Captain Amarinder govt’s debt waiver for farmers

The populist move by a government that has inherited empty coffers was called inadequate and not matching the promise made by the Congress ahead of the elections. HT examines the intent and extent of the waiver proposal.
The Punjab government’s budget announcement of Rs 9,500-crore crop loan waiver for 10.25-lakh small and marginal farmers in the state was lost in the din as the treasury benches and the opposition indulged in a slugfest in the assembly. The populist move by a government that has inherited empty coffers was called inadequate and not matching the promise made by the Congress ahead of the elections. HT examines the intent and extent of the waiver proposal.
HOW SERIOUS IS DEBT PROBLEM?
Punjab farmers are under a debt of Rs 90,000 crore till March 2016, as per the figure quoted by finance minister Manpreet Singh Badal. All 18-lakh farmers in the state are under debt and the most stressed are those with land holdings between 2.5 to 5 acres (small farmers). As many as 5.71-lakh own up to 2.5 acres (marginal farmers) and owe a cumulative debt of Rs 9,845 crore. Of these, only 35,000 account for Rs 4,500-crore debt, which means each of them owes Rs 13 lakh. With 2-lakh farmers (20%) owing around 75% debt amounting to Rs 63,000 crore is a cause of concern. Falling remunerative prices (minimum support price) on crops and the tendency of farmers to take loans beyond their payback capacity has led them into a vicious trap. As per an estimate, 4,000 debt-ridden farmers in the state have committed suicide since 2000.
WHAT CONG PROMISED?
The Congress promised a complete farm debt waiver. It was supposed to cover money lent by both nationalised and cooperative banks besides that borrowed from arhtiyas (commission agents). The party even got forms filled from all farmers, taking a statement of their debt.
WHAT IS GOVT’S WAIVER OFFER?
Punjab chief minister Capt Amarinder Singh announced of the budget eve in the Vidhan Sabha that up to Rs 2-lakh crop loan of 10.25 lakh farmers who own up to 5 acres will be waived. The budget presented by the finance minister on June 20 made a provision of just Rs 1,500 crore for the debt waiver. A day after, the CM clarified that the government will spend a total of Rs 9,500 crore in five years on debt waiver, and Rs 1,500 crore were allocated for only this fiscal. He said the government will repay the loan to banks on behalf of farmers. The waiver is based on the interim report submitted by an expert panel, led by former commission for agricultural costs and prices chairman T Haque. The complete report is expected in August.
HOW STAKEHOLDERS RESPONDED?
Both the Opposition — Aam Aadmi Party and Shiromani Akali Dal–Bharatiya Janata Party combine — and farmer unions have accused the Congress government of befooling the farmers by announcing a partial waiver. The scheme is silent on the waiver for at least 15 lakh landless farm labourers, who by an estimate of the agriculture directorate owe an average loan of Rs 68,000. Also, the government has given no commitment to waive the debt of Rs 15,000 crore to 25,000 crore that the farmers owe to arhtiyas. While studying the debt pattern, the panel came across certain anomalies, such as there are 18-lakh farmers in the state but 50-lakh kisan cards issued for taking crop loan.
IS IT A PERMANENT SOLUTION?
The waiver scheme, experts say, is not a permanent solution. “(Debt) waiver is no solution, farmers would again fall into the trap. The challenge is to make farmers self sufficient,” says farm economist SS Johl. “What’s the fault of farmers who have not taken debt, or who have returned it, and why are those given waiver who can repay but have not?”. In the House, too, the legislators had called for a permanent solution.
WHEN WILL FARMERS GET WAIVER?
The farmers will get the waiver soon after a notification comes out. Expected in September-October, the notification will set the ball rolling. “The complete report of the expert panel will be in by then, and we will also take up debt settlement with the banks,” said Suresh Kumar, chief principal secretary to the CM. “Dealing with 10.25-lakh farmers is a huge task, and we will form a task force to implement the waiver.”