FROM LOAN WAIVER TO MORE SUSTAINABLE SOLUTIONS
Creating a stress-free environment for the farmers.
Hey, how is it going?? Hope my last article on India-China economic ties has covered some key notes on international affairs and their social impact to some extent. And here is my new blog on the very sensitive issue i.e. farmers’ loan waiver where I have highlighted about the solution next to loan waiver.
So let’s have a quick review on the scenario of Indian agriculture. Low scale and low productivity this is what Indian agriculture is characterized by. Most of the land under cultivation has no access to irrigation. Agricultural income does not suffice to meet the farmers’ basic needs. Besides these weather and market crisis make the situation more disastrous.
Why farmers’ debt is rising?
Modern agriculture requires investment in machinery, seeds, fertilizers, labor etc. Rising expenses in health, education put additional demands on farm families. All these investments go beyond the savings of a mere Indian farmer and this instinct him to go for loans from various institutional and non-institutional sources. And this debt burden is giving rise to suicides for which there are such hue and cry all over the country.
What initiatives have been taken??
Recently a few states like UP, Maharashtra, Punjab, and Karnataka have responded to farm distress by enacting farm waiver schemes as a measure of immediate relief. The demand for such measures is spreading to other states too. The ultimate goal of farm loan waiver is to lessen the burden of vulnerable farmers and to help them qualify for fresh loans.
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Amidst this again the question arises does this benefit reach out to all the needy farmers?? Obviously not. Everything has its own drawbacks. Well, I can’t give the accurate clues about the functioning of such grand schemes so I would like to mention the exact points what agricultural economists say regarding this issue.
Let me summarize the loopholes:
First, it covers only a tiny fraction of farmers.
Second, it provides only a partial and short term relief to the indebted farmers.
Third, loan waiving excludes agricultural laborers who are even weaker than the cultivators.
Fourth, it severely erodes the credit culture with dire long run consequences to banking business.
Fifth, this scheme is prone to serious exclusion and inclusion errors according to the report of Comptroller and Auditor General.
In my opinion, the waiver is quite superficial in its approach.
Then how Should Be The Approach???
It’s time to think sustainable
Instead of waiving loans government should for providing financial relief (cash) to the required family who satisfies certain criteria, this seems to be an immediate relief too. For instance, in Uttar Pradesh, 23.2% agricultural households (180.49 lakh) are estimated to have income below the poverty line. With 36000 crores each household can be given Rs 85,920. This looks to be a more inclusive approach and provides farmers the flexibility to spend the money.
As a part of sustainable solution collective effort is needed to increase the income from agricultural activities. Capitalist countries like the U.S. provide huge subsidies to the farm sectors and India should follow the same. Improved technology, expansion of irrigation, crop diversification are the measures for raising productivity and farmer’s income.
A liberalized environment for investment, trading, and marketing should be created. Reforms in rules and laws are highly needed by both state government and the center.
Hence its high time India needs to work for extensive growth and bridge the gap between India and Bharat.
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