top of page

By:

Abhijit Mulye

21 August 2024 at 11:29:11 am

A decade and a half of farm loan waivers in Maharashtra

AI generated image Mumbai: In the heartlands of the state, where erratic monsoons and price crashes routinely threaten agrarian livelihoods, farm loan waivers have transformed from emergency financial lifelines into anticipated political rituals. Over the last decade and a half, successive state governments have announced massive debt relief packages to alleviate farmer distress. But how effective have these multi-billion-rupee interventions been? A closer examination of the waivers...

A decade and a half of farm loan waivers in Maharashtra

AI generated image Mumbai: In the heartlands of the state, where erratic monsoons and price crashes routinely threaten agrarian livelihoods, farm loan waivers have transformed from emergency financial lifelines into anticipated political rituals. Over the last decade and a half, successive state governments have announced massive debt relief packages to alleviate farmer distress. But how effective have these multi-billion-rupee interventions been? A closer examination of the waivers implemented since 2009 reveals a complex narrative of fiscal strain, implementation bottlenecks, and a heavily debated impact on the state’s agricultural credit culture. Following the substantial relief provided to the state under the UPA government’s nationwide 2008 Agricultural Debt Waiver scheme, the state progressively shifted towards localised, state-funded bailouts. The first major modern wave came in 2017 with the Chhatrapati Shivaji Maharaj Shetkari Sanman Yojana (CSMSSY). Announced by the Devendra Fadnavis-led government, this ambitious Rs 34,022 crore package aimed to clear the slates for approximately 89 lakh distressed farmers, offering relief up to Rs 1.5 lakh per farmer. However, the 2017 scheme’s success was highly mixed. Driven by a desire to weed out bogus beneficiaries and ensure precise targeting, the state mandated strict online applications and mandatory Aadhaar linkages. This bureaucratic friction severely bottlenecked the rollout. Ultimately, about 44 lakh farmers successfully navigated the red tape to receive the waiver. Consequently, the actual financial outgo was roughly Rs 18,500 crore – barely over half the announced package size. New Scheme Two years later, agrarian distress persisted, compounded by unseasonal rains and shifting political tides. In December 2019, the newly formed Maharashtra Vikas Aghadi (MVA) government under Chief Minister Uddhav Thackeray announced the Mahatma Jyotirao Phule Shetkari Karjmukti Yojana (MJPKY). Learning directly from the administrative nightmares of 2017, the MVA designed a highly streamlined, almost frictionless scheme. With an initial outlay estimated around Rs 22,000 crore, it offered unconditional waivers of up to Rs 2 lakh for short-term crop loans. Crucially, it required no application forms from the farmers; the government directly accessed bank records and credited farmer accounts. This efficiency paid immense dividends. The scheme successfully reached nearly 31.8 lakh of its 32 lakh targeted beneficiaries, with actual spending settling near Rs 20,250 crore. It was widely hailed as a logistical success, providing swift psychological and financial relief with minimal hurdles. Third Scheme On this backdrop comes the Punyashlok Ahilyadevi Holkar Farmers Loan Waiver Scheme, which the state cabinet cleared on Tuesday and details of which are expected to be announced once the Legislative council elections are over. With recurring rural distress and repeated demands raised from various quarters, the Mahayuti government, once again spearheaded by Devendra Fadnavis, has cleared the state’s largest package yet, valued at an unprecedented Rs 36,585 crore, this scheme promises to waive agricultural loans up to Rs two lakh, targeting an estimated 56 lakh farmers. In an attempt to address long-standing criticisms regarding moral hazard, the cabinet also introduced a Rs 50,000 incentive for farmers who regularly repay their crop loans, aiming to reward credit discipline. Criticism Begins However, as expected, the farmers’ bodies and the political adversaries have criticized the feat. While Raju Shetty described it as “hollow”, Harshwardhan Sapkal of Congress termed it as a “white wash”, adding that the money won’t reach the real needy. Despite their undeniable political popularity and immediate localized relief, these massive waivers generally draw sharp, consistent criticism from agricultural economists and the Reserve Bank of India (RBI). The core of the expert contention lies in the destruction of the agricultural “credit culture.” When waivers become predictable, historically honest farmers are incentivized to strategically default on loans, anticipating a future bailout. According to historical RBI data, following the 2017 and 2019 waivers, agricultural Gross Non-Performing Assets (NPAs) in the state saw concerning spikes, reaching 8.44 per cent by 2019. Banks, burned by these sudden spikes in bad loans, often become highly risk-averse. This paradoxically shrinks the pool of fresh formal credit available to farmers for the next sowing season, pushing vulnerable populations back toward exploitative informal moneylenders. Furthermore, prominent economists, including former RBI Governor Raghuram Rajan, have repeatedly cautioned that repeated waivers crowd out essential private and public investment. When a state government absorbs Rs 30,000 crore in private liabilities, it severely squeezes its own capital expenditure budget. Funds that could have been invested in permanent infrastructure—such as robust irrigation networks, decentralized cold storage chains, or significantly strengthening the Pradhan Mantri Fasal Bima Yojana (crop insurance framework)—are instead diverted to clearing bad loans. As Maharashtra embarks on rolling out the sprawling 2026 Ahilyadevi Holkar scheme, the central policy debate remains unresolved. While these multi-crore relief packages undoubtedly offer vital, short-term survival mechanisms for millions of vulnerable farmers caught in a debt trap, experts unanimously agree that long-term agricultural sustainability is impossible without structural reform. Moving beyond cyclical debt waivers to address the systemic root causes of farming unprofitability—through resilient market access and climate adaptation—remains the state’s most pressing, unfulfilled mandate.

