Lifelines beyond farm loans waivers (Agriculture and farm distress)

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Lifelines beyond farm loans waivers (Agriculture and farm distress)

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• Rural distress is the discourse now: Due to many reasons, including the Assembly election 2018 results, and farmer agitations, focus is sharply on this distress now.
• Farm loan waivers as solution: The usefulness is being debated as three new state govts. chose the loan waiver route. But since 2014, such waivers were given by Telangana, Karnataka, AP, Maharashtra, UP and Punjab - so all parties are involved.
• Responding to a crisis: Why do they do it? To respond to a direct pain point, as mounting debt pushes farmers into despair. NSSO 2013 SASAH (Situation Assessment Survey of Agricultural Households) says 52% of farming households are indebted. Debt volumes have grown too, taken from informal sources.
• What does a loan waiver do? It gives immediate relief, and an acceptance that system failures have pushed them into debt. Three things are hard on farmers -

1. Lack of drought and disaster related relief,  
2. Failure of crop insurance schemes, and 
3. Losses due to prices being << MSPs

• Who needs help? The small and marginal cultivators need it. How do we reach them for sure, and ensure same problems do not recur? If  farming is a national enterprise, then limited liability and bankruptcy protection must extend to farmers.
• Immediate + Long term together: Farmers are harmed by repeated waivers. Alongwith waivers, we have to give a long-term solution to indebtedness.
• Farmers' demands today: They want a for "freedom from indebtedness". A bill prepared by AIKSCC has two reforms -

1. an accessible institutional credit system (bypass informal sector), and  
2. protection from debt trap in bad years.

• What will this Bill do? It ensures 

1. institutional credit access to farmers, and 
1. It guarantees institutional credit to all categories of farmers - land-owning, sharecroppers, tenants, adivasis, women farmers, and animal-rearers.
2. It will register all, and issue Kisan Credit Cards. Thus, marginal and landless too shall be included, and will escape predatory lending by input-dealers and moneylenders. 
3. Tenant farmers will benefit the most. Upot 75% of suicides in Telangana are by these (they lease land from other owners). 
4. RBI's 2014 guidelines (for credit to Bhoomi Heen Kisan - landless farmers and debt-swapping informal loans to bank loans) that have been ignored will be acted upon.
2. builds a distress relief mechanism.  
1. It will build disaster relief commissions at national and State levels (like Karnataka model of FDRC). Certain areas or crops will be declared distress-  affected as need be.
2. The Commissions will have the power to order relief, including loan rescheduling, interest waiver, one-time settlement, etc. 
3. The idea is that farmers who are suffering for no fault of theird should be protected. 
4. This allows relief from time to time, without waiting for an election year. Since crop insurance has limited coverage and little payout, it has failed. However, distress relief will include it too.

• Make agri profitable: Give fair remunerative prices, lower the cost of cultivation, promote farmer collectives and sustainable models of agriculture. Governments have to rise to the occasion now.
• Summary : While loan waivers are short-term relief measures, the time has come for governments to structure a long-term solution for farming crises in India, including seamless access to institutional credit immediately.

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