The level of intensity and large scale of protests by farmers had surprised every observer of rural scene. There was something really pinching that may have hurt and let all the sections of farmers come together and do such protests.
Experts said that it was one connecting thread among all, it was unbearable pressure of debts. If we look at the larger unified level the debt had increased from Rs 8.1 lakh crore in March 2014 to Rs 12.6 lakh crore in 30 months, at least the way media reports suggested. It was more than 50 per cent of jump. The value which agrarian productivity added had been hovering around one to two per cent only. It was only four per cent of growth in 2015-16, the figure which speaks for itself.
Two factors of utmost importance has played larger role on mounting debt in farm sector. The primary one is the proposed input of purchased input and it made the farm yard completely different in look from what it looked ten years back. The other factor is high value and high cost, means those commercial crops which now account for more than 58 per cent of entire crops.
Other crops had created problems for the crops left aside. These crops are more volatile and many of such crops don’t even have backing of minimum support price (MSP), this adds to other sub factors of high cost and high vulnerability, for instance dairy, fruits and vegetables.
These are the circumstances where farmers feel dejected even with higher production, because he faces lower prices and uncertain future. Real issue is of bad marketing practice which makes a farmer suffer even though he had made an outstanding production.
The difficulties for the farmers are compounded due to the lack of comprehensive and dependable risk mitigating measures.
It creates a background where farmers are forced to ask for loan waivers, as they have to pay their debts. They feel more unsecured when they come to know that more than Rs 9 lakh crore is the unrecovered loan from industrialists. A clever union government had already burdened states with pressure of waiving off loans and paying debts themselves. This move has created more pressure on exchequer than states, an economist hence call it shortsighted.
States with limited resources are either forced to borrow or cut regular and sometimes necessary expenses to arrange recovery for these waive offs.
Farmers can only feel a short but pyrrhic victory, because the organised financial institutions that otherwise never had in mood of lending loans for agrarian purposes, feels relaxed. Yes, for unorganized sector it opens the doors of opportunity as they still cater more than 40 per cent of entire agrarian loans in India. Input suppliers and Adhatia’s (Local tradesmen deal in bulk produces and lends loan) will have a full swing of joy in future.
Solutions need states or provincial governments to do something seriously important. They must cut their losses to manage loan waivers, maneuvering still leaves thing behind, possibilities like loan waiver up-to limits and differing payments to some extended time frame like three or may be four years can help much while taking responsibility to pay interests for differed purposes.
These aspects though require tough bargaining but financial institutions and states have their resources to do it. Most important aspect for state governments is to seriously look for contending parties and take few tough measures like having strong controls on output markets.
I do not ask them to be harsh, but they can be little serious and tough. It will automatically lead the states for better techno-innovative choices. It will definitely increase productivity and produce best possible results.