Doling out farm loan waivers without addressing rural distress is just kicking the can down the road and playing into the hands of the moral hazard brigade
Last week, farmers agitating for better prices for their produce of onions and pulses—prices for both of which have witnessed a steep fall in recent months—in Mandsaur district of western Madhya Pradesh turned violent.
Coming in the backdrop of a similar agitation by farmers in the adjoining state of Maharashtra, it puts the spotlight on rural distress and the piquant demand for farm loan waivers.
Given the heightened rhetoric—especially with the issue assuming the polarizing hue of a Bharatiya Janata Party (BJP) versus the other political parties—there is greater attention on farm loan waivers and less on rural distress. This is tragic: because one is a symptom (loan waiver /indebtedness) and the other is the malaise (rural distress).
Resolving the former without addressing the latter is just kicking the can down the road and playing into the hands of the moral hazard brigade who argue, rightly, against farm loan waivers as they breed the culture of default. The solution, therefore, is complex and not something that can be resolved overnight; it has to factor in the fundamental transformation that Indian agriculture is undergoing.
The fatal flaw of existing public policy is that it continues to mostly view Indian agriculture through the conventional prism—refusing to recognize how the risks have spiked.
Less generously, maybe, it is just deliberate; a status quo will ensure a repeat of the loan waiver cycle, giving the political class an opportunity to distribute patronage among a key electoral segment.
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