What happened?
On June 1, farmers in Maharashtra went on strike for the first time ever. Their agitation saw violence, and angry farmers spilling milk and throwing vegetables on the road; at one point the strike expanded into a bandh call, where agitators threatened to stop supply to urban markets. This apparently leaderless agitation grabbed the attention of both the government and the urban population, quite ignorant of conditions in rural areas. A week into the protest, the farmers have made one gain: the Maharashtra government has committed itself to a deadline by which it will announce a loan waiver.
Why are farmers protesting?
The main demand: loan waivers. The other demands include higher support price for their produce and the implementation of the Swaminathan Committee recommendations. The BJP had made the implementation of the report, tabled a decade ago, a campaign promise during the 2014 Lok Sabha elections. The demands are not new. Farmers have also asked for a cap on import of farm produce and an increase in import duty to safeguard the interests of the farm sector.
What brought on the agitation?
From 2013 to 2015, successive poor monsoons exacerbated farmer woes. Frustration grew when, after a satisfactory monsoon in 2016 and a good crop, demonetisation and the resultant currency crunch meant that the Rabi produce failed to earn profitable prices. Demonetisation also hit district central cooperative banks, the backbone of the State’s crop loan system; DCCBs are now sitting on over ₹2,700 crore in demonetised currency, which the Centre is refusing to exchange for new notes. This has raised questions about their lending capacity, and they face the danger of being wiped out. In addition, heeding the Prime Minister’s 2016 exhortation to grow more pulses, many farmers invested heavily in their cultivation.
This resulted in a glut in the market. Traders made a killing because they were able to buy at lower rates, and when the Minimum Support Price (MSP) kicked in, they sold at the MSP, leading to more farmer fury. Farmers say the government’s failure to anticipate the larger crop isn’t their fault, and a loan waiver would help them offset their losses because they heeded the Prime Minister’s appeal but were then let down by the government. Farmers’ organisations admit a waiver is not the ultimate solution, but say it will have at least a soothing effect and bring farmers back into the credit system. Farm loan waivers in the States ruled either by the BJP or the allies of the NDA have prompted them to ask, why not in Maharashtra?
How has the State responded?
The BJP-led State government has always maintained that it supports the loan waiver. But it has also said it will announce the decision at the ‘right’ time. This week, Chief Minister Devendra Fadnavis formed a panel to study the Uttar Pradesh loan waiver. The government has also said it will introduce a stringent law making buying agricultural produce at rates lower than MSP a punishable offence. For the rest of the demands, it has passed the buck onto the Centre. When the strike started, the State government called a meeting of selected leaders and announced it would declare a waiver package by October 31. The meeting, held without informing all organisations representing the agitating farmers, backfired: the leaders who attended the meeting were dubbed “back-stabbers” by the farmers.
Is a loan waiver viable?
Maharashtra is in a financial crunch. For 2017-18, the estimated revenue deficit is likely to cross ₹4,000 crore. Excise revenue has dropped by ₹7,000 crore after the Supreme Court’s decision to ban liquor outlets near highways. Implementing the Seventh Pay Commission report for State government employees will cost ₹21,000 crore. Ambitious infrastructure projects — the Mumbai-Nagpur superhighway (₹40,000 crore), urban Metro projects (over ₹1 lakh crore) — and the Shivaji statue off Mumbai’s coast (₹3,800 crore) add to the bill. Against these expenditures, bringing over 31 lakh farmers back into the credit system would require ₹30,000 crore. The government has hard choices ahead.
