Farmer suicides: Is Telangana govt’s loan-waiver policy aggravating the situation?

Telangana's well-intentioned but poorly thought through loan-waiver policy is not only closing options for farmers, but also driving them into the clutches of moneylenders — and ultimately suicide

A Saye Sekhar September 25, 2015 13:59:58 IST
Farmer suicides: Is Telangana govt’s loan-waiver policy aggravating the situation?

Hyderabad: The agrarian situation is grim in Telangana. Perhaps this is an understatement given the reality on the ground. Over the last 10 days at least 100 debt-ridden farmers have committed suicide in the state. Unofficial sources put the number much higher.

While the usual factors — scanty rainfall, lack of electricity to run the motors to tap groundwater, poor irrigation facility and loans from private moneylenders — are at play in the state, experts feel the loan-waiver policy of the government is aggravating the farm crisis. The well-intentioned but poorly thought through policy is not only closing options for farmers, but also driving them into the clutches of moneylenders.

Farmer suicides Is Telangana govts loanwaiver policy aggravating the situation

Representational image. Reuters

In the run-up to the polls, the TRS had asked people not to repay the loans. Once elected, it evolved a policy and decided that farmers could pay up in four annual installments. Therefore, the farmer isn't discharged of his existing loan for four years. In effect, the loan goes on for five years. He cannot obtain a fresh loan from banks, since he is still technically a defaulter. So he has to run to private lenders. From here, the old story of high interest rates, indebtedness and suicides begins all over again.

Presenting the macro-economic picture, working president of the Telangana Pradesh Congress Committee (TPCC) Mallu Bhatti Vikramarka says there are gaping holes in the waiver policy. "The government has decided to waive loans worth Rs 17,240 crore in installments. As the loan is not fully paid and its repayment is staggered into five installments, the farmers automatically became ineligible for fresh loans," he said.

"The farm loan up to Rs 1 lakh doesn’t attract any interest if cleared in time. However, the loan attracts 12 per cent interest if the crop season ends. And, if at all that loan repayment extends beyond three crop seasons, the interest levied spirals to 14 percent. If the government paid the principal amount in four staggered installments, the interest accrued would account for over Rs 12,600 crore. This doesn’t free the farmer from the debt burden," added Vikramarka. He also suggests that the Telangana government should have the entire loan transferred to its name and liberate farmers from debt traps.

The Telangana government, on its part, is auditing the loan accounts before implementing the loan waiver promise and a committee headed by principal secretary (Finance) K Ramakrishna Rao has detected false claims to the tune of Rs 1,000 crore and pruned them. The government will continue the verification of genuineness in loan waiver claims and eliminate the bogus ones. This move, though required, will only add to the delay.

Agricultural scientist and executive director of the Centre for Sustainable Agriculture GV Ramanjaneyulu agrees with Vikramarka. Speaking to Firstpost, he said the loan waiver should not have been announced in the first place. Once announced, it should have been implemented at one go. According to CSA statistics, the total number of farmers and agricultural labourers who committed suicide after June 2, 2014 (the day of formation of Telangana state) stood at 1,259 until Thursday.

Had the government taken upon the loan onto itself and relinquished the farmers of their debt, it could have been helpful to farmers. Else, he felt, “the government could have created a corpus fund (credit guarantee fund) and cleared the loans on behalf of those who could not repay, and recovered the same from the tillers in easy installments."

Dr Ramanjaneyulu said the government should have cleared loans up to Rs 50,000 at once so that 70-80 percent of farmers would have come out of debt. In fact, only 21 per cent of farmers were availing of bank loans, and the government should implement debt-swapping by transferring the loans obtained from private parties to banks and the state could own up to such loans.

The complacency on the part of the government in not reacting on time to take stock of drought and crop failure and remedial measures also pushed the farmers to a corner, he pointed out. Telangana Chief Minister K Chandrasekhar Rao has announced an ex-gratia of Rs 6 lakh to every bereaved family of farmers who committed suicide. However, it would be a much more purposeful preventive measure if he focused attention on the skewed loan-waiver policy, said an expert who did not want to be named.

Updated Date:

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