July 1, 2008 @ 12:36 am
In the last budget, the Finance Minister had announced a significantly sized loan waiver for farmers. While this had economists starting to talk and the pro-farmer lobby to celebrate, I was keen to know how this plan was implemented and what is its real impact on the people concerned.
After some searching, I found that Mint has been running a sort of constant coverage of events related to the loan waiver.
There are some interesting things happening out there, cut-off from our inflation glazed spectacles:
1. On Day 6 of the Yavatmal, Maharashtra coverage, the report states that there is a new class of farmers who are agitated and disappointed. Reason? The Government had promised that waivers will be given to farmers holding lands upto 5 acres in size. Now, in the Yavatmal region, the measurement system adopted is a traditional one where 2.2 hectares make up 5 acres. According to the Government and the new measurement system, 2 hectares make up 5 acres. Therefore, many farmers who hold 5 acres according to the traditional measurement system will lose out on the waiver. In fact, this makes one question the idea of a size limit. What the article states is that in areas like Vidharbha, the productivity is low and hence farmers need to have larger holdings of land in order to earn on par with farmers in other areas.
2. In Mandya district of Karnataka, a farmer M. Maraiah has a loan of Rs. 10,000 against him. This loan has been waived off. Reason for Maraiah to celebrate right? Wrong. He had already sold off that land since he was unable to pay back that loan ages ago. So the waiver didn’t really make any difference to him. His current profession: Daily wage labourer. Agriculture is just not viable, he says.
3. In the village of Sampla, Haryana, the farmers don’t care about this whole waiver stuff. Real estate prices are so high here that almost every farmer is a potential millionaire. No debates happening here.
4. In Bharatpur, Rajasthan, less than 4 out of 10 farmers default in their loans. Quite naturally, majority of the people are highly discontent on this waiver scheme. An excerpt:
A farmer from Talimpur village, who took a Rs2 lakh loan for sinking a borewell on his farm, was also all set to start paying off his dues. “I could not start paying back last year because the crop failed,” said the farmer, who identified himself only as Ashok. “This year, with early rains, I was thinking of paying off but now I am expecting to qualify for the loan waiver.”
Check out Mint’s complete coverage here. There are views of bankers too, which convey a different picture from what the politicians say. I found the insights very interesting. Economics isn’t really just about demand and supply, is it?