How beneficial is loan waiver scheme?

The Maharashtra government rolled out the first phase of its loan waiver scheme onJune 18. Chief minister Devendra Fadnavis directed a sum of Rs 4000 crore for the first set of farmers. The first phase is expected to benefit more than 8 lakh farmers. The government also added that about 80 per cent of the farmers will get their loan waiver amount by mid-November.

Chief minister Fadnavis had announced the loan waiver scheme in June. Claiming it to be “biggest in history” the state government then allotted Rs 34,000crore towards it. However, according to a recent report in Mint, the government is not sure about the real estimate of the fund to be extended for the loan waiver scheme as several amendments have been introduced since its announcement.

The state was hard hit by severe drought since 2012, adversely impacting the cultivators.

The Maharashtra government was forced to introduce the farm loan waiving scheme after days of protest by farmers. The state was hard hit by severe drought since 2012, adversely impacting the cultivators. The farmers will be getting the loan amount from the state government after four months of wait. The government, in order to curb manual interventions, has devised an online application process. This will transfer the money directly to their bank accounts.

Over one lakh farmers are not entitled to receive funds from the scheme. The conditions laid down by the government restrict them from receiving compensation for their losses.Ajit Nawle, convener of the coordination committee of agitating farmers has said that these farmers’ will demand a case of cheating, murder and abetment of suicide to be filed against the government for the loss of farmer's life.

A report in Financial Express stated that many farmers in the first phase of the scheme have received certificates without the loan waiver amount in it. Citing a local news channel the report mentioned Dhondiba Laxman Patil and Santan Dumin Fernandes, farmers from Mugali village, Chandgad district, Kolhapur have received certificates without the amount.

The state government assented to the farmer's demands of waiving off the loan after several days of protest. The government implemented the first phase of the scheme after five months.Within two daysof its implementation, it has received a set back from the very section of the society that it was launched for.

A similar farm loan waiving scheme was carried out by the Uttar Pradesh government. As part of his election promise to waive off farmers’ loan, the state government led by chief minister Yogi Adityanath had announced “Krishi Rin Mochan Yojana” in April. The state government had allotted Rs 36000 crores for the same. The scheme aimed at waiving crop loan of small and marginal farmers up to Rs 100,000. The election promise had raised big hopes among the farmers of Uttar Pradesh and was launched in September.However, the implementation of the scheme had left many farmers shocked and infuriated. They felt cheated after receiving amounts as low as Rs 10, 12 and even 1 paisa, 10 paisa, 12 paisa.

The agricultural growth rate of our country has been on a constant decline and farmers suicide on a rise.

Shambhu Nath, a farmer in Barabanki spent Rs 218 only to receive a loan waiver of Rs 12. In an interview to a Hindi daily, Adityanath said, “farmers of UP are so self-reliant that they paid the loan all by themselves”. Shambhu Nath had taken a loan of Rs 28,812. Out of which he returned Rs 28, 800 by selling his bull. Therefore he was entitled to receive only the outstanding amount which amounted to Rs 12.

A report stated that over 4,814 farmers got loan waivers amounting between Rs 1-100. About 17,260 farmers received loan amounting Rs 1000 or less than it. Clearing off the farmers’ outstanding loan amounting to 1 Rs, 10 Rs or few paisa will certainly not benefit any of these farmers.However, it will add up to the figures of beneficiaries from the Yogi government’s flagship mission of waiving off farmer’s loan.

The agricultural growth rate of our country has been on a constant decline and farmers suicide on a rise. Since independence over 3 lakhfarmers have ended their life. Natural calamities, drought and floods strike our country every year. Loan waiver is certainly not the only solution to farmers’ distress. Waiving off the loan is a short-term sustenance for their miseries. The government needs to address the root problem. They need to minimise the ever-growing devastation to agriculture and farmers of our country.