Maharashtra Revenue Minister Chandrakant Patil, also the chairman of the Group of Ministers (GoM) set up to negotiate modalities for loan waiver and various other demands of farmers in the state, on Monday announced that the government has “principally” agreed to waive agriculture loans in the state.
“It is agreed, in principle, to waive off the farm loans without any restriction on the land holding. But the conditions and criteria for the loan waiver are yet to be finalised,” said Patil. He also urged banks to start giving fresh crop loans to the farmers.
The GoM, comprising ministers of agriculture, water resource, revenue and transport, made the announcement after they held a four-hour long meeting with the leaders of farmer organisations on Sunday.
“We welcome this decision, but the government needs to implement this before July 25. Else, we will have to call for strike again,” said Dr Ajit Nawale of Kisan Kranti. He added the GoM had agreed to prepare a draft on demands such as pension, irrigation and electricity. “We also need to know about our demands regarding MSPs, milk producers, fishermen and poultry owners.”
The chief minister constituted the GoM to discuss the current crisis with farmer leaders and prepare a proposal of recommendations to the government.
“The cabinet was supposed to take the decision on the recommendations along with decision on the criteria and conditions for the loan waiver. How come Chandrakant Shinde and farmer leaders are saying that the loans are waived off?” asked Girdhar Patil, a farmer leader and expert on agrarian issues. The government has not yet held a cabinet meeting to discuss these, and the GoM has not yet submitted its recommendations to the cabinet.
Of the total 1.36 crore farmers in the state, 1.06 crore are marginal farmers. Of the total 89.75 lakh farmers with loans, 34 lakh farmers are in debt and have defaulted on repayments.
“These 34 lakh farmers are facing a risk of getting thrown out of the institutional credit system and hence, we will be giving them Rs 10,000 as first help immediately for buying seeds and sowing activity,” said co-operatives minister Subhash Deshmukh. He added the government will give guarantee to the banks for the amount. This will need a provision of around Rs 3,400 crore and the same will be reconciled with the amount of the loan waiver.
Explaining various possible conditions and criteria for the loan waiver, the revenue minister said, “Families with at least one member employed with the government and those farmers with alternate source of income or are paying tax will not get the benefit of loan waiver. Farmer families dependent only on agriculture and who are not tax payers will be eligible for the loan waiver. We will discuss various other conditions also.”
Meanwhile, demonetisation impact is also far from over. “RBI has not yet converted old currency notes worth Rs 3,000 crore that is with the district co-operative banks since November. The DCC (district cooperative central) banks are suffering a burden of paying interest on this amount to the account holders,” pointed out Congress spokesperson Sachin Sawant.
Further, although the government will be providing the guarantee for Rs 10,000 to be paid to farmers for sowing, Sawant wondered if how the DCC banks would shell out the same when they do not have new currency notes. “The entire rural credit system is through these DCC banks and as many as 11 district cooperative banks have gone into deep financial trouble just because the old currency with them has not been exchanged yet.”
Experts are not yet convinced over how the government is going about with its farm loan waiver. “The debt pattern in north Maharashtra or western Maharashtra is entirely different from the one in Vidarbha or Marathwada. A marginal farmer growing grapes or sugarcane has a very high debt as compared to the debt of a marginal farmer growing soybean or pulses. How is government going to give fair justice to all is a puzzle,” said Prof Milind Murugkar.
While grape or sugarcane farmers have an average debt of Rs 1 lakh per acre, the rain-fed farmers in Marathwada and Vidarbha regions have an average debt of Rs 20,000 an acre. “What if the government decides to waive off loans till Rs 1 lakh for all farmers? Majority of the farmers in Vidarbha and Marathwada will be debt free, but those in western and northern Maharashtra will have hardly 25 per cent of their debt cleared. They will be still considered ineligible for further loans,” Murugkar explained.
Moreover, waiving off Rs 1 lakh for 34 lakh farmers will amount to a provision of Rs 34,000 crore. This is a huge amount to provide for, especially when Maharashtra government already has a debt of Rs 3.87 lakh crore.
Although the burden of waiving off agriculture debt will be high, there is another side which is worth sincere consideration. It is the 'reverse subsidy' that farmers give every year.
This year, according to the Maharashtra government, about 20.33 lakh tonnes of toor (arhar) was produced in the state. The production cost calculated for toor was Rs 6,240 a quintal or Rs 62,400 per tonne, according to the data collected by the Centre from various government agencies. The Minimum Support Price of Rs 5,050 per quintal or Rs 50,500 a tonne announced by the Centre, which significantly falls short of the cost of production, meant that toor farmers alone in Maharashtra gave a 'reverse subsidy' of Rs 11,900 a tonne or a whopping Rs 23,800 crore for 20.33 lakh tonnes of toor produced from the state.
Similar is the case with sugarcane, soybean, cotton, onions and all other crops.
“For all the crops put together, farmers in the state give a “reverse subsidy” of more than Rs 1 lakh crore every year. But farmers in the country have got a loan waiver only once (in 2008-09) in the entire history of India,” said Girdhar Patil. He pointed out that the governments make producers suffer in order to please the consumers. “This happens only in the case of agriculture and never with the industry,” he added.
Expressing similar concerns, CPI(M) General Secretary and MP Sitaram Yechury tweeted, “The total bad debt in agriculture is less than Rs 1.2 lakh crore. This is just 17-18 per cent of all NPAs. Bulk of the NPAs owed by big corporates.” He further tweeted, “Loans written off by government banks in 2015-16 is Rs 59,547 crore and in 2014-15, it was Rs 52,542 crore for the corporates.”
“That is the reason why we demand for the implementation of the recommendations of the Swaminathan commission. Why would farmers commit suicides if they get 50 per cent over their production cost?” asked Girdhar Patil. “Rising input costs is the real problem. Government should address this real issue. We want it to treat the disease and not the symptoms,” he furthered his argued.
Patil said the discussion about transferring benefits such as subsidies for seeds, fertilizers and pesticides has been going on for years without any decision. “Allowing NREGA in the farming to reduce the input costs for labour could also be an aspect worth consideration. It will generate huge employment, it will reduce costs and far more land could be brought under cultivation,” Patil said.
It will also help to reduce the cost of the agriculture produce and can protect farmers. He said, “What we find is that the government is completely averse towards the well being of the farmers. Look at its initiatives such as land acquisition, the so-called samruddhi yojana or imports of commodities such as wheat, pulses, edible oil, etc at zero per cent duty.” According to him, the absence of will for the welfare of agriculture is the real problem; loan waiver is merely a treatment of the symptoms, not the disease.
