When farmers cultivate crops — or more often when they can't — politicians cultivate farmers. Karnataka chief minister HD Kumaraswamy of Janata Dal (Secular) is doing this with a dash of panache rarely seen in India. On Wednesday, he presented a state budget with the sole design of pushing through a scheme to write off farmers' loans. The budget is also packed with schemes that reek of appeasement politics aimed at keeping people of certain castes happy.
With an eye on the 2019 Lok Sabha poll, even Congress is desperate to claim credit for Kumaraswamy's loan-waiver. Rahul Gandhi's tweet on Tuesday is proof of that.
On the eve of the Karnataka Budget, I’m confident our Congress-JDS coalition Govt will act on our commitment to waive farmer loans & to make farming more profitable.
This budget is an opportunity for our Govt. to make Karnataka a beacon of hope for farmers all across India.
— Rahul Gandhi (@RahulGandhi) July 4, 2018
Former chief minister Siddaramaiah also said after the budget was presented that the loan waiver was part of the programme of "both" JD(S) and Congress.
But you can't stop Kumaraswamy from taking the whole credit for this. If, in the process, Karnataka's economy goes to hell, let it. Under successive governments of Congress and BJP, the state's economy is already half-way down that path. All that matters to Kumaraswamy is to win as many of the state's 28 Lok Sabha seats as possible in 2019 for JD(S) that has an uneasy, if not an unholy, alliance with Congress.
Kumaraswamy brushed aside criticism on two counts: Firstly, he rejected the stand taken by former chief minister Siddaramaiah that there was no need for a full-fledged budget since he'd already presented one for the current year before the 12 May election. Secondly, Kumaraswamy blasted critics who warned that waiving farm loans to the extent he promised would wreck the state's economy.
But the chief minister came down on both the counts. The budget he came up with was largely a repetition or a continuation of what Siddaramaiah presented. Kumaraswamy also scaled down his original promise of waiving off all types of farm loans totalling Rs 54,000 crore. His loan-waiver turned out to be limited to crop loans defaulted up to 31 December, 2017, with a cap of Rs 2 lakh. This and other conditions attached to the waiver will reduce the burden on the state to Rs 34,000 crore. To encourage non-defaulters, the government will also credit the repaid loan, up to a maximum amount of Rs 25,000.
Taking loans to waive loans
But even the effect of this watered-down loan-waiver on the economy is not insignificant. It will have a cascading effect on the state's finances beyond the current year since the government has committed itself to pay for the waived loans in the next four years. In the current year, the budget allocated Rs 10,500 crore towards loans written off by both Kumaraswamy as well as by the previous Siddaramaiah government. In June 2017, Siddaramaiah waived cooperative farm loans up to Rs 50,000 which came to Rs 8,165 crore.
The current year's allocation of Rs 10,500 crore towards loan waiver will partly come from loans raised in the open market, LIC, and from increased taxation. While taxes on diesel, petrol, liquor and other commodities will go up, road tax has been hiked by as much as 50 percent for private service vehicles.
Crop loan waiver of this magnitude, whose long-term utility for farmers is dubious, is bad enough for the economy. But what’s worse is that Kumaraswamy is also continuing the brazenly populist gimmicks of the previous government under pressure, bordering on blackmail, from Siddaramaiah.
Vote bank politics
Besides, the budget is also replete with vote bank politics of the kind you usually witness just before elections. It has made allocations for religious mutts and a variety of castes starting from Brahmins.
To Kumaraswamy’s credit, it must be said that the budget hasn't seen a fall in allocations for social services and is left with a modest surplus of Rs 106 crore. But it's pertinent to point out that the money spent on populism could have been better utilised for creation of infrastructure and jobs to ensure healthy development without the masquerade of socialist welfare.
Kumaraswamy's budget must go down in the history as a fine example of how to ruin a state's economy. But when an election beckons, political opportunism takes precedence over economic wisdom. Wooing farmers is a good way to win seats in 2019, or at least that’s what Kumaraswamy hopes.
For the record, Kumaraswamy is fulfilling an election promise and he intends to prove that he is a man of his word. But in reality, the budget has three motives. For starters, he wants to consolidate his party which only won 37 seats in the recent Assembly election but he became a chief minister as part of an opportunistic alliance with Congress, which won double the number of seats. Second, he wants to clip the wings of Congress as much as he wants to defeat BJP in the next elections.
And last but not the least of reasons for Kumaraswamy wanting to win most Lok Sabha seats in Karnataka is to give his father HD Deve Gowda a fighting chance to become the prime minister once again in case of a hung Lok Sabha. Gowda became the "accidental" prime minister in 1996 with just 16 seats in Karnataka.
Gowda, 85, is a bitter man. He believes that despite having been in active politics for 50 years all he got was the chief minister's job for 18 months and a stint as the prime minister for 11 months. He is somewhat happy his son is back as the chief minister, and there are reasons to believe that he is the backseat driver of the coalition government.
But Gowda would be happier if once again the prime minister’s job comes his way: By accident or otherwise. If it does, he won’t shirk the responsibility of carrying India's destiny on his experienced shoulders.
Updated Date: Jul 06, 2018 10:30 AM