Limits of loan waiver

If the government's Rs 60,000-crore farm loan waiver was aimed at making heavily-indebted and resource-starved farmers eligible for fresh loans to resume their normal farming activity, that purpose is unlikely to be fully served in the short run. The implementation schedule for the scheme says as much. Those who take the benefit of the loan waiver will not be eligible for fresh bank borrowings until after June 30. So, even assuming that banks and cooperative credit organisations will not fight shy of lending again to defaulter farmers, the money can be disbursed only in July "" which will be too late for timely sowing of the kharif crop, or for securing the inputs for late planting. Kharif sowing in the rainfed tracts, which account for nearly 60 per cent of farm land, normally commences with the onset of the monsoon in the beginning of June and the bulk of the sowing is usually over by mid- or late July. In the irrigated areas, nursery planting and seeding operations begin even before June, soon after the rabi harvest in April. Thus, farmers in neither the rainfed areas nor the irrigated ones will be able to use fresh loans for agricultural operations in the ensuing kharif; they will have to wait till the next rabi before they can get back into the credit cycle.

Also, the loan waiver is unlikely to be of much use to farmers who are outside the institutional credit system and rely on loans from moneylenders. All too frequently, this is where the problem of rural indebtedness assumes its worst forms. The debt write-off cannot also be expected to automatically enhance farmers' capacity to step up production or increase their incomes as it is not accompanied by any specific output-boosting measures. From that viewpoint, the suggestion mooted by the noted agricultural expert M S Swaminathan for extending the production-oriented components of various on-going schemes to those farmers who are rescued from the debt and suicide trap, merits consideration. Several farm development programmes being operated under the National Food Security Mission, the National Horticulture Mission, the Rashtriya Krishi Vikas Yojna and the like have elements like distribution of free mini-kits of seed and other farm inputs, and cost-effective packages of technology and services. These can be handy for farmers to re-establish their production systems without putting any additional financial burden on the exchequer.

What farmers need most are avenues for production and income generation (read livelihood), rather than more credit, which, in the absence of assured output and returns, can push them back into the same debt trap from which they are sought to be extricated now. Thus, it would be far better, from the long-term livelihood security point of view, to invest amounts of the magnitude of Rs 60,000 crore in promoting measures like rainwater harvesting and watershed development so as to facilitate the availability of life-saving irrigation. Indeed, since it would be futile at this stage to expect the government to retract or even re-assess its debt waiver move, there should at the very least be some effort to achieve better targeting of government intervention, so that the benefits of the existing agricultural development programmes reach people in the non-irrigated tracts where farmer distress is most pervasive. Otherwise, this will not be the last loan waiver that gets announced.