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Is farm loan waiver a solution to farmers distress?

If you give a man a fish, he eats for a day; If you teach a man to fish, he eats for a lifetime. This should be the motto of our government but unfortunately, the government always gives a temporary solution to a permanent problem as in the case of farm loan waiver.




Small or big farmers in India are completely dependent on monsoons for the productivity of crops. They take loans either from institutional bodies like commercial banks or from illicit local moneylenders at high-interest rates. If the monsoons are good they yield their crops and return the money, but if it goes bad they come in the vicious circle of moneylenders and are never able to repay their debt obligations. When the elections are near, the farm loan waiver is the mega talkathon for the political parties as it is the only arsenal they possess in their manifesto to gain the maximum number of votes.


Prima facie this looks to be the best solution for the kibbutz. But the reality does not seem to hold water when the government think-tank Nitiayog gave their report. They explicitly stated, the reality is that only a small percentage of agrarian take loan from institutional banks while the majority takes a loan from local moneylenders at high-interest rates. The farm loan waiver scheme will only benefit 30-40% of farmers in our country. Further, it impacts the credibility of taking loans, big farmers take unnecessary in the hope of loan getting waived in time of election thus creating a shortage of liquidity for the farmers who need it the most. Also, giving loan waivers in such a significant amount creates a fiscal deficit for the government and hampers the overall growth of the country. 


So, instead of having a myopic vision, the government should be clairvoyant about the future problems that farmers are going to face. The most radical solution is that the government should keep its powder dry and work on problems like depleting ground resources, fragmented distribution of land, and giving subsidy on the farming related tools and equipments.

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