Waivered Politics

Are ‘Farmers’ distress and loan waivers’ a deliberately manufactured political strategy to reap electoral and political gains? Why do political parties announce ‘freebies’ to people at the time of every election in the country? What is the political and economic ramification of these nefarious activities of political parties? Let us dive in to take a look at the financial mess we have gotten into.

Crop Loan based on pass books @Rs 50,000/- per acre and mortgage loan based on 50 per cent per cent of market value of the land. Add to it input grants like Rythu Bandhu scheme @ Rs 4,000/- per acre per crop and other subsidies.

Today politicisation of farmers’ issues is a real problem in our country. Former Finance Minister P Chidambaram, who has never tilled any land in his entire life, is challenging people to cultivate 2-acre lands for 10-years and then talk about “Farmers’ Loan Waivers”.

Mr Chidambaram is shamelessly absurd in his postulation to critics of farmer’s loan waivers. It will be justified if small farmers with 2-acres land are given ‘loan waivers’ as marginal farmers. But what about those who are defrauding the Exchequer of tax payer’s hard-earned money, under the garb of farmers?

I am an erstwhile farmer, who practised active farming just three years ago, and I have all India experience and exposure of agricultural practices (5-years as Senior Visiting Fellow and Consultant at National Institute of Rural Development). Let me shine the light on farmer’s issues.

There are several categories of farmers’ issues: 1) Categorisation of Farmers, 2) Varieties of Crops, 3) Different Agri-climatic Zones, 4) Loan Waivers, 5) Minimum Support Price (MSP), 6) Agriculture Policies and Transfer of Advanced Cultivation Technologies, 7) Impact of Farmer’s Loan Waivers on the Economy.

Firstly, let us look at the categorisation of farmers which is disputable. Categories of farmers include Small (2-acre), Marginal (5-acre), Medium (10-20 acre), Corporate farmers, particularly of plantations, seed farms, etc. Ironic but true, the generalisation of “poor farmers” is the worst fraud since tenant farmers cultivate a majority of farms owned by landlords on 50:50 share basis.

Secondly, varieties of crops include cereals such as Rice, Wheat, Maize, Oats, Millets, sorghum, Ragi, etc; pulses like Moong, Lentils, Peas, Cowpea, Chickpea, Soya, etc; vegetables (both perishables and non-perishables; cotton; variety of fruits; tobacco, nuts (Almonds, Cashew, Ground, Walnut, Pista etc); mustard, zinger, coffee, tea, rubber and coconut plantations, opium, heroin, flowers etc.

Thirdly, extreme climatic conditions – drought, cyclones, frost etc. – also contribute to “farmer’s distress” that varies for different categories of farmers and different varieties of crops in different climatic regions. Deserts and semi-arid tracts like Anantapur district in Andhra Pradesh where drought conditions prevail every third year cannot be equated to Punjab, Haryana, and river-fed delta regions.

Fourthly, the issue of ‘farm loan waivers’ requires a de novo review after considering categorisation of farmers, varieties of crops and climate conditions. Agricultural experts identify, determine and prescribe the qualifying conditions or criteria for bank loans and farm loan waivers. Unfortunately, Dr M S Swaminathan Commission’s Report fails to address these issues.

The justification by ‘farmers lobbies’ for ‘farm loan waivers’ is simple. When a government is giving so many concessions and waivings off multinational companies taxes and debts, what is wrong in waiving-off agricultural loans? After all, the poor farmer does not even get the MSP.

Today, all categories of farmers avail of loans. Why? The local Sarpanch lucidly explained the reasons for taking loans to include: loans will be written off whenever there is a drought (once in three or five years); legal ownership of farm will be upheld should there be any dispute; and low-interest rates.

Today, if one takes a survey of loans by farmers in Telangana region, most farmers take loans from banks even after being beneficiaries of Rs 8,000/- (Rs10,000/-) per year for two crops under the Rythu Bandhu Scheme.

Next, how can one justify ‘farm loan waivers’ to Seed Companies, Corporate Farms, plantation of all types? Other crops can also be added to the list of non-qualifying crops with the possible exception of pestilence and devastation due to natural disasters.

Furthermore, how can bank loans and Rythu Bandhu allocations be availed of by a relatively good number of “City Dwellers” owning farm lands acquired on either side of the National and State Highways as “Real Estate” investments and lying barren or cultivated by tenant farmers? Isn’t it the most heinous fraud?

Even the issue of farmers distress and loan waivers of those under the “Canal Irrigation” systems facilitating assured 2 to 3 crops in a year needs pragmatic review. The real justification for ‘farm loan waivers’ to such categories is due to ‘glut’ conditions in market and non-realisation of reasonable prices due to them giving appropriate profit.

Fifthly, the issue of MSP was identified long ago. It is not a new phenomenon. For example, the media regularly highlights the ‘glut’ conditions of onions, tomatoes, potatoes etc., resulting in non-remunerative prices. As a practising farmer, I too had to throw the tomatoes at the “Auction Platform” on a few occasions.

The National Commission on Farmers, chaired by Prof MS Swaminathan, submitted five reports in the period between December 2004 to October 2006. His final report focused on causes of farmer distress and the rise in farmer suicides. He recommended addressing them through a holistic national policy for farmers. He had highlighted the need for land reforms, irrigation, credit and insurance, food security, employment, the productivity of agriculture and farmer competitiveness.

