Populist quick-fixes: Think beyond loan waivers


Beyond loan waivers
The submitted version of my letter published in The Hindu today (under "Populist quick-fixes") copied below:
Beyond waivers
The issues raised by Ramesh Chand and S K Srivastava in their article “Think beyond loan waivers” (The Hindu, July 20), hopefully, must be receiving attention at NITI Aayog to which both of them belong. It is high time the ‘religious taboo’ in India on taxing agricultural income is removed and agriculture is brought into the mainstream as an activity on which majority of the people of India depend for their sustenance.
The need for farm loan waiver is a product of several factors which together make farming a loss-making proposition for owners of agricultural land with landholdings of few cents to thousands of acres of land. These obstructive factors include, from high cost of inputs to low farm gate prices, absence of irrigation facilities and inadequate availability of electricity and transport arrangements, reluctance to promote joint farming where landholdings are small, expectations generated by government and financial sector about availability of ‘cheap’ credit followed by ‘waivers’ and so on. There were situations in states like Kerala when farm credit obtained on the basis of landholdings directly went to fixed deposit accounts of borrowers with another bank next door and the credit availed became eligible for interest subsidy for prompt repayment, without involving any farming activity!
If still consensus on agricultural income tax is unthinkable, there should be some arrangement for pooling a portion of surpluses from farm sector during good times and using it in bad years as also a compulsory crop insurance scheme covering all major crops. Insurance is about cross-subsidization.
Of course, better agricultural practices supported by technology should go side by side with all these efforts.

M G Warrier, Mumbai

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