Kamal Nath announces farm loan waiver, with strings attached

After assuming power in the state of Madhya Pradesh, Kamal Nath government waived off the farmer loans in its very first order. An order issued by Chief Secretary of Farmer Welfare & Agriculture Department Rajesh Rajora stated, “Madhya Pradesh Government has taken a decision to write off short-term crop loan of eligible farmers up to the limit of Rs two lakh, as on March 31, 2018, from nationalized and cooperative banks.”

It seems that Kamal Nath government has followed the same line as Congress did in Karnataka. In Karnataka, loan-waiver came with a lot of terms and conditions that farmers were not made aware of. The mainstream media houses seem to foresee these clauses while hailing Rahul Gandhi for keeping his promise of loan-waiver.

The order sanctioning the loan-waiver states that the upper ceiling for the outstanding amount to be waived off is Rs. 2 lakhs. This means that any farmer having a loan amount of more than 2 Lakhs will hardly get any benefit from this loan-waiver.

Besides, the order clarifies that only the outstanding amount till 31^st March 2018 would be waived off by the state government. This poses another problem for several farmers. This contradicts the promise made by the Congress party and Rahul Gandhi which said that full farmer loans had to be waived off.

The order clearly mentions that only short term loans would be waived off. Short term loans are granted for seasonal crops. But most of the loans like for digging wells, buying irrigation equipment, tractors, animals etc comes under medium to long term loans which are not to be waived off.

The order says the loans of ‘eligible farmers’ would be waived off. This left everyone wondering whether the waiver scheme has only surprises and restrictions or any relief for the farmers. The order further says the loans that stacked up till 31^st March 2018 would be waived off only, which clearly means that the pending loans of previous years would be waived off, not the whole amount, as promised. One more fact which has to be taken care of is that almost 95% of farmers renew their loans on yearly basis.

In case all the above-mentioned restrictions are applied, ‘eligible farmers’ would just come around 10% of the total farmers’ population. While waiving loans in Karnataka, Congress added 11 riders and Madhya Pradesh seems to be following the same precedent.

Also, during Karnataka elections, Congress had promised full farmer loan waiver. After the Congress-JDS government came in power, the loans of farmers were not waived off for a long time. After facing a lot of pressure and mass agitation by farmers, the state government had to waive off the loans. But, it emerged that the farmers were still getting recovery notices from banks for the loans they had availed. The government had also admitted that out of the Rs. 44,000 crores sanctioned for the farmer loan waiver, only 800 farmers had benefited from the scheme. The new MP government led by Kamal Nath seems to have adhered to the same practices as Karnataka government adopted. The fiscal deficit of the state will also move northwards and will further deteriorate fiscal health of the state.