Farm loan waivers invariably figure in most political discussions across the country these days. But this topic is not new. Before farm loans were given out, many other measures were taken to ease the growing stress on farmers — from the Green Revolution in Nehru’s era that helped produce high-yielding varieties to largest ever farmers rally conducted in the late 1970s by Chaudhry Charan Singh in Delhi’s Boat Club.
Similarly, rallies for the plight of farmers were conducted by Sharad Joshi in Maharashtra and Mahindra Singh Tikait in North India in the 1980s-90s. The movement only grew and gathered momentum over the years and unfortunately, we eventually reached a stage of farm loan waivers.
India has seen its fair share of waivers over the years, with the first one given out in 1990, amounting to Rs 10,000 crore at the time. In today’s value that is around Rs 50,500 crore. The then PM, VP Singh’s decision at the time set the stage for parties using the promise of farm loan waiver as a political tool.
Since loan waivers are a fire fighting measure to save distressed farmers, and not a permanent solution to the problem of indebtedness, waivers are a recurring phenomenon. The next farm loan waiver was seen when Rs 52,000 crore were released by the Centre as part of Agricultural Debt Waiver and Debt Relief Scheme, launched in May 2008 by Prime Minister Manmohan Singh, right before 2009 general election.
Since then, state governments have also been promising farm loan waivers.
In 2014, when the erstwhile AP was bifurcated, farm loan waivers were promised in both the states. In Telangana, TRS formed the Government. TRS-led Government wanted to waive the loans at once, but keeping with the guidelines of Reserve Bank of India, it was eventually carried out and concluded in a phased manner at a total cost of Rs 16,124 crore in four phases. The crux of the matter is that the problem needs to be addressed at its root, rather than just waiving loans.
Chief Minister K Chandrashekhar Rao has come up with an ingenious solution to the problem by way of the ‘farm investment support scheme’. The scheme extends coverage to nearly 80 lakh farmer families in Telangana. It includes a payment of input grants directly to the farmers. In total, the annual payment received by each farmer will be Rs 20,000 per hectare.
The groundwork for this scheme has been carried out and the CM is due to launch this scheme before the start of kharif season of 2018, by issuing cheques to the farmers in May itself. He has also requested Finance Minister Arun Jaitley to ensure that nearly Rs 7,000 crores are made available in cash across all bank branches in TS.
After going through the provisions of this decision, I feel this model can be replicated successfully all over India. This model has been called “crop-neutral, more equitable, more transparent, and gives farmers the freedom to choose” by the former Secretary, Agriculture, GoI, Siraj Hussain in a newspaper article.
The Congress in Telangana has also promised a farm loan waiver if it comes to power in 2019. The estimated cost of this waiver is said to be Rs 32,000 crore. The entire revenue receipts of Telangana are Rs 1,13,083 crores for a year, including devolution of central taxes and grants-in-aids. This means that if Congress wants to waive farm loans at once, it will have to stop government functioning for nearly three months.
KCR has approached this issue with a far more sensible step-based approach. The first step – electricity. Farmers in Telangana are being provided free power for agricultural pumps. From January 2018, electricity is being provided 24 x7. The second step is water in the CM’s plans with massive irrigation projects being set up on Krishna and Godavari rivers to increase the cultivable land in Telangana by up to 1 crore acres. The next and third step is the cost burden for cultivation. For this, the Telangana government has introduced the above-mentioned grant which will help reduce cost of cultivation for each farmer.
To scale this move at a national level, I have introduced a Private Member’s Bill titled, “The Payment of Agricultural Inputs Grants Bill, 2017” in the past Winter Session of Parliament. The Centre will decide every year in the annual Budget, the amount of grants payable to the farmer, which will be shared on a 50-50 basis with States.
The amount payable will depend on the land holding size of the farmer and will be paid in a bi-annual manner, directly to the bank, krishi or any other account specified by the Centre. The basis of payment depends on the land holdings and hence the Bill also requires the collection of land data records. This way the farmer will have funds to procure his inputs before each season.
Since the Bill proposed a grant and not a loan, the amount received by a farmer will not have to be repaid even if there’s a crop failure due to extraneous factors. By removing the need to take huge loans, GoI and respective state governments will be able to successfully tackle the problem of farmers, notably the farm loan waivers.
The author is MP, Karimnagar