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Alternatives to agricultural loan waivers

Alternatives to agricultural loan waivers

By Shweta Shaju

On August 6, 2017, Devender Singh from a village in Fatehgarh Sahib District in Punjab was found hanging from the ceiling in his room. A year before, in December, Devender’s father died after consuming pesticide and some eight years back in 2009, Devender’s brother committed suicide. In a span of eight years, a farming family lost three of their bread earners to indebtedness.

According to National Crime Records Bureau (NCRB),  Farmer suicides in the country have risen by 42 percent between 2014 and 2015. The increasing unrest amongst the farmers has been due to a number of reasons, namely: successive droughts in the area, debt burden, low income, crop failure and most recently demonetisation. In the wake of increasing farmer unrest, some states have come up with various loan waiver schemes. However, are farm loan waivers the right way of addressing the agrarian crisis?

The need of the hour

The farm loan waiver caters to only one aspect of the agrarian crisis i.e. debt burden that too debt taken through formal sources. However, the farmers are affected by a number of problems as mentioned previously. Even after the Agricultural Debt Waiver and Debt Relief Scheme of 2008, not much has changed in farmers’ life. Although the reason for most of the farmer suicides is indebtedness, the spell of a loan waiver can only offer temporary relief and is unlikely to change much in the long run. So, the need of the hour is long term structural reforms to solve the woes of the farmers.

Planning for the long run

For starters, a farmer’s income has to be made stable and secure. For this, the Minimum Support Price (MSP) has to be set at such a price that covers all their production cost and includes profit for the farmers. Various ways need to be devised to minimise farm production cost and maximise returns. Production cost can be reduced by using machines and modern technology. Here, the government can intervene and help the farmers in the easy procurement of the new technology.

Indian agriculture is highly dependent on the monsoon and if in a particular year there is no rainfall, farmers face losses. To avoid this, the money that the government uses in waiving off loans can be used for investment in better forms of irrigation which will help the farmers in the long run. 

If a crop fails, the farmer has no money and if the crop is good, prices tumble down and he is bankrupt again. So in either case, the farmer is in trouble. To protect the farmer from these extremities, the following two things must be worked on; better insurance policies and roll out of warehouses to store surplus crops instead of selling it right away and reducing the prices of the same.

Bringing on the Evergreen Revolution

One of the major problems faced by farmers is the existence of middlemen. By eliminating the middlemen, there will be a free flow of market forces which will determine prices based on demand and supply of a particular crop. If the price of a crop falls below a predetermined threshold level (MSP), farmers can be compensated by the government. There is also a need for increasing productivity in perpetuity without causing any ecological harm. The concept of Evergreen Revolution coined by M.S. Swaminathan focuses on the same. It includes integrated pest management, integrated nutrient supply, and scientific water management.

Going organic

More emphasis should also be done on organic farming. Indian states should follow the example of Sikkim which has become the first state to be declared the Organic State of India. Organic cultivation doesn’t involve the use of chemical pesticides and fertilizers and also improves the quality of the soil which consequently improves the standards of the crops produced there.

What is required

Structural reforms in Indian agriculture will go a long way in improving the farmers’ condition, quelling the vicious cycle of indebtedness and making agriculture sustainable. Although at present, there is no alternative of loan waivers to abate farmers’ woes, an amalgamation of loan waiver scheme and structural reforms is what is required.

Featured Image Source: Flickr


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