The Great Indian Farmer Loan Waiver

I wanted to write on this issue a long time ago. But somehow it didn’t materialise. So, I guess I will do it now. Yep, I am talking about the loan waiver our respected Finance Minister P. Chidambaram announced in Budget 2008 presented on February 28, 2008. A full Rs. 60000 crore of farmer loans was waived by the man who, in the 1990s, unleashed the Indian economy, due to which we are an emerging superpower now.

Now you would have expected a budget which makes good economic sense from a man of his caliber. But, burdened no doubt by political considerations, the Finance Minister has made this unabashedly populist announcement. So how many farmers will actually benefit from this? Well, just about 23 percent of them will, because that is the percentage of farmers having access to institutional credit. And the marginal farmers (farmers having less than two hectares of land) will hardly be the ones to benefit here, though they are the ones towards whom this loan waiver is targeted. Most of the marginal farmers take loans from private moneylenders, not banks. So basically these farmers have little or no relief when you look at the fine print of this declaration.

Indeed, the truth of the above statement that I made can be gauged from this report in DNA, which says that on an average, there have been 7 farmer suicides a day since the waiver was announced. All the economists, without exception, have said that this loan waiver isn’t really going to help anyone.

As India Today reports,

The shock though seems to have been reserved for the economists. Without exception, the Rs 60,000-crore loan waiver is seen as the worst kind of fiscal profligacy. What makes it surprising is that it has come from the most pro-reforms duo of P. Chidambaram and Manmohan Singh.

In some sense, they do seem to understand that this being the fifth budget of UPA, it had to be political and, therefore, sops were to be expected. But it isn’t the waiver alone that worries them. The lack of transparency— the budget is packed with expenditure not accounted for in the numbers—and the failure of UPA to address the issue of accountability on public spending.

Heck, are elections a good enough reason to shamelessly waste taxpayers’ money on haphazard social welfare schemes such as this? Really, one would have hoped that the farce ends here. Well, Mr. Rahul Gandhi, the scion of The Royal Family hadn’t played his part yet, had he? On the 13th of March, 2008 the prince made a speech in Parliament in which he said that he wants the loan waiver to be even bigger (by relaxing the two-hectare land holding restriction). Even bigger? These guys are within an inch of throwing open the treasury to the public. Are they mental?

And yes, before you think that no one could possibly give a second thought to such a stupid suggestion, read further. Rahul Gandhi’s dear mommy, Mrs. Sonia Gandhi, sent a reminder to the government that his suggestions should be considered. Of course, no one knows how much additional financial burden the exchequer will have to bear to accommodate The Royal Family’s demands. Does anyone even care anymore?

Finally, let’s give a thought to those poor idiots who may have toiled hard day in and day out to repay their loans but now realise that they need not have paid up at all. They really must be at the end of their tether!

[CROSSPOSTED on Mutiny.in]

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