A Bad Idea: Niti Aayog rightly rejects farm loan waivers–Times of India

Going against the grain, Niti Aayog has given a thumbs down to the concept of farm loan waivers just as Rajasthan became the fourth state in three days to write off such loans. Farm loan waivers were a major plank of the Congress campaign in the three Hindi heartland states of Rajasthan, MP and Chhattisgarh which it recently wrested away from BJP. Now in all three states farm loans have been waived, while BJP-ruled Assam too has announced such a scheme.

However, farm loan waivers are nothing but a race to the bottom. They neither help the state’s finances nor provide solutions to agrarian distress. They are just populist palliatives that are trotted out during election season. Farmers are indeed suffering in large parts of India. But their woes stem from increasing fragmentation of farmland making farming unproductive, poor irrigation facilities and hurdles to accessing the market. Unfortunately, none of the political parties is willing to address these fundamental issues or take on vested interests.

Niti Aayog has rightly pointed out that farm loan waivers essentially aid just 10-15% of farmers as the rest don’t have access to institutional loans. In such a scenario, the only long-term solution to the farming crisis lies in boosting labour-intensive industrialisation to absorb excess farm labour and moving to schemes such as Telangana’s  Rythu Bandhu which provides investment support to farmers up front. It’s high time farm loan waivers are junked.