Madhya Pradesh farmer protest: Loan waivers are worst form of populism, they won't solve real issues

I am totally opposed to farm loan waivers as it will destroy the integrity of the banking system and only hurt farmers. When state governments announce farm loan waivers, it is a kind of “copy-cat” knee-jerk reaction. The Uttar Pradesh government’s decision to waive off farmer loans was disastrous and it is snowballing in other states of the country now.

A terrible consequence of farm loan waivers is that it can completely undermine the extraordinary anti-poverty initiative led by Self-Help Groups (SHGs) of women across the country, initially in States like Kerala, Tamil Nadu and Karnataka but now even in States like MP and parts of UP. So many of these women, with more than 97 percent loan recovery ratios, have helped uphold the banking system in remote rural India. In India, it is not the poor but the Vijay Mallyas and Subroto Roys who are the main defaulters. What nationalisation of banks made possible in the first instance, is being carried forward by the SHG-bank linkage program. All this great work, which has made a huge dent into rural poverty, is threatened by loan waivers

Why are farm loan waivers being given at all? Why not focus on the real issues that affect the agrarian sector? When you don’t, you have agitations hitting the road with farmers protesting.

The problem that has beset the country now, dates back to the Green Revolution, which was introduced in India as an attempt to ensure food security and was a solution for the country in the 60s and 70s. But in recent years, it has completely gone off the rails. There is a crisis of sustainability in every sense of the term so much so that we need a paradigm shift in agriculture.

The first crisis is ecological. Farming is about nature. People making decisions about farming in the comforts of their air-conditioned rooms tend to forget that. If the technology and inputs that a farmer puts into the land destroys the soil and water, farming becomes unsustainable.

Farmers spilling out milk on a road in Aurangabad on Thursday. PTI

Farmers spilling out milk on a road in Aurangabad on Thursday. PTI

To cite an instance. Punjab is a case where one can highlight the relationship between inputs and outputs and how it got skewed over the years. In the initial years, we had a positive, upward sloping relationship between farm inputs and output. However, over time this relationship has plateaued, even turned negative. What this means is that to get the same output, farmers have to use more and more fertilisers and pesticides. So the benefits are going down and the costs are going up, also because these chemical inputs are harming our soil and groundwater. This has meant that farmers end up making losses and farming becomes increasingly unviable.

One response to this crisis is to argue that we must get people off farming. While there is no doubt that we need to create more jobs in manufacturing, there is no getting away from the fact that even in 2050, according to latest UN projections, there will be 800 million people living in rural India. And just one look at the state of Indian cities will make it clear that we cannot endlessly move people from the villages to the cities before we fix the urban crisis.

So solutions have to be found for agriculture – and fast. It is imperative that the government takes the initiative to encourage farmers to shift to non-chemical agriculture. Many think that this is a romantic proposition. But I can testify, through work on the ground in this remote tribal pocket in MP, over thousands of hectares of farmland, that viable alternatives exist, which help even the poorest farmers earn profits from agriculture, even while maintaining the ecological balance and protecting their soil and water. This is real sustainability, both economic and ecological, even more urgently required at a time of climate change. The pattern of our subsidies must also change, moving decisively away from chemical fertilisers and pesticides, towards more nature-based options. There is a shortage of these in our country and government can play a big role in incentivising their production and increasing their availability at reasonable prices.

Farmers must also be encouraged to grow crops that require less water, like pulses and millets. They are nutritionally superior crops too. Instead, what the government has done is to incentivize farmers to grow rice and wheat, as it primarily procures only rice and wheat. We have created a situation where around one-third of the country’s total water resources go into paddy. We have incentivised paddy farmers in Punjab to sow rice in June before the monsoons.

It is actually a myth to say that there is a water shortage in India. We have enough water but we have completely mismanaged it. We need to learn to live within our means. If you encourage farmers to grow sugarcane in Marathwada, you will engender a water crisis. Sugarcane is reported to take up 71 percent of Maharashtra’s irrigation water. Why are we surprised at a situation we have ourselves created!

The way forward is for the government to incentivize growing of crops like millets and pulses by including them, for instance, in the Integrated Child Development Services (ICDS) and Midday Meal Scheme. So if government assures farmers that it will procure the millets and pulses they grow, at a Minimum Support price, many of India’s farmers will make the transition to these crops and gradually move towards economic and ecological sustainability.

This is also a health imperative for us given that diabetes is today a major national epidemic in India. A major component of treatment has to be changing the dietary habits of our people, with a greater role for millets and pulses.

The government also must not delay investing in much-needed farm infrastructure that would enable farmers to move up the value chain. We cannot continue to have farmers dumping their onions, potatoes, tomatoes and milk on the road. Farmers should not go to the market with raw produce; it should be processed. We do not have upgraded processing facilities in most parts of the country.

It is in this background that one must understand the farmers’ agitation. Unless we have a “new deal for agriculture”, these problems will keep recurring as they have at different points throughout the world over the past century. What we are seeing today is akin to the “scissors crisis” that periodically hits agrarian economies when farm prices fall dramatically relative to other prices in the economy. So if you have a bumper crop, prices crash, consumers are happy, but farmers face a crisis. In such situations, the role of government intervention becomes critical. This is why we need our procurement and price support policies and the infrastructure of food security carefully built up over the last 40 years. But it has to be given a new direction as I have outlined.

The government has to also be very clear about its trade policies. Why did we not stop imports of pulses when it was clear that we were in for a bumper crop? We now have a 10 percent import duty. This must be raised further to protect the farmers. We need to be very nimble-footed in our policy-making and be clear whose interests we want to protect.

The author is former member of the erstwhile Planning Commission.

(As told to Sulekha Nair)


Published Date: Jun 08, 2017 10:25 am | Updated Date: Jun 09, 2017 04:02 pm