Loan Waiver Is a Winner & Rahul Gandhi Deserves Full Credit

Given the backdrop of toxic discourse we’ve been mired in, Rahul’s loan waiver has been a welcome departure.

Image used for representational purposes only. 

(Photo: Reuters)

I won’t mind being called a Congress dalal (sycophant) for the kind of position I have taken here.

I am willing to ignore the moral hazard argument, which is generally offered when something like a blanket debt waiver is announced. It says that in addition to the worthy ones, many more supposedly undeserving ones get their loans written off, which adversely impacts general credit culture. It unfairly rewards the delinquents and punishes all those who pay back in time.

Then there are those who say that a vast majority of small and marginal farmers have very limited access to the institutional credit. Since the loan waiver applies only to institutional credit, the needy ones are deprived of the benefits altogether.

Cost of Loan Waiver & Other Arguments

We all know that the cost of loan waiver is going to be quite hefty, and the benefits not in the same proportion. I have written extensively on the subject and the most recent one lists reasons why a loan waiver is not the most effective way to provide relief to farmers in distress.

I had quoted from a World Bank report which said, among other things, that “the credit availability of indebted farmers came down sharply following the rollout of the scheme… the program had no positive impact on productivity, consumption or labour market outcomes, but led to significant moral hazard in loan repayment.”

Loan waiver, therefore, is a kind of double whammy for a majority of farmers.

The sane ones also argue that the finances of state governments going for such amnesty schemes get a hard knock, and developmental works suffer as a result. Fiscal deficits of state governments go up, and that is terrible news.

I concede that all of these are valid arguments and more weightage ought to be given to them while evaluating policies that can have such far-reaching consequences. We should, therefore, have been alarmed at the way state governments have been casually going about the task.

Other than the three Congress-ruled states, two more have followed suit and many others are evaluating options to come up with their own versions of loan waivers. And in most cases, without doing any due diligence and sans any cost-benefit analysis.

It looks like an abhorrent herd mentality impacting policy decisions. Is it?

I have my disagreement with this line. Logical reasoning becomes the most obvious casualty in turbulent times and you perhaps need to be as unreasonable to shift the goalposts. This is what Rahul Gandhi seems to be doing, and to good effect.

The Low Level of Public Discourse

Look at the kind of issues that have been force-fed to us, day after day through endless debates on prime-time television shows. Deciphering the caste of Lord Hanuman is one such issue. What a perversion! The devout Hindu in me takes great offence to any effort to compartmentalise our revered gods.

Being a bhakt myself who loves to recite Hanuman Chalisa on most auspicious occasions, how can anyone project Him as anything but omniscient, omnipresent and omnipotent? How can He be projected as part of the pernicious caste system? How can our senses allow prime-time debates on something as silly as this?

Then look at the raging debate on ‘mob mentality is right as long as it is for a right cause’. Can anything be as absurd as this? Sanction for mob mentality as long as it suits someone’s divisive worldview? You look at the religion of the person who questions the depravity of mob behaviour and pass judgement accordingly?

Today it is Naseeruddin Shah, tomorrow it could be anyone else. There is a vertical split down the middle, supporting this or the other side of the divide. And we have been reduced to passive recipients of toxic debates all around.

Then there’s the build-up to subvert all constitutional norms and have a temple in place ahead of elections. How can we, the people, allow the subversion of something we have pledged to ourselves, just because it supposedly suits the electoral needs of a group?

A temple now at any cost, or a temple perhaps after the completion of due process and after taking all stakeholders on board? The choice is very simple for the vast majority of us... but not for a section that is bent on milking our gods for petty political gains.

Rahul Gandhi Has Changed the Direction of Public Debate

Given the backdrop of toxic air we have been exposed to, Congress President Rahul Gandhi’s steadfast espousal of a loan waiver has been a welcome departure. We know there is a cost involved. But is there any price too much to get rid of toxicity all around or that at least has the potential to reduce the level of venomous outpouring?

Following Rahul’s move, we have been forced to discuss farm income, rural wages, remunerative prices, structural problems facing the agriculture sector, state governments’ finances, banks’ non-performing assets (NPA), priority sector lending, health of the rural economy and moral hazards associated with blanket amnesty schemes – there is now pressure on governments to give an account of the deliverables.

While the toxicity has not disappeared entirely, there is a real chance that issues concerning all of us can dominate our public discourse.

It is such a welcome shift in discourse ahead of the all-important general elections a few months down the line – should we not thank Rahul Gandhi for that?