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Will Loan Waiver Ever Solve Farmers’ Issue?

18 December 2018

Ajesh Mallick

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Bhubaneswar: With the general elections-2019 inching closer, loan waiver has become a buzz word jostling for garnering votes and coming to power following which the recent assembly elections of Madhya Pradesh (MP), Chhattisgarh and Rajasthan won by Congress are glaring instances.

Besides Congress, Odisha BJP unit also today jumped to the bandwagon after the respective BJP governments in Madhya Pradesh (MP), Chhattisgarh and Rajasthan got ousted as victorious Congress had made loan waiver its main poll plank in the three States.

The big question now arises if loan waiver is the sole solution to solve the problems plaguing Indian farmers as well as Odisha farmers or simply a political gimmick played by the parties.

Speaking to OMMCOM NEWS, Naba Nirman Krushak Sangathan (NNKS) coordinator Akshay Kumar commented, “It’s (loan waiver) certainly a political compulsion. It’s never a permanent relief. It’ll only provide immediate relief to some extent.”

“But, that’s not the permanent solution. Permanent solution lies in fulfillment of our longstanding demands of Price, Prestige & Pension. We’ve raised social security allowance for our farmers, justified price and overall infrastructure, then only it will solve the issues of our farmers,” the farmers’ leader stressed.

Ruling BJD spokesperson Pratap Deb said, “There are various problems of agriculture and farmers. Among them loan waiver is an issue out of many. As we are in the government, solving problems of the people is our duty. Our State Government has formed a ministerial team and discussion is going on with the leaders of farmers. Two rounds of discussion have already been done and will continue. The Government is also gathering feedbacks from all blocks and districts on how to solve. Decision will be taken at the right moment.”

“Loan waiver is not a permanent solution. It’s a part time solution. Loan waiver has various ways. For instances, Term Loan, Defaulter Loan, loan itself. Hence, the State Government will take decision taking all angles into view. It will be taken after the discussions with the leaders of farmers by the ministerial team and submission of its report, I think so,” opined the BJD leader.

Another BJD spokesperson Sasmit Patra said, “Instead of discussion on loan waiver politically, it would be better if the State Government takes a decision on it. Hence, an inter-ministerial committee has been constituted and it is examining the different demands of our farmers. Unless and until the inter-ministerial committee draws a conclusion on it, political comment is unjust. Our State Government has always been thinking about the farmers and the same positive thoughts will also persist in future.”

“Rs 72,000 crore loan waiver of the farmers had been done in 2008-09 during the UPA regime. Did it fully solve the problems of the farmers? No. Hence, more important is the price given to the farmers. Particularly, the MSP of Rs 2,930 and our State Government is trying hard to get it implemented for which pressure has repeatedly been exerted on the Central Government, but it is extremely unfortunate to note that the Centre has not yet taken any decision on it.”

As per reports, four states Uttar Pradesh, Maharashtra, Punjab and Karnataka have already announced farmer loan waivers in 2017 with an estimated cost of about US$13.6 billion (Rs 9,62,67,60,00,000). Experts project that if the loan waivers are implemented nationally, will cost about 2–2.6% of GDP of about US$40–50 billion (Rs 28,31,62,00,00,000-Rs 35,39,52,50,00,000).

Also reports said that the RBI opposes the loan waivers as they hurt India's public sector banks which are already under stress. Many farmers in other states have stopped paying loans and are withdrawing deposits from banks in anticipation of waivers.

Soon after the swearing-in-ceremony, Congress has already kept its poll promise and loan waiver has immediately been effected. Now the Congress-ruled State Government there is responsible for paying the interest and the principal against the loans taken by the farmers from Cooperative and nationalized banks.

According to reports, farm loan repayment in Madhya Pradesh had dipped by 10% as majority of farmers opted for a change in the State Government and expected loan forgiveness by the Congress coming to power.

On the contrary, studies show that big and medium farmers are the ones who gain the most from farm loan waivers. Scholars also point that the loan waivers during the one loan cycle prompt banks to reduce credit outlay for small or marginal farmers during the next loan cycle. Besides, recently outgone Governor of Reserve Bank of India (RBI), Urjit Patel, was reportedly of the view that waivers could eventually affect the national balance sheet.

Since India is an agriculture-based country and more than 50% of population depends on agriculture, it accounts for 18 per cent of India's gross domestic product (GDP) and provides employment to 50% of the country’s workforce. Thus, it is said that agriculture in India is a backbone for Indian Economy.

Also Read: Farmers Affected By Cyclone Phethai-Triggered Rain Will Be Compensated: Odisha SRC

Also Read: Senior Citizens Trees Of Wisdom, No Society Can Grow Ignoring Them: Odisha CM

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Akshay Kumar, Coordinator, Naba Nirman Krushak Sangathan, Odisha

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Pratap Deb, Spokesperson, BJD

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Sasmit Patra, Spokesperson, BJD