Sunday, January 13, 2019

Is Loan Waiver is The Real Solution?

Modi tujhse bair nahin par Vasundhara teri khair nahin.
Image source: https://www.bhaskar.com/
This line floated a lot before State Assembly elections held in Rajasthan. Many BJP delegates may say that their anti-incumbency which led them to lose the elections along with the NOTA, but that’s not the fact. Let’s go back one year in 2017, one of biggest news coming for the cry of farmers craving from the government for the things which is happening in the rural podium especially to agriculture. The number is still not clear but many committed suicide for the loan they got from the moneylenders or banks and have failed to pay back due to the failure and corruption persisting in the medium layer who grabs biggest profits when the vegetables arrive in the so-called sabji mandis. Now come to the present, you may have heard about people sending 1064 Rs. the farmer has obtained from selling 750 kg of onions to our PM in frustration. Check another instance, if you have followed KBC, there was a farmer who came from Maharashtra who tagged himself and every farmer as a gambler. That has brought tears in many eyes listening to the pain and vain there are suffering currently. Are these things not surmounting to a crime against those who are feeders of our country?
Several factors lie apart from governance which has led to the losses. Let’s start demographically, consider the cyclones like Gaja or Titli which devasted so many lands. Tamil Nadu which was once the rice bowl switched to the vegetation of coconut but Gaja which was earlier predicted that will hit Tamil delta reached inside after the breach of its code and entered with a bulky and lashing storm to create huge damage. Between 1891 and 2002, Cyclones arrived at a rate of 0.49 hits per year. But when you consider about the period from 2002 to 2018, in just 16 years, 10 storms came and 10 storms went away (0.63 hits per year), clearly giving the signs of the agony of Mother Earth for not respecting her properly and effectively. Over usage led to environmental distractions. This also led to a change in rain pattern which in turn affected the quality of soil and crop failure is the outcome what we see. Enough discussed in the Southern side now come to pan India and state level. We point towards the government and make them react towards these incidents by making this a political issue.
We listen that various schemes have been launched with the vision of helping farmers in a better way. Odisha launched KALIA (Krishi Assistance for Livelihood and Income Augmentation) under which they declared to give Rs. 5000 in Kharif and Rabi season to all farmers and loan of 50000 will be interest-free. Jharkhand released Mukhyamantri Krishi Ashirwad Yojana under they promised to give  Rs. 5000 per acre to the farmers every year. Madhya Pradesh stands behind the scheme of Bhuvantar Bhugtaan Yojana to meet out the demand of MSP with what has been the commodity sold at the price. And above all now West Bengal Government in which state we have 72 lacs of farmers, presented another diplomatic scheme apart from their own devised Marxist approach with the flagship of “ Krishi Krishak Bandhu” to offer 2 lacs to the next kin of farmer who has committed suicide. Farmers from Rajasthan flee to Surat to join the textile industry or involved in stone scrounging industry or establishing roadside hotels in the highway with the vision that this new profession can build income for them. It becomes quite astonishing to wonder about the what was will be next propaganda in the scheme of new plan any state government will lay in near future. Bureaucrats may be also sitting there with the government but why are they not telling how it will impact the economy in terms of agriculture to them?
Former RBI Governor advised through different print media that this will simply increase the fiscal deficit and instead of handling such things one need to make the holistic framework and try to check how to handle Minimum Support Price. But Odisha failed to listen to it completely and declared KALIA and increased the MSP of oilseeds. No matter whatever mentioned in these loan waiver,  it will scuttle out and the day will arrive when cannibalism will be a common sight in day to day basis as the quality of food will vanish (Remember the scene from Jack Reacher). 

If not loan waiver, what can be done?
Already we can see paralysis in the banking system and Government every now and then trying to recapitalize the banks. Already 83000 Crore has been awarded to these banks which are under Prompt Corrective Action Framework of RBI i.e. they have been disbanded to provide any sort of loan, although they Statutory Liquidity Ratio of 26-27%, much above of 19.5% of threshold instructed by RBI. Pallav Mohapatra, CEO of Bank of India, hopes that they will come out of PCA framework by 2020. Banks are already facing bulks of NPAs and Government is trying to remove the hurdle through FEOA by knocking down economic offender existing in the real world. No doubt some of this NPA is coming from the farming sector. So, to handle these two issues, can be that farmers should be provided with more loan repayment time period. This will also envisage the fact that interest rates will also get smaller. Apart from that MSP architecture should be monitored strictly and penalizing the offenders who violate the system. Farmers should be provided seeds at a cheaper rate or sold to them at no cost.  Unless and until checkpoints won’t get installed, we will see the immense anger of farmers in the future.

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