Maharashtra farmers' protest: Devendra Fadnavis' Rs 34,000 cr loan waiver has left state in a no-win situation

The issue of farmers’ loan waiver has not died down even after the Maharashtra government on Saturday launched another scheme to provide Rs 34,020 crore debt relief to financially distressed farmers. The scheme will cover 89 lakh farmers and will see debt of up to Rs 1.5 lakh per farmer being written off.

 Maharashtra farmers protest: Devendra Fadnavis Rs 34,000 cr loan waiver has left state in a no-win situation

File image of Devendra Fadnavis. PTI

However, farmer leaders want all loans taken up to now waived off, not just the ones they had taken till 30 June, 2016. They want all electricity bills written off.

This loan waiver is not Maharashtra's first — that happened during SB Chavan's first term  —  Rs 75 crore was written off to help farmers retrieve the jewels and vessels they had mortgaged.

However, compared to that, this write-off is the granddaddy of them all. And yet, farmers are demanding more. The government should find that quite vexing. While we don't know exactly how much farmers owe the state-owned power company, in the absence of adequate irrigation via canals, a large segment of farming is dependent upon wells and borewells. As many as 40 lakh electrified pump sets are being subsidised. In 2016, that subsidy cost Rs 4,790 crore.

That the farmers owe so much despite increasing subsidies year after year points to two possibilities:

1. Farmers' economic distress is worse than we could have ever imagined.

2. The urge to let the bills pile up is strong.

One tends to go with the first supposition.

The Maharashtra government found itself trying to please everyone and ended up pleasing no one. It also faces the uphill task of securing the resources to write off the loans. Both cooperative and public sector banks have expressed their helplessness in extending to the government even the Rs 10,000 per farmer it wanted to help them buy seeds.

The only voice from the banking sector backing the government's move was former RBI governor YV Reddy. He told The Indian Express  “you cannot take a moralistic attitude and say farm loan waiver is wrong” and that compared to the manner in which corporates get their debts restructured, farm loan waiver was “less wrong”.  Fair point.

If the banks are unable to even extend the loan for buying seeds, Chief Minister Devendra Fadnavis will have to approach commercial banks.  While the loan waiver would undoubtedly benefit farmers, there is a nagging suspicion that politicians are in it for themselves — seeking monetary gains post demonetisation under the guise of being farmers — which, if true would be a tough nut to crack.

Even if they were not in the forefront of demanding the loan waiver, the politicians have been adding fuel to the fire. Their demand for eliminating qualifiers – area of land held, employment — is seen as a part of that ploy.

Thus, Maharashtra has put itself in financial limbo. This loan waiver could negatively impact the state's allocation to other sectors over the next few years. However, a sickly farm sector can play havoc with the economy, especially when it is so dependent on rain. During drought, no amount of pump sets can produce water.

Politically, things remain unsettled. Notwithstanding the size of the debt relief, the Shiv Sena is bound to use loan waiver as a stick to beat the Bharatiya Janata Party and get under their skin.

The Shiv Sena’s ministers were present in the Cabinet meeting when the waiver was decided upon, but their boss Uddhav Thackeray keeps raising issues which causes concern among Sena ministers and the rank-and-file. Thackeray said the loan waiver was "not satisfactory" and demanded that the 30 June, 2016 cut-off date be extended to 30 June, 2017

While Shiv Sena claims credit for raising this demand, it gave no loan waiver when it was in charge. AR Antulay wrote off farmers' debts in 1980. So did Sharad Pawar.

In 2014, Fadanavis helped farmers clear debts worth Rs 170 crore that piled up with money lenders, which was seen as an attempt by the BJP to help the working class.


Updated Date: Jun 27, 2017 17:08:04 IST