Loan waivers little help to farmers, says Niti Aayog after Rahul statement

Waiving off farmers’ loans is a “palliative” and not a solution for India's agrarian distress, said the Niti Aayog on Wednesday, reacting after three newly elected Congress state governments announced plans for such measures.

Congress president Rahul Gandhi has said his party will scrap loans of all farmers in the country if it wins the 2019 Lok Sabha elections. He has said he would not let Prime Minister Narendra Modi “sleep or rest” till he gave a reprieve to farmers.

Gandhi’s statements came made after the Congress chief ministers of Madhya Pradesh and Chhattisgarh waived off farm loans immediately after taking charge last week. Rajasthan announced a waiver on Wednesday.

On Wednesday, Niti Aayog cautioned against such policies. "Farm loan waiver is not a solution to farm sector distress. It is not a solution but is palliative," said Niti Aayog vice chairman Rajiv Kumar at a press conference after the release of its 'Strategy for New India @ 75' document.

Agriculture policy expert Ramesh Chand, a Niti Aayog member, agreed with Kumar. "In poorer states, only 10-15 per cent of farmers are benefited from loan waiver as few number of farmers get institutional loans in such states. In many states, not even 25 per cent of farmers avail institutional credit," Chand said.

"Even a CAG report says that farm loan waivers do not help. Loan waivers is no solution to address distress in farm sector," said Chand, referring to the Comptroller and Auditor General of India.

Kumar and Chand said the Aayog will advise the agriculture ministry to link allocations to states to reform measures undertaken by them in the farm sector.

Replying to a query on GST, Kumar said the average rate will gravitate towards 15 per cent with increased resources and widening of the tax base.

To a question on job creation, the Niti Aayog vice chairman said, "On the employment front, I am not sure crisis is appropriate word to use." "We are concerned with the employment situation. In fact, I am one of those economists who has said our policy targets could well be in terms of employment maximisation and growth will come out of that," he added.

Kumar also noted that aspirational levels are much higher today among the youth than what it was earlier.

Noting that the government wants to look at regional inequality, Kumar said, "We are not following Washington Consensus." He also said after the release of 'Strategy for New India @ 75', the Aayog will now start working on the 15-year vision document.