Farm loan waiver – Is it the way forward?

No, definitely not. Farm loan waiver is an immediate relief but not an optimal solution in the long run. In an agrarian country like India where 70% population is primarily dependent on agriculture, mostly rely on monsoon for cultivation. As a result of the yield declines and they not able to repay the loan, subsequently trapped in debt and live in a hope that their loans could be waived off.

But loan waiver is not a permanent solution to them. Waiving loans will not let them able to pay their loans on their own rather they burrow again. A few years later they will be again demanding for another loan waiver. It may provide them assistance or encouragement for the next cropping season but it severely affects the other part. The first reason for which it is detrimental that it causes “inflation” which is a threat to our economy.  It also puts the public sector banks under heavy stress. Many small, poverty-stricken poor farmers in rural areas don’t depend on banks for the loan but rather prefer money lenders. So this scheme doesn’t cover those people who are the worthy candidate rather the rich farmers are benefited. This also makes people feel cheated who have paid the loan. It also affects the areas like Education, Health from where the capital is dragged.

According to a report by agriculture ministry of 2014 – total 12.60 lakh crore rupees farm loan is outstanding as on 2016. This money could have been used in other developmental works. RBI and economists also treat this as a wrong aspect. Former RBI governor Mr Raghuram Ji Rajan also expressed his concern that the real beneficiaries are not helpful rather others take the advantage from this.

Instead of loan waiver, many alternatives can be adopted. Providing crop insurance and subsidies on fertilizer and other requisites, adopting sustainable farming techniques and educating the farmers on crops can improve their condition. PRADHAN MANTRI FASAL BIMA YOJANA (PMFBY) also serves as a good alternative to loan waiver. They should be provided with better agricultural marketing and better irrigation system. It is seen that the government is just using the public’s tax money without any proper plan for political benefits. So the farmers should be equipped with the latest agricultural technology and proper farm knowledge so that they can pay their loans of their own. That will surely improve their condition and ultimately our country will prosper.

written by Biswabhusan
edited by Biswajit