• Farmers from Tamil Nadu protest in Delhi to demand for one time loan-waiver and better minimum support price and wanted the rivers to be inter connected. A group of farmers from Tamil Nadu protest at Jantar Mantar, New Delhi, Caught the attention of the nation.
  • Tamil Nadu Chief Minister and Ministers and many political leaders met the farmers in New Delhi.

Way of Protest:

The farmers from Tamil Nadu protested in a different way by holding human skulls, half naked, rolled bare-bodied on tar road, ate grass and bit mice and snakes.

Various Reasons for Which the Farm Loan Waiver is Needed:

  • Due to poor monsoon, farmer’s income reduced.
  • Farm loan waiver will be quick relief to farmer’s distress.
  • Many farm households are in debt
  • It will reduce the debt burden of vulnerable farmers
  • It will make farmers qualify for fresh loans
  • Many areas are still unirrigated and dependent on rainfall
  • Physical procurement by FCI is conducted only for rice and wheat, leaving out other crops.
  • Only 22 crops are covered under MSP and few farmers have awareness about it.
  • Some farmers are not aware of insurance scheme
  • Farmer’s suicide can be prevented.

State Government’s Loan Waiver Scheme:

  • Various state government such as Tamil Nadu, Andhra Pradesh, Telangana, Karnataka, Maharashtra, Uttar Pradesh, Punjab, Chhattisgarh, Jammu & Kashmir and Union Territory of Puducherry recently announced their own farm loan / debts waiver scheme.
  • Tamil Nadu Government had announced waiver of loans issued to small & marginal farmers by the cooperative Banks as on 31 March 2016.


High Court:
  • HC in April 2017 directed the state government to provide relief to farmers. The state government waived off debts on marginal & small farmers and extended partial debt relief for farmers with bigger land holdings.
  • Later, the High Court ordered Tamil Nadu government to waive farmer’s loan irrespective of their land holdings.

Supreme Court: SC on July 2017, put a stay on High Court’s order. This was a setback to the farmers.
Opinion of Economist on Farm Loan Waiver:

Opinion of Economist on Farm Loan Waiver:

  • Economists and bankers have different opinion on whether farm loan waivers are desirable or not.
  • Some economists argue that loan waivers represent poor policy for the following reasons:
    • It adversely affects the repayment discipline of farmers which leads to a rise in defaults in future.
    • Earlier debt waiver schemes have not led to increases in investment or productivity in agriculture.

Reasons Given by the Government for Not Waiving Loans of Farmers:

  • Farm loan waiver will only help minority section of farmers and it excludes landless farmers.
  • It incentivizes willful defaulters and erodes credit discipline.
  • It increases government spending which is then financed by additional market borrowings, pushing up the interest rates.
  • It provides only a partial relief because about half of the institutional borrowing of a cultivator is for non-farm purpose.
  • It excludes some agricultural labourers who are even economically, politically and socially weak.
  • It severely erodes credit culture.
  • It have serious implications on other developmental expenditure.
  • It provides only short term relief to limited section of farmers.
  • It increases the fiscal deficit.
  • After the waiver, the banks become conservative to issue fresh loans to some beneficiaries. As a result, the waiver’s main objective of expanding the issue of fresh loans to farmers was not fully achieved.

Short Term Measures to Help Farmers:

  • Waiving only a portion of loan
  • The government can provide a fixed cash subsidy per acre.
  • Banks can restructure farm loans. It will allow farmers to take a loan for next crops and then start repaying both loans together.
  • Insurance schemes can be expanded to reach more beneficiaries.
  • The government can focus on highly vulnerable districts instead of whole state.

Permanent & Long Term Solution to Improve the Conditions of Farmers:

  • In the long run, strengthening the repayment capacity of the farmers by improving and stabilizing their income is the best way to keep them out of distress.
  • The government can spend money for the following:
    • Building irrigation capabilities.
    • Promoting e-market
    • Building more storage facilities
    • Rural electrification
    • Transport facility
    • Building canals & ware houses
    • Ensuring procurement
    • Integrating producers with market
    • Farm infrastructure building
    • Increasing crop insurance coverage