The Yogi Adityanath bug has bitten many states. After the firebrand Uttar Pradesh chief minister announced a Rs 36,000 crore farm loan waiver, suppressed voices from other states have found a reason. Maharashtra CM Devendra Fadnavis has already gone on record saying his government is studying the UP model. From Madhya Pradesh to Rajasthan, similar demands have started raising their heads.
Not to be left behind, Odisha Chief Minister Naveen Patnaik has also toed the same line, although with fewer words. His “we will certainly examine it” may have been in sync with Naveen’s personality of keeping things low-profile but it has stirred a ray of hope among farmers of the State who have been well under the weather since last year’s drought. For an agri-dependent economy like Odisha, utterances such as this have a manifold impact.
Let’s look at economics first. Rough estimates available with cooperative banks say approximately 34 lakh farmers have availed of credit for agriculture purposes in Odisha. The cumulative worth of outstanding loan is pegged at Rs 19,000 crore of which about Rs 12,000 crore is from cooperative credit structures. The rest has been extended by commercial banks.
In the 2015 kharif season alone, the cooperatives disbursed over Rs 5,077 crore to 17.34 lakh farmers. The commercial banks financed Rs 2,155 crore to 5.04 lakh farmers.
If it follows the UP way, the government could write off the entire outstanding loan (to a defined set of farmers) or it could just waive the outstanding for a certain period. It would be entirely the government’s choice to make.
A cursory glance of Odisha’s economy amply indicates that its sources of income have dried up while the endless list of sops have bled the exchequer. The State Budget 2017-18 shows tax collection dropped by over 11 per cent in December due to demonetisation. The government has admitted to the fact that its non-tax revenue estimated at Rs 9,822 crore in 2016-17 slumped to Rs 8,822 crore, and during 2017-18, the revenue projected at Rs 9,500 crore will most likely be revised, thanks to demonetisation and a sluggish growth of revenue earning sectors.
Income from the mining sector has dropped below the Rs 5,000 crore mark for the first time in the last five years, while excise revenue is set to fall by Rs 1,100 crore due to the recent Supreme Court diktat. Pushed against the wall, the government has already decided to go in for Rs 10,273 crore borrowing from the open market.
Yet, there is no stopping the Populism Juggernaut. A slew of new schemes announced in this year’s budget will inflict a burden of Rs 5,000 crore on the exchequer. The pucca house scheme will cost Rs 4,000 crore. If the government implements the Seventh Pay Commission for its employees, it will result in an additional burden of Rs 5,000 crore per year.
The million dollar question is where would the State government mobilise resources for a farm loan waiver? Last time the farmers of the State received a farm loan waiver was in 2008 when the UPA government announced the Agricultural Debt Waiver and Debt Relief Scheme. The total write-off which stood at Rs 3,000 crore was borne by the Centre. Truth be told, the BJD government just cannot marshal finances for any waiver. This, though, is one part of the argument.
Experts have dissected the 2008 UPA waiver to prove that such write-off actually bleeds the economy and in no way helps the farmer, except for a season. Additionally, it affects loan re-payment behaviour in a big way and demoralises the honest loanee.
This is where cooperation minister Damodar Rout, who walked into controversy recently for his remarks on farmers using loans for unproductive uses, makes sense. A political veteran, Rout said agriculture loans are misutilised by land owners, not sharecroppers who are the real tillers. “If farm loan is waived, it is of no use to the real farmers as the benefit will go to the landowners,” he said.
Interestingly, the government continues to sit on a land tenancy Bill seeking to address the sharecroppers issues. The Bill was drafted after a spate of farmer suicides last year.
At this juncture, it must encourage crop insurance to save the farmers on a rainy day. More importantly, it should empower them through technology transfer and adoption of cash crop practices. Subsidies and waivers will only lock the farmers in uneconomic farming and hazard their very existence.
Even though it is already looking at the 2019 elections after the not-so-encouraging show in the panchayat polls, Naveen should be very cautious in choosing his words. He has RBI Governor Urjit to follow who has already cautioned states against following the UP precedent.
Siba Mohanty
Deputy Resident Editor, Odisha
sibamohanty@newindianexpress.com