Loan waivers will hurt farmers more – Business Line–05.04.2018

Policies that improve the long-term sustainability and competitiveness of the farm sector are the need of the hour

The ongoing farm distress around the country compounded by the government’s failure to adequately address the burning issues of this sector has triggered a coalition of farmer bodies to propose a slew of legislative changes intended to deliver relief to the beleaguered farmers.

According to reports, the All-India Kisan Sangharsh Coordination Committee has proposed two key recommendations. One, unconditional farm loan waiver; and the other, making minimum support price (MSP) a legal entitlement. Several political leaders have reportedly extended support to the proposal.

It is clear that the demand for farm loan waiver is a poorly thought-through, blatantly populist and emotive proposal that will prove to be a short-term fix. Quite apart from the fiscal implications of the demand, loan waivers create a sense of complacency among the farming community who over a period of time may begin to assume such a policy as an entitlement, rather than as a bailout under exceptional circumstances. We have seen it happen in the past.

It is possible that the coalition may be misdirecting itself by making this demand. It needs to seriously rethink its priorities and think long term. Will writing off farm loans improve the lot of growers, build capacity in them to face weather and other challenges and help withstand market volatility? No, it will not. If anything, such demands are sure to destroy the innate pride of farmers; and reduce them to dole-seekers.

Look at the long term

Instead of seeking a bailout, it would be prudent for the farmer coalition to focus on proposing policies for long-term sustainability and competitiveness of the farm sector. It is not industrialists, but farmers who are the biggest risk takers in our country; but their rewards are not commensurate with the risks they take. They need to be strong, with their pride intact.

For that, agriculture needs dynamic policy, investment and technology support. Indian agriculture is facing multiple challenges – worsening land constraints, looming water shortage and climate change, to name three key threats. Policy-makers must focus on these challenges. We need a policy environment that will not only encourage higher production but also ensure a remunerative return to growers. Large investments are necessary — for irrigation projects and for rural infrastructure; and we need to infuse multiple technologies in agriculture.

The importance given to agriculture across States is not uniform.We need a national agricultural policy with regionally differentiated strategies given the variations in natural endowments. The implementation of the national policy should be closely monitored and outcomes evaluated.

Any policy for the farm sector must seek to enhance the competitiveness of the sector. Debt waiver will not achieve that. As the Indian economy integrates with the global economy through the trade and investment route, our farm sector must seek to attain global competitiveness. This is what we must seek to achieve eventually. If it involves a subsidy —which I guess it will — so be it.

There are six key areas the farmers’ coalition may like to examine:

(1) Strengthen the input deliver system. Regulating the input market — seeds, fertilisers, agro-chemicals — will ensure growers are not short-changed in terms of quality and price; and that they are able to access quality inputs at correct prices.

(2) Rapidly expand irrigation facilities. A large number of irrigation projects are languishing across the country with time and cost overruns. These have to be completed including last mile connectivity so that farmers benefit. The Central and the State governments will have to work on a war-footing.

(3) Infuse technology and revive the extension mechanism. Indian agriculture (both pre-harvest and post-harvest) needs multiple technologies covering infotech, biotech, satellite tech, nuclear agri-tech and nanotech.

Tech infusion will result in higher efficiencies.

(4) Invest in rural infrastructure. this would cover approach roads to marketing yards (mandis), improvement in the APMC markets, warehouses, cold chains and so on. In addition to public investment, encourage the private sector to enter this economic activity.

(5) Use mobile phones to deliver weather, price and market information to growers.

(6) Build capacity among farmers to withstand market volatility.

I believe, farmers in our country can be turned into savvy traders with capacity building.

The farmer coalition AIKSCC would be well advised to concentrate on proposing policies to build long-term competitiveness of the farm sector.

The writer is a global agri-business and commodities market specialist. Views are personal

via Loan waivers will hurt farmers more – Business Line

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