The numbers are startling. According to a recent report by SBI Research, farm loan waiver announced by the Centre and the State governments in the last 10 years aggregated ₹4.7 lakh crore. This, the report added, was as much as 82 per cent of the industry level bad loans today. Despite writing off so much debt, there seems to be no end to the farm distress. It has actually worsened in the last couple of years. And farmers continue to commit suicide.
It is clear that farm-loan waiver, a politically significant but economically debilitating measure, has had little impact on the plight of the farmers. Its effect so far has been akin to giving a pain killer to a seriously ill patient and ignoring the ailment that is causing the pain in the first place.
Like pain killers, farm-loan waivers have a bad side-effect. It worsens the credit culture among the farmers and in the process hurts the already fragile banking system. Farm loan non-performing assets (NPAs) in 201819 have risen to 12.4 per cent of the total bad loans in the banking system, up from 8.16 per cent in 201516. Why will a farmer repay a loan when he/she is certain that a waiver will be announced before the next election?
But the irony is that even after so many loan waivers, indebtedness of farmers remains high. This is be cause a large proportion of farm land (some say it could be as much as two-thirds) is cultivated by tenant farmers who do not own the land and hence are not eligible for any benefits. They, typically, borrow from moneylenders at high rate of interest and struggle to service the loan if their crop fails or gets a poor realisation. Some of them end up repaying the debt with their lives.
This story is from the January 17, 2020 edition of The Hindu Business Line.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the January 17, 2020 edition of The Hindu Business Line.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
Covid Presents An Opportunity For India
India must attract investors exiting China post-Covid. Streamlining of project clearances and relaxation in FRBM norms will help
Did Alternative Assets Shield You From Covid-19 Volatility?
The assets closely linked to stock and debt markets could not stave off the losses
How To Put Aircraft To Bed
Preserving grounded planes, to get them up and flying at short notice, is a challenging task. Ashwini Phadnis captures the process
There Can Be No Going Back On WFH
Covid-19 has fast-forwarded the shift to ‘work from home’. However, some face-to-face connect will always be needed
UN, WHO Urged To Ensure ‘Benefit Sharing' Of Covid-Related Data
Biopharma firms should reach vaccines, medicines to poor nations at an affordable price, say civil society bodies
With No Clear Signal From Rlys, States Explore Ways To Bring Back Migrants
Quarantine centres, cross-country buses being arranged even as migrants hop on to boats, trucks and ambulances
Centre Allows All Neighbourhood Shops To Open But With Riders
Final call will be taken by local authorities; shopping complexes that draw fewer ‘outsiders’ are permitted to operate
Covid Impact Relatively Muted In India
Compared to Italy and the US, India’s rate of infection spread has been slow. This can be attributed to the strict measures in place
How Global Trade Will Fare Post-Covid
China isn’t likely to lose its pre-eminent position soon. India, for one, will need to make manufacturing globally competitive
How To Curb Harassment In The Virtual Office
Training and sensitisation are essential. Institute a strict dress code and chat etiquette to ensure professionalism during video calls
