- 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.
Judgements:
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
