Back in the summer of 2017, the Bharatiya Janta Party (BJP) had wasted no time in latching on to what Indian politicians have time and again deigned to promise and perform. By playing to the galleries (and not just playing, but public manoeuvering), the premier of Uttar Pradesh, Yogi Adityanath had waived loans amounting to one lakh in order to supposedly “alleviate” the grievances of marginal sections in the state’s farming community. The move was said to have affected close to ninety percent of the agricultural setup, thereby sending the exchequer reeling under the pressure of a Rs. 36, 729 crore debt trap. Such is the bane of “appeasement politics”!
Tracing this tradition to a different set of statesmen at the helm of India’s Home Ministry inevitably bears recall of the UPA regime’s declaration of a loan-waiver scheme worth Rs. 52,000 in 2009. India is no stranger, therefore, to myopic, spineless and convenient populist measures. To cite bare economic facts, that 2017 move by Yogi Ji came quite close to risking the fiscal imbalance going amok. In the face of a 3% transgression limit set by the FRBM Act, the party seemed to have no respect for the country’s economic health. If lip service was indeed paid to heed safety warnings, it was spurious at best.
The Congress romped up a majority the Assembly elections of Madhya Pradesh, Rajasthan and Chhattisgarh, In short order, all three states had waivers announced as promised during the poll campaign. Madhya Pradesh announced waiver for loans up to Rs. 2 lakh covering about thirty five lakh farmers. Chhattisgarh loan waiver is likely to cost Rs. 6,100 crore and will benefit sixteen lakh farmers. In Rajasthan, it will cost Rs. 18,000 crore and benefit thirty lakh farmers. Notwithstanding all good intentions, such a move will reduce availability of loan for farmers and mounting bank NPAs.
The want of a seamless distribution channel (for reasons such as appropriation of allotted funds, red tape-ism, falsification of data and bribery) in India’s handicapped agricultural sector has been a long standing concern. Waivers dispensed as a part of specious election manifestos are just a tactic to gloss over such fundamental shortcomings. Bureaucratic inefficiency is a chronic issue wherein planning and execution don’t go hand in hand. The CAG’s audit report of the 2008 UPA loan waiver stands testament to how such financial reliefs don’t percolate down to the sections they are most supposed to. Paperwork checks on state-aided farms reveal that 22% of them possess serious discrepancies with respect to ground realities. The BJP had no qualms about pointing fingers claiming the Congress’s role as a national fiddle in scams well in excess of lakhs of crores. Either Indian politicians have an innate difficulty in understanding that two wrongs don’t make a right, or they love the blame-game a little too much.
NSSO statistics contend that marginal-subsistence classes are incapable of financing their needs via banking due to lack of credible collateral. Rather than banking on financial institutions, they pander to informal creditors. In every 100 farmers, 78 are found to take part in such helpless action. Along with Uttar Pradesh’s glaring liability, West Bengal and Punjab find themselves in a sorry state too. Punjab’s outstanding debt was valued at 33% of its GSDP last year. When majority of public funds are squeezed out as interest payments as a consequence, the situation is tantamount to a budgetary emergency. We should not hesitate to lend our ears to the cause of the impecunious farmer. The mode of concession granted to the impoverished landowners should be drawn up in such a manner that, willful defaulters are brought under the purview of loan discipline. Asif Gulati and Siraj Hussain opine that superfluous manifestos in the eve of elections put the federal exchequer in peril with loan waiver promises. What’s the point of placing a cap on fiscal behaviour then?
Doling out freebies from the national treasury under the garb of democracy is not only irresponsible but is the very totem of a government wary of making the right choices. In fact, such brazen governance urged the Supreme Court to issue directives to the Election Commission superintending over the validity of manifestos. For too long now, this fiasco and its likes are being swept under the carpet with parties increasingly orienting themselves towards the thought: “Bad economics is good politics.” Development is not a one-day job but to lack fiscal discipline is a sure indicator of regression. One should not undermine the ill-effects of loan waivers. They might be short-lived on the surface but in the long-run, they shall certainly be devastating. Here is a penny for the Election Commission’s thoughts:
“When will the freebie culture be shown the door in Indian politics?”
Picture Credit- New Indian Express