Loan waiver a palliative, address structural issues

NFC’s major recommendations include four per cent interest rate for farm loans, levying simple interest, direct fertilizer subsidy, universal crop insurance scheme, remunerative crops support prices, and waiver of farm loan for small and marginal farmers (which has been met).

Speaking to The Indian Express, member, NFC, Atul Kumar Anjan said, “The union finance minister did not touch all those aspects which were required for achieving higher growth rate in the farm sector in this budget. He just followed one recommendation of NFC of waiving off farm credit. NFC’s recommendations are the ‘mantra’ for improving agriculture growth rate.”

Commenting on the pros and cons of loan waiver, Managing Director and CEO of Yes Bank Rana Kapoor said: “Union Budget 2008-09 essentially has a rural flavour as significant emphasis has been placed on inclusive growth. The waiver of farm loans is a short-term strategy which will not seriously address structural issues. However, it will greatly benefit agricultural stakeholders by resuscitating farmers back into productive agriculture participation. It will also facilitate the cleaning up of banks’ portfolios.”

Added Krishan Bir Chaudhary, president, Bharatiya Krishak Samaj: “The government instead of dealing with this situation in depth has tried to play with the sentiments of the poor in this Budget with an eye on the forthcoming polls. Waiving off farmers’ loans is the best thing the government can do under the prevailing circumstances. But the government failed to redress the problem of imposed capital intensive farming which is the reason for farmers becoming indebted and committing suicide. The government needs to replace this capital intensive farming model by farmer-centric agriculture.

The capital-intensive agriculture model benefits the companies supplying fertilisers, pesticides, seeds, farm machinery and implement. The government should encourage farmers’ cooperatives and declare areas as Exclusive Zones for Farmers’ Cooperatives on the line of SEZs and provide them incentives and benefits.”