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Home > India > Business > Special


Will the loan waiver relieve farmer distress?


Makarand Gadgil in Mumbai | March 12, 2008

Ultimately, it boils down to whether a loan waiver will help without taking action to improve irrigation facilities and to ensure remunerative prices for farmers.

Vijay Jawandhia, President, Shetkari Sangathana Maharashtra

'Unless the loan waiver is followed up with other measures to ensure the farmer gets remunerative prices, the measure is unlikely to help much'

Just like our colonial masters exploited our farm sector for the benefit of their industries, we did the same in the six decades of our independence. Only the skin colour of the exploiter changed. And unless and until we change our exploitative policies towards the farm sector, nothing is going to change.

I am not saying that the loan waiver was not needed. It was a much-needed relief to our farm sector but unless it is followed up with a series of initiatives to ensure the farmer gets remunerative prices for his produce, the loan waiver won't help.

The loan waiver in the current format doesn't do justice to dry land farmers. The land holdings in dry land areas are more compared to irrigated areas, and so, large chunk of farmers from dry land areas like Vidarbha, Bundelkhand, north Karnataka, Telangana, and so on, will be left out.

Besides, the quantum of loan available to dry land farmers is much lower than to irrigated land farmers. The cotton farmer gets a loan of around Rs 5,000 per acre and the sugarcane farmer gets a loan of Rs 40,000 per acre.

Ironically, the agrarian crisis is acute in these dry land areas, where the maximum number of suicides have taken place. So instead of putting the cap in terms of hectares, the government should announce a loan waiver to all and put a cap in terms of money.

When the Prime Minister toured the Vidarbha, we had suggested that farm labourers should be included in the ambit of the pay commission. The pay commission should decide the wages for farmers just like it does for government employees, and then, the agriculture price commission should declare the minimum support price for various farm products based on these figures.

This will ensure dignified living not only to farmers but for the millions of landless labourers also.

When India entered the World Trade Organisation, it had hoped the subsidies of farmers from Europe and the US would come down, which they haven't, so we should also increase the subsidies given to our farmers. The government also gives subsidies for exports like we are doing in the case of sugar.

There is a need also to change the mindset of our media, political parties and government officials. Whenever the prices of farm produce start rising, the media starts crying foul about inflation, political parties jump on to the bandwagon and organise protests and then the government immediately reacts and bans the export of that particular product or announces imports of it to check the prices.

But we never see the same thing happening when prices of items like steel or cement start rising. Don't they contribute to inflation?

This year, by and large, has been a good year for the farm sector, cotton is getting a price of around Rs 2,700 per quintal, soybean around Rs 2,200, and wheat between Rs 1,200 and Rs 1,400. The government should ensure that farmers do not get prices below this level next year.


Jayant Patil, Finance Minister, Maharashtra

'Long-term solutions are needed, but you need to give life-saving drugs after a heart attack - a bypass or angiography decision can be taken later'

I think it's a revolutionary step which will go a long way in ensuring the country's food security which has come under threat due to the declining production of food grains. The move is going to help the majority of the farming community in our country.  It will help around 76 per cent farmers in Maharashtra, and over 90 per cent in states like Uttar Pradesh, Bihar, West Bengal, Kerala, and so on.

The decision taken by the UPA government has opened the credit line for more than four crore farmers, whose credit line had got choked up due to default and who had no option but to turn to private money lenders.

The farmers will now able to take fresh loans from banks before the forthcoming kharif season and start the farming activity with new enthusiasm. It will definitely help to increase both production and productivity.

Many people who are criticising the loan waiver package are arguing that, if the government had such a huge chunk of money  to spend on the loan waiver, why is the government not spending it on creating better infrastructure for agriculture in form of better irrigation facilities, more cold storage chain, better road connectivity to rural areas, and so on?

This suggestion has been well-taken by the government. And nobody is denying that these measures are needed for the long-term growth of the farm sector and realising the dream of 4 per cent agricultural growth in 11th Five-Year Plan .

But the current status of Indian agriculture is like a person who has suffered a heart attack and needs to be given a life-saving drug first. Whether he needs angiography, bypass or open-heart surgery can be decided later.

Nobody is claiming that the loan waiver is a magic wand that will cure all the ills of our agriculture sector. Indeed, long-term measures like bringing more land under irrigation are needed and, in my view, Finance Minister P Chidambaram has tried to address the issue by allocating large sums for irrigation projects and also by announcing the formation of a
special corporation to execute large irrigation projects.

A demand is coming up from some sections that the limit of two hectares should be increased for dry land farmers from Vidarbha and Marathwada. While taking the loan waiver decision, the central government took a holistic view and ensured that a majority of the farming community receives the benefit. It has to draw the line somewhere.

I believe the decision to limit the land holding to two hectares is not at all arbitrary as suggested by some experts. It is a decision taken after taking into consideration the realities of both the farm sector and the government's resources.



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