Farm loan waivers: How smart villages, data science can help govt manage agri debt, even beat gamesters

They are talking about smart cities. How about some smart villages for a change? There is something strangely ironic about a day when headlines create contrasting impressions on the economy of India – which also happens to be an information technology superpower. First, we have farmers’ protests raging across several states – some hit by drought and others hit by crop gluts. But both sorts come to the government seeking better prices for their produce or waiver of loans. Finance Minister Arun Jaitley has told the states to fend for themselves in waiving off loan repayments, but there is alarm among some bankers that farmers may be faking it in anticipation of a politics-induced waiver of loans and deliberately holding off on repayments. Loan waivers are a frequently occurring phenomenon in India, and each time, there are conservative fiscal pundits warning us about indiscipline and almost without fail, chief ministers seek to subsidise or bail out farmers. It is time perhaps to have a meaningful loan waiver policy because there are genuine reasons to help farmers, and equally genuine reasons to ensure that politics and smart-Alec farmers do not lead to a “gaming” of the public sector dominated banking system. What the government needs is a policy that lays down rational expectations for when and how banks or state governments can step in to bail out farmers, and data science – the business of using statistics and information to help anticipate and audit ground realities, can be of immense help in separating farmers who genuinely need help from those who are gaming the system. [caption id=“attachment_3581893” align=“alignleft” width=“380”]  Representational image. Reuters[/caption] India set up the National Informatics Centre in 1976, and it now covers as many as 668 districts. The government also has an elaborate information machinery to help _kisan_s. The agriculture ministry also tracks crop sowing regularly. But what we need now in a nation that has more than 450 million Internet users (of which 163 million are rural) is a system for a richer system of data mapping in detail that can send to the Central agriculture ministry in as close to real-time as possible information and numbers on everything from rains, crop growth and harvests. Bankers and policy-makers need such data just as farmers need data on crop prices, weather and such for which the government has already taken several steps. And they need it with speed and detail. India has reached a point where Tamil Nadu farmers protest after a drought while Maharashtra farmers complain about a glut in tur dal while Madhya Pradesh worries about a glut in onions! If the Niti Aayog, which has been working on crop insurance with an elaborate technology-driven approach that involves sensors and satellites, needs to collaborate with the agriculture ministry so that bankers and state governments know in advance who deserves a waiver and who does not. Loan waivers are important where farmers suffer unfairly because a glut brings down prices or a crop fails due to bad rains. Urban armchair pundits talking only about fiscal discipline often lose sight of the fact that farmers need a cushion for their risks that can come from either excess or little of rains or crop. This, in fact, enables steady investment in agriculture and efficient inflation management. Subsidise or bail out farmers It is time perhaps to have a meaningful loan waiver policy because there are genuine reasons to help farmers, and equally genuine reasons to ensure that politics and smart-Alec farmers do not lead to a “gaming” of the public sector dominated banking system. What the government needs is a policy that lays down rational expectations for when and how banks or state governments can step in to bail out farmers, and data science, the business of using statistics and information to help anticipate and audit ground realities, can be of immense help in separating farmers who genuinely need help from those who are gaming the system. India set up the National Informatics Centre in 1976, and it now covers as many as 668 districts. The government also has an elaborate information machinery to help _kisan_s. The agriculture ministry also tracks crop sowing regularly. But what we need now in a nation that has more than 450 million Internet users (of which 163 million are rural) is a system for a richer system of data mapping in detail that can send to the Central agriculture ministry in as close to real-time as possible information and numbers on everything from rains, crop growth and harvests. Bankers and policy-makers need such data just as farmers need data on crop prices, weather and such for which the government has already taken several steps. And they need it with speed and detail. India has reached a point where Tamil Nadu farmers protest after a drought while Maharashtra farmers complain about a glut in tur dal while Madhya Pradesh worries about a glut in onions! If the Niti Aayog, which has been working on crop insurance with an elaborate technology-driven approach that involves sensors and satellites, needs to collaborate with the agriculture ministry so that bankers and state governments know in advance who deserves a waiver and who does not. Loan waivers are important where farmers suffer unfairly because a glut brings down prices or a crop fails due to bad rains. Urban armchair pundits talking only about fiscal discipline often lose sight of the fact that farmers need a cushion for their risks that can come from either excess or little of rains or crop. This, in fact, enables steady investment in agriculture and efficient inflation management. Retail price inflation touched on the day the finance minister was meeting bankers. Surely, there is a linkage to that with farmers protesting about gluts. Rather than rely on anecdotal tales of suffering from protesting farmers or shrewd cash withdrawals from upset bankers, the government should rely on region, crop and time-wise statistics and information for an effective data-driven policy that lays down guidelines in advance every season, if not month, on where waivers or higher prices are justified. Such policy guidelines can help India manage monsoon risks without having to go through the painfully recurring cycle of droughts, protests, suicides, subsidies, waivers and support price changes in ad-hoc ways. That is why we perhaps need smart villages more than smart cities. After all, 70 percent of rural India’s population is and as much as 40 percent of people rely on farms for their incomes. (The author is a senior journalist. He tweets as @madversity)