NEW DELHI: Apparent rural distress appears to be pushing the Narendra Modi-led NDA government towards populism. The Centre is now mulling a proposal to make crop loan interest-free.
On one hand, there is an agrarian crisis in the country with farmers staging protests in most of the states. On the other, the BJP is bracing not only for the 2019 Lok Sabha elections, but is also gearing up to protect key bastions in states headed for polls.
“The Modi government will not waive off farmers’ debt, which was done by the Manmohan Singh-led UPA in 2008. However, the government is well aware that the condition of farmers has become precarious on account of mounting debt. Therefore, the proposal to make crop loans interest-free is under serious consideration,” said a senior BJP functionary.
Incidentally, crop loan is made available to farmers who pay back their debt on schedule at four per cent interest. A few of the state governments further subsidise the crop loan by bearing the interest burden in the range of 1-3 per cent.
“A formula could be worked out under which the Centre and states can share the interest burden of the crop loans. The financial burden on the Centre could at most be `18,000 crore a year. Such a move could give much-needed relief to farmers,” sources in the government said.
The move to extend crop loans at zero per cent interest rate to farmers has been deliberated by the party chief Amit Shah and senior leaders, who reportedly concurred to extend financial relief soon, added sources.
Agriculture experts have argued that subsidising crop loan is a low-hanging fruit for the Centre to encourage agrarian community at a difficult time. “This will help increase the lending to the agriculture sector and further encourage farmers to pay back their loans. The banking sector too will benefit at a time when a large chunk of loans to farmers has turned into non-performing assets,” said a senior official in the government.
Mounting Crisis
The BJP is gearing up to defend Gujarat, which is heading for Assembly elections in December. The BJP will further be defending the party rule in key bastions—Madhya Pradesh, Rajasthan and Chhattisgarh—next year. All these states are plagued by farmer unrest.