Without infrastructural support, how is waiving farm loans a solution?

Between April 2013 and November 2017, 3,515 farmers in the state have committed suicide. Farm loan is just one reason and there are many other factors driving them to it . Only if we understand their real problems will we be able to address them and waiving off farm loans is not the real solution.

Farmers are suffering due to a decline in productivity over a period of time as a result of fragmented fields, growing salinity of agricultural land, depleting ground water levels, water shortage, changes in environment, untimely rains, spurious pesticides and poor quality seeds. Also, when the crop is ready, the government fails to announce the minimum support price, worsening the farmers’ plight.

We need to address these issues by recharging the groundwater, widely introducing watershed programmes and so on to improve the productivity of farmers. When we have not done that how can waiving off farm loans be a solution? How will a poor farmer, who has not even borrowed from the formal sector, benefit ?

Also, writing off farms loans to the tune of Rs 53,000 crore will drastically reduce the allocations for the poor and vulnerable. The 2018-19 budget estimates envisage revenue receipts of 1,62,764 crore and expenditure on social services of Rs 64,193 crore. If Rs 53,000 crore is allocated for waiver of farm loans, it amounts to one- third of the state’s total income, which will have an adverse impact on its expenditure on social services.

In my view it might be better to only waive off the interest amount of the loans and retain the principal. The other alternative could be waiving off only loans taken by small and marginal farmers and that too in instalments spread over a few years until 2021.

And to mop up some additional revenue , the state could hike tax on liquor and cigarettes as this will not attract much protest. Currently, the total taxes collected in the state stand at Rs 1,03,444 crore.