The centrepiece of the Union budget for 2008-09 presented by finance minister P. Chidambaram is unquestionably the waiver of agricultural loans to the tune of Rs 60,000 crore. All loans upto March 2007 and overdue up to December last year will be covered by June 2008. Three crore marginal farmers holding upto one hectare of land, and small farmers holding up to two hectares, will benefit to the tune of Rs 50,000 crore by the waiver. The one-time settlement for other farmers, in which the government will give a 25 per cent rebate on payment of outstanding loans, will cost another Rs 10,000 crore.
Coming as it does on the back of thousands of farmers’ suicides across the country, the write-off has been described as “revolutionary” by UPA president Sonia Gandhi. Prime Minister Manmohan Singh has called the loan waiver a “generous gesture“. But farmers’ groups, some of whom were rounded up by Congress lackeys to celebrate in front of Sonia’s residence, are not all enthused. They feel that the land-size criterion is too strict. Most of the farmers in worst-affect Vidarbha, where large packages announced by Singh have failed to stem the deaths, would actually miss out.
Questions: Is the move to write off farm loans a good move or a bad move? Is it really intended to help the farmers or is it intended to woo them in the next election? Will banks have to pick up the UPA’s tab or will the government impose a cess on non-farmers to raise funds? Will the write-off stop the suicide spurt or will it only end up in creating a very poor repayment culture among farmers? Has politics triumphed over economics? Or, given the general prosperity of the country, is it a small price–jai kisan and all? And above all, will such populism really swing votes in the direction of the UPA, or is the Indian farmer smart enough to see its motives?