Loan waivers do not end debt trap
With farmers on the warpath in different parts of the country, states are falling back on announcing loan waivers in a desperate bid to stem the distress. Left with no option, farmers are committing suicide, being unable to repay the bank loan, and in a sizeable number of instances finding themselves at the mercy of money lending sharks. A loan waiver is nothing short of buying temporary peace, be it in Maharashtra or elsewhere. That cannot be said about Madhya Pradesh where chief minister Shivraj Singh Chouhan went on an indefinite satyagraha only to end it abruptly after 28 hours. This was after the police firing in Mandsaur in which five farmers were killed.
Chouhan's image of being dedicated to the farmers' cause has suffered a grievous blow. The states with little maneuvering space were left with no option but to announce loan waivers. They will find it difficult to bear this heavy burden on their own. The Union Finance minister Arun Jaitley announcing that the Centre is unlikely to bail out the states going in for loan waiver, has added a new dimension to the problem.
What has compounded matters are the prices of the commodities, which are well below not only the minimum support price (MSP) fixed by the government but even less than seasonal rates. One of the follies of the political leadership is to look at short term gains rather than taking an overall view after a proper assessment of the prevailing situation and working in a determined manner for sustained and multi-pronged development on the agriculture front.
The problem of farmers is manifold, encompassing vast tracts of land that are drought prone, rain-fed and areas affected by floods, along with the lack of direly required irrigation facilities. There are several other aspects pertaining to the problems of the poor and marginal farmers. It has been suggested that farmers be given a one-year break on debt servicing. Most importantly the government must pursue long term solutions which has been the bane of the political leadership all along. For many years the MSP has been dropping below the annual inflation and in real terms the farmer is being paid less and less for his produce.
This, is in addition to their family size growing, coupled with shrinking land-holdings. Another disturbing aspect is that the MSP is used as a monetary policy tool akin to agricultural policy intervention. While loan waivers yield political dividend, it causes systemic changes to the farm credit market and does nothing to end the debt trap five years hence.
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