Some immediate relief
In a significant development, the new Uttar Pradesh government last week waived loans worth Rs 30,729 crore taken by small and marginal farmers. In his first Cabinet meeting, Chief Minister Yogi Adityanath also decided to forego non-performing assets worth Rs 5,630 crore of seven lakh farmers. Reports indicate that these measures are likely to benefit 86 lakh farmers who have loans up to Rs 1 lakh. One of the main poll promises of the Bharatiya Janata Party, which won a massive majority in the Uttar Pradesh elections, was that it would waive off farm loans. For the time being, many farmers in the state can breathe a sigh of relief, and it is a positive step for their immediate welfare. More than half of India's 90 million households engaged in agriculture are in debt, and they need the government's support. But the evidence seems to suggest that when a government spends vast sums on loan waivers, it reduces the scope for necessary public expenditure in agriculture. However, the concerns of the agriculture sector in India are structural in nature. What it needs is serious reforms, including making land leasing easier and legal, better access to markets for farmers, and massive investment in areas such as irrigation, superior storage facilities, water saving practices, and in-depth research into better agricultural practices to reduce dependence on the monsoon. Do farm loan waivers address these concerns? Do they resolve any of the above concerns? The answer is no.
Juxtaposing this development against the scene in Tamil Nadu, many farmers in the state are in dire straits after another failed monsoon last year, and some of them have taken their protests to the national capital. Among other acts of protest, they held the skulls of farmers who had committed suicide in their region to communicate the desperate state of affairs in their area. The protesters demanded a farm loan waiver, saying they are not in a situation to repay their debts because of severe droughts. The court, however, directed the State government to waive all farm loans issued by nationalised and cooperative banks and ensure that no punitive action or loan recovery is initiated against them. In the order, the court made no attempt to differentiate between those farmers with large or small land holdings, and in fact argued that this distinction was "arbitrary".
What is needed from governments is greater political will to implement all these reforms and measures. What farmers need is better remuneration for their crops, particularly in a time when land holdings are growing smaller, the quality is soil is deteriorating, and input costs are rising. A one-time loan waiver will not resolve any of these concerns. With these extreme events taking place, the question is not just about conjuring up a solution or ignoring the matter in the worst case. It is about ensuring a workable solution beyond effective crisis management.