Waiving Farmers’ Loan No Piecemeal Measures, Please

SOROOR AHMED says that, in view of the importance of farm sector, realistic measures should be adopted to help farmers.

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SOROOR AHMED says that, in view of the importance of farm sector, realistic measures should be adopted to help farmers.

The Union Budget 2008-09 sparked off a debate on the farmers’ loan. Many commentators said that the loan waiving will have little impact as 65 to 70 per cent of those who hold land do not get bank loans at all. Instead they had to rely on village money-lenders and mahajans, who extract huge interest from them.
The debate on the Union budget at least exposes the helplessness of the government in bailing out this section of the society. In a way we have not only accepted that 70 per cent of our land-holders cannot take loan as they do not have even Rs 500 to 1,000 to open bank accounts. Besides, the commercial banks are not accessible to them and they are unable to fulfil their criteria.
However, our agriculture minister, Sharad Pawar, was quick to respond a day after the presentation of the budget. He asked small farmers not to pay back loans taken from “unauthorized” moneylenders. He also said that the central government would ask the states to set up special machinery or task force to curb the influence of unauthorised moneylenders in rural India. The state governments will be asked to make all such pending debts with which unauthorised money lending is involved “null and void” and the farmers “need not repay at all”.
But Mr Pawar is well aware that we have even larger rural population called landless labours, whose economic and social condition is even worse. They too rely on the money-lenders, not for farming but for the sake of mere survival. They take loan when their children fall sick, they take loans when their huts are swept away by flood or other natural disasters and they take loans for performing the last rites of their dead ones.
However, this is true not only with the rural areas. In the urban slums too a huge population of daily-wage earners, hawkers, vendors, artisans etc can never take any bank loan, though their requirements range from Rs 2,000 (or even less) to 10,000. Thus there is an acceptance by the government that banks cannot be of any help to three-fourths of our population.
The idea not to pay back the loan as enunciated by Mr Pawar sounds very fanciful, but can anyone from the weakest sections of the society stand up and turn out the money-lenders? What will be the repercussion? What will the state machinery do in the far-flung villages where the clout of money-lender is strong? Does not Mr Pawar know about many campaigns against the money-lenders and mahajani system, especially in the earlier years of the Jharkhand movement? Besides, why is the minister reminded of not returning the money to money-lenders today? Was not he aware of the evil practice of money-lenders? At the same time the biggest question this loan waiving announcement raises is: if the government can in one go waive Rs 60,000 crore then why not get rid of the interest system once and for all––if not in consumer section it can at least do this with the interest on micro and farm loans.
Though it is the unorganized sector which is actually running a large part of our economy, we take into account the contribution of the organized sectors and care for them only. The unorganised sectors are not in our scheme of things. Thinking of the revival of the agriculture sector without taking into account the overwhelming number of small farmers seems to be unrealistic.
Taking bank loans is more common in the cash-crop growing states such as Pawar’s own Maharashtra, and Andhra Pradesh, Karnataka, etc. It is not that the people do not take loan from money-lenders in those states. The advent of multi-national companies dealt a severe blow to the cottage industries, handicraft and artisans. But if we continue to ignore small farmers, it will be much more devastating as farm sector comprises a much larger section of our society. Farm sector cannot be improved just by providing loan for relatively bigger farmers and then at the time of election waiving it. It is another thing that the move sounds too populist and detrimental to the economy.
The government cannot afford to look at the things in isolation. We will have to understand that many of the farmers who are committing suicides have taken loans not just from money-lenders, but even from the commercial banks. As they buy high yielding hybrid seeds at much costly price, failure of crops breaks their back and makes them unable to pay the loan, which keeps on multiplying – thanks to the high interest rate. This paves the way for suicides.
Unless we put a brake on high interest rate and provide both big and small farmers with easy loans, we cannot break the vicious circle. Adoption of half-hearted measures will not help and suicides will continue unabated.