The Congress party has started showing its true colors as the newly elected Kamal Nath government put many riders in the loan waiver scheme like his counterpart in Karnataka. Almost 90,000 farmers of the state will be bereft from loan waiver benefits as the government has restricted the waiver to only short term loans. The farmers who borrowed money from banks for medium and long term to purchase farming equipment’s like tractor, cultivator and pump sets are not allowed to avail farm loan waiver benefits. There are 90,000 such farmers and the amount of the loan is around 2,000 crores as of 30th June 2018.
District Cooperative Central Banks (DCCB), District cooperative agriculture and rural development bank, and National Bank for Agriculture and Rural Development (NABARD) used to give medium and long term loan to farmers purchase agricultural machinery till 2009. But given these loans translated into NPAs as many farmers did not pay back the loans. The banks slipped into heavy debt and the government told the banks to stop loans. The loan waiver announced by the UPA government before 2009 Lok Sabha election was implemented but these farmers did not benefit from the scheme.
More than 1 lakh hectare of farming land is put as collateral with banks. The banks offered the farmers to pay principal amount of loan in one time and the interest amount will be waived but the majority of the farmers still failed to pay back the loans. The state government has delegated the task of loan recovery to NABARD. The apex agricultural and rural credit bank already has 880 crore of credit and hence it will take strict measures to recover the loans.
The farm loan credit NPA has turned to 24 percent as majority of farmers did not pay back the loans anticipating a relief as the political parties and leaders had promised loan waiver. This has also affected the credit cycle in the state as the banks no longer release new credit to farmers due to the fear of not getting back the loans. The state governments which waive the loans take four to five years to repay to cooperative banks and this creates shortage of funds for banks. Therefore with shortage of funds and fear of not getting back the money compels the banks to go slow on lending. The slowing down of credit will hurt the farming activities in upcoming season.
There are 8000 farmers with 208 crore of loans in Vidhisha, the district of Shivraj Singh Chouhan.
Bhind district has 4000 such farmers with loan amount of 137 crores, Sehore’s 3500 farmers has loan of 110 crore, Sagar district has 4500 farmers with loan of 45 crore rupees and Chindwara’s 1500 farmers has loan of 110 35 crore. The least amount of loan is in Tikamgarh district where 900 farmers owe 17 crore rupees.
Congress party is well known for ‘Know-it-all’ ministers and ‘Promise-it-all’ manifestos. The party made many unrealistic promises in its manifesto for 2018 Madhya Pradesh assembly election. Congress party was well aware that loan waiver to all farmers is not feasible given the already strained state budget. But it promised loan waiver, unemployment benefits and many more sops to win the election.
Now, the Kamal Nath government is forced to deliver on its promise of farm loan waiver and therefore, it had to find a way to manipulate the waiver by putting various constraints. Congress used the same old technique of complicating access to loan waivers to confuse farmers. Now, the party might go to the media and say that it delivered on the promise but in reality, very few people got the benefit and money spent for the purpose is also very little.
The promise of a farm loan waiver could be a good example of how Congress makes populist promises despite being aware of the nuances of it. The party finds itself unable to deliver on all those promises. Earlier, in previous elections as well, the party promised universal school education, universal healthcare, food security, mobile phones, fast internet connections, white goods but they do not seem to be coming true. The fact remains that despite all these populist promises, the party delivered on very few.