After listening to the budget proposals on the waiver of the farmer loans the first thing that came to my mind is that we are stepping backwards. The issue I have is not about the money being spent but on what it is being spent. In this post I will try to elaborate as to why I have such strong views on this subject.
Spending 650 billion rupees (65,000 crores) for no change
The farmer whose loan is written off will anyway have no money again even after his loan is written off. He still has to borrow the next year to grow his crop. With no change in the environment surrounding his current situation which put him in this position in the first place what's stopping him from ending up where he is again two or three years down the line. So we are spending all this money in writing off his debt but it will not change anything. He will be in debt very soon again as he has no money in his hand.
Agricultural Infrastructure is the problem
The reasons the farmers are in the situation they are in is because of the infrastructure that they have at their disposal. Many of them still till their land using bullocks and a plough. They use substandard seeds. They do not have consistent water supply. They do not get adequate compensation for the crop that they grow. They do not have access to technology that can improve their crops. They do not have a good supply chain that will get their produce where it is needed most and a good price for it. If these are put in place I do not think the real farmer needs such write-offs.
Rewarding the defaulters
The ones that have not paid back the loans are the ones that are being rewarded. How do you know that these people are not wilful or habitual defaulters? We are rewarding those farmers that made mistakes and the ones paying for it are the farmers that are being truthful and paying for the defaulters mistakes through the taxes they pay (if they pay any). What about the ones whose property has already been attached by the bank and sold to recover the money loaned. What do we do for them ? I think this is highly unfair.
What is stopping them from doing this again?
This is the third time we are doing this. Don't we learn any lessons. Has it stopped them from defaulting on their loans? What is stopping them from doing it again? And the answer to all of this is a resounding "NO", "NO" and "Nothing". So are we moving forward in an environment where "India Shining" is being talked about and the answer again is "NO" as we are not benefiting anyone by doing this.
This decision by the finance minister is completely politically motivated - there seems to be absolutely no meaning in developmental terms in order to do this. Development takes time and effort to show results - this does not. Development is a long term gain - this is a short term gain. Given that elections have to get done in another year - it does not take a genius to figure out why a political party goes for something that gives it short term gain rather than long term gain. On the other hand development creates something for our future, hand outs rob us of our future. So giving the farmers this handout is sure to rob us of a lot of things that we could have done with that same money to improve our farmers environment and hence our country.