Lifelines beyond farm loan waivers
Mains Paper 1: Agriculture
Prelims level: NSSO
Mains level: Major crops cropping patterns in various parts of the country,
different types of irrigation and irrigation systems storage, transport and
marketing of agricultural produce and issues and related constraints
- Rural agrarian distress is firmly at the centre of the national
discourse today, triggered by the recent Assembly election results in the
Hindi heartland as well as continuous farmer agitations in the past two
- The farmers’ march in Delhi highlighted the reality of their
deprivation, anger and resolve.
- Their presence rallied the urban middle classes to march in
solidarity, and leaders of major political parties to pledge support.
Cry of distress
- The NSSO Situation Assessment Survey of Agricultural Households
(2013) shows that 52% of farming households are indebted, with rates as high
as 89-92% in some States.
- The quantum of debt has increased enormously, especially from
informal sources. Indebtedness has become the elephant in the room that
cannot be ignored.
- A loan waiver is only an element of immediate relief.
- It is an acknowledgment that farmers have been pushed into debt
due to the systemic failures of the government.
- The burden on farmers on account of just three items (lack of
compensation during drought and disasters, the failures of the crop
insurance scheme, and the deficit due to prices falling below the announced
Minimum Support Prices) runs to tens of thousands of crores every season.
- Farmer organisations can justifiably claim that it is the nation
that is indebted to the farmers, and not the other way around.
Bill to tackle indebtedness
- Repeated loan waivers used every few years as election sops may be
in the interest of political parties but are not in the interest of farmers.
- Immediate relief should be accompanied by a long-term systemic
solution to indebtedness.
- The unique aspect of the ongoing farmers’ movement is that their
demand goes beyond a one-time loan waiver they want enactment of a law for
freedom from indebtedness.
- The Bill, which has been developed by the All India Kisan
Sangharsh Coordination Committee, incorporates two key elements of reform: a
functional institutional credit system which is accessible and accountable
to all cultivators, and protection from debt trap in bad years.
Two key elements of reform
- First, it guarantees all farmer access to institutional credit;
this covers not only land-owning farmers but also sharecroppers, tenants,
adivasi and women farmers, and animal-rearers.
- It requires the registration of all cultivators and providing them
Kisan credit cards.
- This is critical because marginal and landless farmers are mostly
excluded from institutional credit, thereby putting them at the mercy of
predatory lending by moneylenders and input dealers. Tenant farmers who
lease land from other land owners are especially vulnerable.
- A study by Rythu Swarajya Vedika in June 2018 showed that 75% of
farmer suicides in Telangana are by tenant farmers.
- The NSSO Situation Assessment Survey (2013) showed that the
average debt from institutional sources for small and marginal farmers was
only ₹17,570 per household, and ₹1,41,804 for medium and large farmers.
- The Reserve Bank of India did issue guidelines in 2014 for
extending loans to Bhoomi Heen Kisan (landless farmers) and for a
debt-swapping scheme to convert informal loans of farmers into bank loans,
but they have remained on paper.
- Second, it establishes farmers’ distress and disaster relief
commissions at the national and State levels, based on the model of Kerala’s
Farmers’ Debt Relief Commission.
- Based on incidences of natural disasters, extensive pest attack
and such calamities, the commission can recommend declaration of certain
areas or crops as distress-affected in any particular year.
- It has the power to order measures of debt relief, which may
include loan rescheduling, interest waiver, one-time settlement, discharge
of debt in instalments, or, in an extreme situation, immediate discharge of
debt. The State-level commission is also empowered to pass orders regarding
non-institutional loans of distress-affected farmers.
Act on solutions
- In addition to reforming the credit system, agriculture should be
made profitable by ensuring fair remunerative prices, lowering the cost of
cultivation, and promoting viable farmer collectives and sustainable models
- The challenge before political parties and governments is to
deliver on the institutional solutions demanded by farmers.
- The farming community is not likely to relent if governments adopt
a business-as-usual approach and kick the can down the road for the next
- The principle is that farmers who suffer losses due to
circumstances entirely out of their control deserve to be protected.
- Agriculture is a key national enterprise, the concepts of limited
liability and bankruptcy protection need to be adapted to the farming
- This approach provides targeted protection to distressed farmers
when they require it, rather than allowing debt, distress and suicides to
accumulate until an election year.
- At present, crop insurance with its inadequate coverage and payout
is unable to fulfill that role, but distress relief would include any payout
from crop insurance.
Q.1) The official data on poverty released in India is estimated on the
basis of consumption expenditure data collected by
(a) Office of Economic Advisor
(b) Labour Bureau
(c) National Sample Survey Organisation (NSSO)
(d) Central Statistical Office (CSO)
Q.1) How can one ensure that its benefit reaches small and marginal cultivators
who are the ones who really require relief?