to wait for the government to decide. What the government is failing to understand is that Vidarbha farmers may have more land but their loans are much lesser than western Maharashtra farmers.”
Jawandhia said that more than 50 per cent of the loan waiver package would benefit western Maharashtra and the rest will have to be shared by the other regions. He said the loan waiver announcement was made only to placate the Shiv Sena.
Gorakh Ghadge, a farmer from Solapur in western Maharashtra, is also unhappy. “Patil used the Marathi word ‘sarsakat’ [all encompassing] while announcing the waiver. I have crop loan, loan availed to purchase a Jersey cow and another one for irrigation pipeline. Will the loan waiver cover all of these?” he asked.
Moreover, a report by India Ratings and Research said the waiver will push up the state’s fiscal deficit to 2.71 per cent from the existing 1.53 per cent. To manage this, the state could reduce expenditure on capital formation. “Ind-Ra estimates that debt/GSDP [Gross State Domestic Product] ratio will rise to 17.44 per cent against the budgeted 16.26 in FY 18,” said the report. This will obviously affect the state’s economic growth.