Caste-based Census Sparks Nationwide Debate

Updated: Oct 22, 2024

Caste-based Census

Caste-based identities continue to dominate rural India, directly or indirectly shaping electoral outcomes. Many major elections are influenced by specific caste groups. After the Bihar government released the first phase of its caste-based socio-economic survey, the caste census became a hot topic. The results, backed by evidence, showed improvements in the living standards and social status of marginalised communities, both in cities and villages. With parties like the JDU and NCP backing a caste census, there is growing momentum for the government to conduct one. However, every story has two sides—joy and sorrow. Even Mahatma Gandhi, the Father of the Nation, raised concerns about the caste census.

Rahul Gandhi accused the BJP of being “anti-Bahujan.” The clear meaning is that his father and forefather refused to execute a caste-based census, which might have far-reaching effects and even permanently fracture India’s social fabric. This may be negative for caste-based beneficiaries. The last caste census in India was conducted in 1931 by the British government. Those times were different from the present scenario. The data was made public and became the basis for the Mandal Commission Reports and reservation policies for Other Backward Classes. Rashtriya Swayamsevak Sangh (RSS) has clarified that the caste-based population count data will not be used for core politics. But the agenda for politics is always twisted and expanded.

The Central Government also joined the legal debate by filing an affidavit with the Supreme Court, leaving the matter unresolved. India’s partition, rooted in the divide-and-rule strategy, is frequently cited as a cautionary tale. Including caste in official census data could further deepen social divides. This issue has become a political pressure point, with various states pushing the Centre for action. Although the Constitution uses the term “class” instead of “caste,” the Supreme Court has consistently ruled that caste is a relevant, and at times, sole or dominant criterion for defining a backward class.

After the release of caste-based census data in Bihar, discussions around conducting similar censuses have gained momentum in states like Rajasthan, Chhattisgarh, and Jharkhand. Karnataka, which has already conducted its own caste census, may release its data soon as well.

Notably, all these states are governed by anti-BJP parties. Congress leader Rahul Gandhi also announced that Congress-ruled states have committed to carrying out caste censuses. Meanwhile, the BJP has remained silent on the matter, creating a significant roadblock.

Caste-based censuses focus on proportional representation in areas like jobs and education, with the argument that this will aid in targeted planning for the disadvantaged. However, the situation remains unclear, much like a foggy winter morning. The BJP’s stance on caste-based censuses and reservations seems different, as they fear the caste-based calculations could fragment their traditional Hindu voter base—an underlying concern for the party.

Professor Sanjay Kumar from The Centre for the Study of Developing Societies, says, “Let alone the BJP; no party can openly oppose it; it is not free from danger. BJP gets a large number of votes from the OBC community, their population across the country would be around 52%. Another downside is that the caste-based censuses could disrupt the balance of socio-economic zones. Data theft is a common issue in government systems, and people may feel disconnected from their actual rights.

The moot question is that if the financial status of an ST/SC/OBC or Dalit citizen moves up by a few notches, will his social status change automatically? The lifestyle of any class will only change when the income of a particular class is changed. The actual source of income is employment. The reality is that only metro cities have enough place and space for workers. Aside from the GIDC and IT sectors, less than 30% of industries have their own designated vacancy periods. After a decade, the Jamnagar and Rajkot Corporations have opened their doors to newcomers alongside experienced staff. However, age and caste bias often operate behind the scenes. It’s important to recognise that poverty is also widespread among many upper-caste individuals, and their needs cannot be overlooked. In the overall interests of the nation, terms like SC/ST/OBC, Dalits, etc. must be deleted from the nation’s vocabulary. Every citizen should have only one classification, that of being an ‘Indian’, in the spirit of the constitution.

Last year, when the Bihar government decided to conduct a caste survey in the state, the BJP was also Nitish Kumar’s partner in the state government, and it supported it. Political expert and former professor of Tata Institute of Social Science, Pushpendra Kumar, says, “It is not that the BJP does not talk about caste. It tries to reveal the caste of the Prime Minister as well. For caste politics, the BJP also tried hard to raise the issue of Pasmanda Muslims.”

(The writer is a management professional based in Ahmedabad. Views personal.)

Comments

bottom of page