Mr Modi is right: On Politics of Loan Waiver

January 2, 2019
Politics of loan waiver

This refers to your editorial “Mr Modi is right” (Business Standard, January 2). Perhaps, agricultural loan waiver became part of Indian political maneuvering in its present form during late 1980’s resulting in a massive loan waiver through the Agricultural and Rural Debt Relief Scheme,1990 (ARDRS, 1990). The timely caution from RBI about the damage such blanket waivers of loans can cause to the repayment ethics, despite governments shouldering the responsibility to repay, and thereby to the financial system by generating future hopes of similar waivers, fell on deaf ears.

All political parties are party to the ‘Farm Politics’, as none of them has so far raised the issues now highlighted by the Prime Minister openly, like, the benefits of investing ‘waiver funds’ in infrastructure and input support for farming. Another politically sensitive issue is tax on agricultural income. If agricultural income is taxed rationally, the revenue will part-fund infrastructure and insurance in the same sector.
A recent media report about farmers in the drought-affected Hiware Bazar village in Maharashtra shows, a different approach to farm sector is possible. The farmers in this village have stated that they are not interested in the government’s loan waiver, but have resolved to develop their own marketing model this year (2019) to increase profits.
Even as the Centre mulls over how to help farmers and achieve its ambitious target of doubling their income, these farmers have shown the way by multiplying their income by conserving every drop of water and making agriculture a profit-making venture. The average monthly income of the farmer in this village has reportedly increased from 832 in 1991 to 32,000 today.
The same model may not be replicable elsewhere. But the principles and approaches to resources mobilization and project management are universal. As a first step, NITI Ayog could consider arranging to disseminate this success story through media and government channels. Perhaps, Prime Minister may consider including this in his ‘Mann Ki Baat’, if not already done.
M G Warrier, Mumbai






New Year resolution: No farm-loan waiver, please*


Radheshyam Jadhav Updated on December 31, 2018

Farmers in Hiware Bazar village decide to do away with middlemen instead

2019 might be another farm-loan waiver year, but farmers in drought-
2019 might be another farm-loan waiver year, but farmers in drought-affected Hiware Bazar village in Maharashtra, have a different plan in mind. They are not interested in the government’s loan waiver, but have resolved to develop their own marketing model this year to increase profits.
Even as the Centre mulls over how to help farmers and achieve its ambitious target of doubling their income, farmers here have shown the way by multiplying their income by conserving every drop of water and making agriculture a profit-making venture. The average monthly income of the farmer here has increased from 832 in 1991 to 32,000 today.
“Loan waivers will not help. We don’t want them. Instead, the government must empower farmers and make them less dependent on loan waivers. It is a proven fact that loan waivers don’t help farmers sustain and survive. We just need pure seeds, electricity and a fair
price for our produce,” a farmer and village deputy sarpanch Popatrao Pawar told BusinessLine.
Like Pawar, many farmes here believe their fate is in their own hands. “The village has a tradition of holding a meeting on December 31 every year to review water availability and decide the cropping pattern. We have a water budget every year and if there is a water deficit, farmers take a collective break from farming. But this does not affect their earnings as the dairy business earns enough money,” said Pawar.

Marketing network plan

This year, farmers resolved that they would develop their own marketing network to sell their produce and keep away middlemen. “The middleman system is getting stronger and earning without doing any work. We are finding a solution. This is our New Year’s resolution,” said Pawar.
 Hiware Bazar, located in an arid zone of Maharashtra in Ahmednagar district, gets 200-300 mm rainfall. Twenty-five years ago, villagers launched water conservation and watershed management works. They ensured that not a single drop of rainwater was wasted.
They changed the cropping pattern and also stopped growing water guzzling sugarcane, instead opting for vegetables, pulses, flowers and fruit cultivation.
Village farmers have a strong dairy business and about 4000 litres of milk is produced daily. Because of profit-making no family in the village is living below the poverty line. In last 25 years, Hiware Bazar has not called for a water tanker and families that had left the village in search of a livelihood have returned back. Not surprisingly groundwater is available at just 20-40 ft in Hiware Bazar while surrounding villages have to dig 300-400 ft.
 *Report in The Hindu Business Line, January 1, 2019



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