India is known as the land of agriculture, as agriculture acts as the backbone of our country’s economy, with over 50 percent population working in the Indian agriculture sector, and yet it contributes only 18 percent to the GDP. This adds to the fact that farmers don’t have excessive or even enough money for sustaining themselves or their families. This lack of economic stability forces them to take credit or loans from money lenders, banks or even wealthier farmers. The act of taking loans, inevitability, traps them in the vicious cycle of debt, which is the main cause for farmer suicides in India. Over the past few years, we witnessed a number of protests by farmers, asking the government to waive off their loans. One such protest was when 25,000 farmers walked from Nashik to Mumbai, demanding a complete waiver of loans, and implementation of Swaminathan’s commission. Though this does lead to spreading the awareness around economic crisis that farmers are going through, and also bringing a change with actors like Amitabh Bachchan who paid the loans of 1398 farmers but what one ignores is that political parties, using loan waivers as a political agenda, are ignoring its effects on the GDP and also on the long term economic stability of the farmers themselves.
A loan waiver, given by the government is a temporary measure to write off the loans that the farmers have taken, in a way they are renewed, and the existing borrowing is used for further process of production of crops. Before the present state implemented loan waivers, there were two major loan waivers which were announced by the Central Government and were notified through the RBI in the year 1990 and 2008.
The 1990 loan waivers focused on waiving loans of the small and marginal farmers, which cost the state upto Rs. 10,000 crores. It was announced in 1990 by Janata Party government, under the then Prime Minister, V.P. Singh. This was followed by the 2008 Agriculture Debt Waiver and Debt Relief Scheme (ADWDRS) and around Rs. 52,000 crores were released under this scheme. The next major loan waiving was in 2014, by the Andhra Pradesh government of Rs. 40,000 crore and then Telangana government announced a loan waiver for Rs. 20, 000 crore, under the ‘Raithu Runa Mafi’ scheme, focused on clearing the debts and also bared the losses for the failure in crop cultivation. And nearly a decade after the ADWDRS, in 2017, the UP Government announced Rs. 36,000 crore for loan waiving which was followed by Maharashtra, with Rs. 35,000 crore waiver, and yet there is a continuous demand for waiving off existing loans, which was proven by the 2018 ‘Kisan Mukti March’ or the above mentioned Nashik to Mumbai march by 35,000 farmers.
According to Indiaspend analysis, after Uttar Pradesh and Maharashtra farm loan waivers, demands for loan waivers have surged among states such as Tamil Nadu, Gujarat,Punjab,Haryana,Madhya Pradesh and Karnataka. Now India faces a cumulative loan waiving of Rs 3.1 trillion which is 2.6% of the GDP of India during 2016-2017. After the waivers offered by Uttar Pradesh and Maharashtra, which was around Rs 700 Billion in 2017, governments of other states have also announced waivers. Recent waivers have also been announced in Chhattisgarh and Madhya Pradesh by Congress after beating BJP in the elections.
Narendra Modi had launched the Pradhan Mantri Fasal Bima Yojna in the year 2015 with an aim to financially support the farmers in events of failure of any of the notified crops as consequences of any natural calamities, pests and diseases. The scheme’s design ensures collection of policies over giant sums of public money to private corporations and to a couple of public insurers who are in line for privatisation. In last three years, over Rs. 66,000 crores of state government money and central government money has been poured into the Pradhan Mantri Fasal Bima Yojna’s operations, excluding the part from the premiums paid by farmers.
Some 2.80 lakh farmers sowed soya in their farms. In a district, the farmers paid a premium of Rs 19.2 crore, the state government and the central governments paid Rs 77 crore each either from the state budget or the money that had been allocated for “Pradhan Mantri Fasal Bima Yojna” , while totalled up to a big sum of Rs 173 crore, which was then paid to Reliance insurance company behind the fallacy of privatization which the premium payer didn’t know of. The crop failed and the insurance company paid the claims of the farmers, with Reliance paying Rs 30 crore in one district, as per data collected, giving it a total net profit of Rs 143 crore without investing a single rupee and multiplying the same amount with the number of districts and the state of Maharashtra.
While the farmers’ income were stagnant and increased rates of farmer suicide didn’t bother the government, the profit seeking private insurance companies also kept increasing directly in proportion with the rate of suicides of the farmers. The Right To Information revealed that the earnings of insurance companies increased by 46% to Rs 9,335.78 crore in 2017-18 from Rs 6,819.44 crore in 2016-17. In 2016-17, government-owned Agriculture Insurance Company Of India earned premiums of Rs 7984.96 crores and paid a compensation of Rs 5673.96 crores, but in the next year. It later privatized its company to 10 different businesses through the country. Multinational firms, mainly companies like Reliance, had made profit simply by covering themselves under the blanket of privatization without investing a single penny. The government officials who were behind the scenes of this scam are still not questioned because of the lack of appreciation of knowledge amongst the farmers. The main reason for this, is the lack of accountability and monitoring that exists within the functioning of the scheme.
Picture Courtesy- New Indian Express