Debt waiver cannot yield lasting rural prosperity–Economic Times–14.03.2018

On the face of it, the 40,000 farmers who marched 180 km from Nashik to Mumbai secured a handsome victory not just for themselves but for all farmers, with the Maharashtra chief minister promising to meet their demands.
These ranged from extending the scope of the farm loan waiver already announced, higher minimum support prices and implementation of the Forest Rights Act to give tribal cultivators farming forest land titles of ownership to the land they tilled to water conservation and river-linking schemes to improve irrigation prospects. Yet, in reality, it is doubtful if the government’s acceptance of these demands would end rural distress in Maharashtra. That calls for a different strategy.
It is difficult to tell farmers that their small loans cannot be written off when large loans made to tycoons and large companies are being written off in part or full, after they turned sour. But the fact remains that using up the states’ fiscal capacity to write off loans, whether of farmers or of bankrupt state utilities, has stripped states of the ability to spend on vital capital formation.
This hurts the entire economy, including agriculture. It would be a mistake to lend credence to the proposition that farmers’ prosperity can be shored up by outlays from the public purse on subsidies and higher prices for farm produce.
India’s farm prices have to be in line, broadly, with their global counterparts. Artificially boosting domestic farm prices way above global prices would be welfare destroying. Improving on-farm productivity and empowering the farmer to capture a larger share of the value that is added to his/her produce along the chain that stretches to the end-consumer are what will make for sustainable farming prosperity. That calls for both investment in infrastructure, better extension services, farmer education and creation of new organisational forms for farmers to play a role in agro-processing, whether it is simply washing, grading and packaging fruit/vegetables or processing these further. That, in turn, calls for cleaning up the power sector.
This piece appeared as an editorial opinion in the print edition of The Economic Times.
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via Debt waiver cannot yield lasting rural prosperity

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