With Chief Minister Siddaramaiah’s announcement on Wednesday, Karnataka has become the fourth State to waive farm loans to bail farmers out of the debt trap.
But one may ask: Is this a real saviour for farmers in distress? And will it moderate the prevailing agrarian distress? Probably, the answer to both is in the negative.
The farmers who are in real distress are not those who have borrowed less than ₹50,000, but those who have accumulated loan burden of a few lakhs. It is well known from the cases of farmer suicides that the farmers who committed suicide on an average showed a debt burden in the range of ₹2 lakh to ₹3 lakh. Clearly, these highly distressed farmers have been bypassed in this policy and hence the severe agrarian distress among this group will continue. This is also the case of Maharashtra.
In 2008 too, the then Government of Karnataka waived farm loans and that did not alleviate the farm sector distress. The most burdensome loans farmers take are from commercial banks. Loans to the tune of about ₹3,000 crore is pending against farmers in Karnataka from commercial banks, which causes great distress owing to their extremely coercive recovery methods.
Mr. Siddaramaiah is one of the illustrious Finance Ministers who is credited with excellent control on the budget. Possibly, he forgot that in the budget of 2017-18, the subsidy burden alone was ₹24,232 crore recording an increase of more than 30% over last year. The total borrowing in the budget of 2017-18 was shown as ₹37,092 crore and that is about ₹6,000 crore more than the earlier year.
Therefore, even though it is necessary to alleviate the agrarian distress in rural Karnataka, the Chief Minister should have taken pragmatic policy steps that will help farmers in the long run. He appears to have forgotten the advice of Prof. Swaminathan and R.S. Paroda committees appointed by him or the Karnataka Agriculture Price Commission, which is expected to help farmers to alleviate their distress through proper price policy.
(The author is Director and Adviser, Centre for Development Studies, PES University, Bengaluru)