Of course, the hue and cry – protests – demanding higher MSP on a regular basis. The demand for revision of MSP is due to increase in input costs particularly labour costs – Three hundred rupees per head of women labour in the current context. Even the labour costs too vary from region to region. The present system was evolved in 1975-76, in which only one set of prices was announced for paddy (and other Kharif crops) and wheat being procured for buffer stock operations.

The government has announced MSPs for 22 mandated crops and Fair and Remunerative Price (FRP) for sugarcane. The mandated yields are 14 crops of the Kharif season, six Rabi crops and two other commercial crops. Also, the MSPs of toria and de-husked coconut are fixed from the MSPs of rapeseed/mustard and copra, respectively.

In the Union Budget for 2018-19, the MSP for cereals and pulses to guarantee farmers at least 50 per cent returns on production costs has been announced under Dr Swaminathan Report.

Sixthly, hardly any political leaders and agri-experts apply themselves to formulate a credible mechanism to ensure their effective delivery at the grass root levels particularly to enhance productivity or yields of various crops – currently nearly half of his counterparts in China, South Africa and others. Why? It is due to the lackadaisical attitude toward the transfer of modern cultivation technologies based on highbred varieties.

In situ value, addition food processing facilities near major “marketing” yards so that “Bumper Produce of Potatoes, Tomatoes, chillis, red gram etc.,” are not dumped on roadsides. Add to it, allowing exports in advance instead of ‘knee-jerk’ responses.

What is needed is an entirely different and dynamic agricultural reform and modernisation including “Green House Technology” in large acreages as was done in Almeria ‘greenhouses in Spain – 26,000 hectares in one place.

Of course, facilitating direct farmer-consumer linkage remains only on paper. The well-entrenched 4-stage marketing continues to this very day. Auction Platforms to Marketing Centers/Brokers-Retailers-Consumer chain. Centralised post-harvest management and value addition remains a distant prospect. And the middle-man or brokers exploit the farmers to the hilt – buy at Rs 2 per kg and sell it to the customers at Rs 20 per kg.

Other suggestions of Dr M S Swaminathan like availability of data about spot and future prices of commodities through the Multi Commodity Exchange (MCD) and the NCDEX and the APMC electronic networks covering 93 products through 6000 terminals and 430 towns and cities besides, State Agriculture Produce Marketing Committee Acts [APMC Acts] relating to marketing, storage and processing of agriculture produce has failed to shift to one that promotes grading, branding, packaging and development of domestic and international markets for local produce, and move towards a Single Indian Market.

The only silver lining is the setting up of Agri-Market Infrastructure Fund, with a corpus of Rs 2,000 crore, for developing and upgrading agricultural marketing infrastructure in the 22,000 Gramin Agricultural Markets and 585 Agricultural Produce Market Committees (APMCs). This will enable farmers in remote locations who are devoid of any institutional mechanism to connect to markets. ‘‘Operation Green” on the lines of ‘‘Operation Flood” is needed to tackle the volatility of tomato, onion and potato prices.

Finally, viewed in the above framework, politics over the economics of farm loans reflects intellectual bankruptcy. As per Niti Aayog, farm loan waivers are not a long-term solution. A cursory look at the loan waivers by various states include Rs 70,000 crore by BJP-ruled UP, Maharashtra; Rs 60,000 crore, Congress Party-ruled MP, Chhattisgarh and Rajasthan.

Chief Minister Captain Amarinder Singh had declared that his government would take over the debt of every farmer, totalling Rs 67,000 crore. However, the Punjab Government has so far waived only Rs 1,750 crore of loans up to an amount of Rs 2 lakh each availed of by marginal farmers from cooperative banks. The state is just now about to launch a second round of waiver covering loans worth Rs 1,771 crore from commercial banks, which is again restricted only to marginal farmers. Small farmers with holdings between 2.5 and 5 acres will have to wait for their turn, probably till the middle of next year.

Karnataka has just finished the process of identification of beneficiaries and will now start distributing loan waiver certificates — probably just in time for the Lok Sabha elections. What is worrisome to economic experts are the liabilities of States to their gross state domestic product (GSDP) — above 25 per cent with Punjab at a high of 33 per cent and MP exceeding 25 per cent.

Ironic but true, experts are on record that “farm loan waiver” is at a high cost of prudent economics. Its long-term adverse effects both on the farmer and banking sector are real. NITI Aayog has been opposing farm loan waivers in the light of the percentage of farmers, who have any outstanding loans from institutional sources, it is not even 50 per cent. So, you are spending lakhs, and crores of rupees and not even half of the farmers are benefiting.

Most important, “Farm Loan Waivers” is a State Government (prerogative) whether you want to give a farm loan waiver since agriculture is a state subject. No point in blaming Modi-led NDA Government. What is absurd is that in many states not even 25 per cent of the farmers are benefiting from the Waivers.

In short, what is urgently needed is a holistic review of “Agricultural” policies. The Government must set up either a Parliamentary Committee or an Experts Commission to undertake a de novo holistic review on “farm loan waivers” based on criteria and conditions specific to each region and category of farmers.

All political parties must stop indulging in popular but economy-sapping “Farm Loan Waivers” and “Farmers’ Distress” as part of their desperate vote bank politics. It is high time that we stopped the fraud committed by unscrupulous politicians in the name of “small and marginal farmers” and tenants by farmers’ lobbies that enjoy political clout and patronage. If the farm loan waiver politics is not stopped, then the economy of the country will

be crippled.