Maharashtra farmers march to Mumbai to ask for loan waivers

• Around 40,000 farmers marched into Mumbai from Nashik covering over 180 kilometres.
• Last year the Maharashtra government announced a loan waiver to the tune of Rs 34,022 crores of which only around Rs 12,381 crore has been transferred into bank accounts.
  
• The Economic Survey of Maharashtra has forecasted a negative agriculture growth of (-) 8.3% in 2017-18.

Around 40,000 weary farmers marched into Mumbai from Nashik covering over 180 kilometres with the sole intention of getting the Maharashtra government to heed to a list of their demands that include:

1) 100% waiver of their loans as well as electricity bills.

2) Implementation of the Swaminathan Commission recommendations.

3) Better rates for crops.

4) The announcement of minimum support price for agriculture produce.

5) Pension scheme for farmers.

6) Land rights for farmers.

Led by the All India Kisan Sabha (AIKS) — the farmers’ collective of the Communist Party of India (Marxist) — these farmers have been adversely affected by the poor rainfall and erratic climate conditions. The Economic Survey of Maharashtra has forecasted a negative agriculture growth at (-) 8.3% in 2017-18 and the primary cause of poor yields can be attributed to droughts, inadequate pricing policies and poor water management.

Maharashtra followed Uttar Pradesh (UP) and Punjab last year to announce a loan waiver to the tune of Rs 34,022 crores of which only around Rs12,381 crore has been transferred into bank accounts. Together, the large-scale farm debt waivers of all the three states amounted to around Rs 77,000 crore or 0.5% of India’s 2016-17 GDP.

The decline in “agriculture and allied activities” has pulled down Maharashtra's economic growth to 7.3% in 2017-18 (down from 10% in 2016-17).

But can India really afford these large-scale loan waivers?

If the current states that have offered loan waivers — Uttar Pradesh (UP), Punjab and Maharashtra — were to be joined by other major states like Gujarat, Karnataka, Rajasthan and Madhya Pradesh to extend one-third of farm loans waivers in their respective states, then the combined amount of farm debt waivers before the 2019 elections would inflate to Rs 2 trillion. Which is not too much of a dent, but if all the Indian states started to follow suit — which they probably will — and offered waivers to cover half of all farm debt instead of just one-third then the total waiver amount will increase to a whopping Rs 6.3 trillion.

For a country that is already facing a significant bad loan problem, not to mention a burgeoning fiscal deficit, this move might prove drastically unfeasible.

What’s more, if they fail to correct the root of the problem, it will only herald another frenzy of waivers in the near future as agricultural productivity continues to decline.