What is the issue?
Farmers in States like Tamil Nadu, Madhya Pradesh, Maharashtra and Karnataka are now demanding loan waiver.
How far is it justified?
- Writing off farm loans is an incentive that neither helps build capacity among growers nor improves the efficiency of farm activities.
- Usually, receiving such an incentive becomes habit-forming and promotes a tendency to treat farm loans as a grant rather than as a debt.
- Having said this, under Indian farm conditions, farmers are greater risk-takers, much more than industrialists.
- In most parts of the world, especially in developed economies, agriculture is almost invariably subsidised.
- But, in our country, agriculture enjoys little subsidy and often, suffers negative subsidy in the form of various restrictions.
- In Tamil Nadu, Karnataka and parts of Maharashtra, inadequate rains, and lower prices have weakened farmers’capacity to repay loans.
- The same cannot be said to be the case in Madhya Pradesh where agriculture is a success story of recent years. Thus, the status of farmers differs across the country.
What could be the solution?
- Short-term measure - Instead of writing off loans, rescheduling or restructuring them should be explored.
- This is particularly important in States that have suffered natural calamities, such as poor rainfall.
- Medium-to-long-term measure - It is vital to step up policy support, investment support and research support for agriculture.
- Some of the important steps to revive agriculture include:
- Strengthening the input delivery system.
- Rapidly expanding irrigation facilities.
- Investing farming with multiple technologies.
- Investing in rural infrastructure.
- Using ICT to deliver price, market and weather information to growers.
- And lastly, work to build capacity among farmers to withstand market volatility as integration with the global market grows.
- All anti-farmer restrictions such as those on storage, marketing and export trade should be done away with.
- Low prices of pulses and oilseeds cannot be treated as isolated incidents. They represent a trend that cannot be overlooked.
Source: Business Line
