Farm Loan Waivers Won’t Work Without Proper Prices, Say Experts

Experts believe that the populist measure of loan waivers is at best a stop-gap solution to address farm distress

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(Photo: AP)

With the General Elections round the corner, the BJP-led NDA government at the Centre is under pressure to address the issues of agrarian distress. The ruling party’s performance In the recently concluded Assembly elections in five states has further fuelled the need to do so.

Industry experts believe that the populist measure of loan waivers is at best a stop-gap solution and the issue cannot be mitigated unless proper remunerative prices are given to the farmers.

Speaking to BloombergQuint, Avik Saha, a Swaraj India spokesperson said that the farmers are wired in farm loans because of poor prices. “A composite scheme would be to provide remunerative prices, without which loan waivers won’t work,” he added.

Analysing the crisis, experts in the panel said that schemes like crop insurance and monthly income support are also temporary solutions.

Speaking on crop insurance, Siraj Hussain, former Agricultural Secretary said, “The basic challenge is to pay farmers hit by calamities on time,” adding that faster settlement of claims is hampered by lack of technological inputs.

He said the easiest option for the government is to waive interests on crop loans.

Political economy analyst Shankar Aiyar said that the low food inflation, which is a result of poor farm prices, raises the question whether one section of the population should subsidise the rest of the economy. He termed loan waivers a result of ‘paracetamol politics’, as it only addresses the symptoms and not the ailment.