PM has reservations on farm loan waiver

Prime Minister Narendra Modi has strong reservation about agriculture loan waivers, which, he believes, work against the long-term interest of farmers. He told some ministers at a meeting recently that such waivers bring only trouble to farmers, rather than help them.

This comes at a time when BJP-ruled states such as Maharashtra and Haryana are under pressure for loan-waivers on the lines of the Yogi Adityanath government’s decision to waive agriculture loans to the tune of Rs 36,000 crore, in keeping with the BJP’s pre-election promise in Uttar Pradesh.

India’s chief economic advisor Arvind Subramanian, too, has red flagged the concept of farm loan waiver — he said on Tuesday that if implemented nationally, this could cost the country about 2% of its GDP.

His remarks came a day before NiTi Aayog member Bibek Debroy’s suggestion that agriculture income be taxed, outraging opposition parties and an unequivocal denial by the Modi government.

Explaining the reason for the PM’s stand against such a populist move, a minister said the NDA government had studied the impact of a similar scheme in Andhra Pradesh and found that farmers didn’t get the entire amount promised.

“Besides, they also became ineligible for future loans. It took more than one and a half years after the announcement for the Chandrababu Naidu government to formulate rules for loan waiver in Andhra Pradesh. In the meantime, farmers stopped repayment of loans, which further aggravated the situation,” the minister said.

It was in this context that the Centre remained indifferent to Tamil Nadu farmers’ agitation in the national capital for a Central loan-waiver scheme, just as the UPA government had done in its first term.

Being the ruling party in 17 states — including four where is in ruling alliance — the BJP is finding it difficult to defend the UP government’s decision.

“We are walking the extra mile to drive home the point that if any state wants a loan waiver, it has to do it with its own resources. We told this to the Maharashtra chief minister. We communicated this to the TN farmers. But, we realise this argument has political implications,” said a government functionary who is involved in negotiation with the states.