Sunday, December 16, 2018

Who will pay the cost of political loan waiver promise ?

In democracy election of representative is the backbone. Political parties use this process to keep themselves in power. Now a day’s political parties are making false promise to attract the segment of the voters for mass polling in favour of their candidates. Before 2000 poverty eradication was a general issue among public for political promise. Now political parties have segmented the poor in different vote bank like dalit, backward, minority, women, farmers. These parties are making different promise to attract the voters. Due to lack of long-term policies farming sector in India is facing a lot of crises. In some state’s agriculture production is not good. In some states production is not getting enough market support due to lack of marketing infrastructure. Ultimately small and marginal farmers are not making enough profit even after good crops.

Govt provides agriculture loan for farmers on subsidized rates with easy term of return. Political parties are using the tool of farm loan waiver. These false promises are making the farmers greedy and promote the to not pay. Once the parties get the power with these promise then they try to bypass the promise like a half-cooked dish. They put a lot of terms like, limit of land, limit of waiver amount, type of bank and so and so. Parties knows it very well that they will not able to full fill the promise, but they use this strategy to come in power. 

Mass loan waiver is not economically viable step of agriculture industry in short term and long term. Ultimately the economic burden come back to farmer and poor. Govt use a lot of financial resources to complete the promise. Govt puts a lot of additional taxes to cover this revenue loss. Govt increases the taxes or cut the expenditures of the long terms’ schemes. These taxes are added back to the final prices of the good used the consumers and step by step this financial burdon reaches to the poor. It increases the inflation rates. Inflation leads to increase the living cost of poor. Living expenses of poor increases. More than 90% farmers are having small and marginal land. Most of these farmers are poor.

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Who will pay the cost of political loan waiver promise ?
Agriculture loan are given against the mortgage of agriculture land. Small and marginal farmers don’t have big land, so they don’t have much access to agriculture loan, Sometime title of small land holding is not clear or there are more than 2-3 owners. Bank don’t give loan due to documentation problems. Ultimately this loan waiver will not benefit them. There is one another category of farmers who take the land on rent and do the agriculture. Generally, these farmers are known as land less farmers. They have also not access of the agriculture loan. Above two categories are very important category for agriculture production and food security. This loan waiver will not also benefit to tenant farmers. 

Big farmers have access to agriculture loan easily. They have big land holding and their land titles are clear. These farmers have good profit from agriculture since the fix cost are very low. This category of farmers is political influential category. These big farmers are also part of local power. In some cases, it was seen that they rent their land to land less small farmers. They take loan from bank even after they are not doing agriculture. They take the loan from bank and give this loan on credit to land less farmers at market rates. This market rates are more that 5-6 time higher than the institutional agriculture loan. If some farmers want to play safe, then they withdraw the agriculture loan and re-invest it in bank as Fix Deposit. In worst and safe case, they are earning 3% - 5% interest. Once the govt change then these farmers get benefit of loan waiver. This loan waiver cost is born by the poor farmers and land less farmers. This loan waiver doesn’t help the category of farmers who need it.

Instead of this loan waiver Govt should invest in market infrastructure, storage, processing. With these steps post-harvest losses will be come down. Self-life of agriculture produce will increase, farmers will have easy access of market. Farmers will safe from the condition of distress selling or over production. These practices will generate the new employment. Excess production will available for export. It will increase the income from agriculture production. In the condition of excess production and distress selling, farmers throw the commodity / produce on road. With in one-two month farmers purchases same produce at 10-20 time more cost.

Economic point of view loan waiver breaks the economic cycle of the agriculture industry. Money doesn’t return on time to the source. In some cases, it was also seen that agriculture loan goes to lifestyle expenses, non-agriculture needs of farmers, or some other head for which agriculture loan was not sanctioned. Farmer organization, farmers, civilians should arise voice against these non-economical steps. If the money will go to long term investment, then it will be beneficial for whole industry an stake holders. Today word is moving toward the precision agriculture, automation of agriculture, soil less farming, urban agriculture. If we will not invest in right direction then our market will be flooded with the imported food items. It will be disaster for local Indian agriculture and not one will spare.


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