On Friday, the Congress party announced – yet again – that it will waive off farm loans if it is voted to power in a particular state, in this instance Haryana. Last year in November, prior to assembly elections in five states, the Congress had made the same promise. It was voted to power in three – Chhattisgarh, Rajasthan and Madhya Pradesh – of the five states. The waivers are nowhere near completion even now, ten months into the terms of the Congress governments in these states Knowing this, the Congress party has thought it wise to promise yet another loan waiver and with a stricter time line – last year, the loan waiver was to be implemented in ten days of coming to power, while this year the party has said that its promise will be implemented within 24 hours. Let’s look at where the party stands on its promise in the states where it made the loan waiver promise last year. A total of Rs 60,600 crore were to be waived – in ten days, as per the promise – in the states of Rajasthan, Madhya Pradesh and Chhattisgarh.Also read: Since 2014, States Have Budgeted Only 63% of Total Farm Loan Waivers PromisedThe Congress governments in these states have not even budgeted half of that amount – collectively – in the two budget cycles that have passed since then, according to a recent Reserve Bank of India report. The amount budgeted for farm loan waivers is only Rs 28,460 crore, or 47% of the amount promised. If Chhattisgarh is kept aside – as it only accounts for 10% of the total waivers promised – the Congress’ performance has been even worse. It has budgeted only Rs 19,000 crore of the Rs 54,000 crore promised to be waived in Madhya Pradesh and Rajasthan – a mere 35% of the amount promised. Since the amounts budgeted reflect the money set aside for waiving farm loans, this is the maximum amount of loans that have been waived. The actual amounts waived would be even lower. The case of Karnataka – again where the Congress was a ruling party – in instructive. The Congress-Janata Dal (secular) alliance promised a loan waiver amounting to Rs 44,000 crore when it came to power in May 2018. In what turned out to be his last budget speech as chief minister in that term, H.D. Kumaraswamy, admitted that the government had only actually released a third of the amount budgeted for loan waivers. The state had budgeted Rs 15,880 crore but only spent Rs 5,450 crore on farm loan waivers.So, only about a third of the amount promised had been budgeted, and further still, only a third of the amount budgeted had been released. The same story has likely played out in all states where loan waivers have been promised. In Chhattisgarh, for instance, farmers will be beginning an agitation on October 14 demanding that the Congress come good on its loan waiver promise. They claim that only a fraction of farmers have actually benefitted from the loan waiver while a majority continue to be in debt. Congress leaders themselves have raised concerns over non implementation of the loan waiver promise. Ironically, on Friday itself when the Congress released its Haryana manifesto promising a loan waiver, senior party leader from Madhya Pradesh Jyotiraditya Scindia admitted that farm loans have not been waived in ‘totality’ in Madhya Pradesh. Intellectual bankruptcy The problem of not being able to deliver on the loan waiver promise is not unique to the Congress. BJP ruled states like Maharashtra and Uttar Pradesh which had promised loan waivers in 2017, have only budgeted about 75% of the amounts promised. Andhra Pradesh and Telangana which had promised waivers in 2014, have, in the intervening five years, budgeted 53% and 84% respectively. Overall, 10 states have promised loan waivers since 2014 in India totalling Rs 2,36,460 crore. But, till the last budget announcements, only Rs 1,49,790 crore, or 63% of the promised amount has been budgeted. One of the conclusions that can be drawn from this is that loan waivers are an empty promise to begin with. A promise that political parties know fully well beforehand that they will not be able to implement. For instance, in the case of Haryana, the Congress would know that there is no way that it will be able to implement the loan waiver in a year or even two, let alone in 24 hours.Also read: Without Rise in Farm Income, Congress’s Loan Waivers Won’t End Rural DistressThe total outstanding credit in the agriculture sector as on June 30, 2019, in Haryana is a little over Rs 51,000 crore, as per the State level bankers committee’s data. If the Congress is to waive these loans in 24 hours, as it has promised if voted to power in Haryana, it will have to spend about 38% of the state’s annual budget on loan waivers only. The budgeted expenditure for Haryana in 2019 is Rs 1,32,166 crore. So, to be able to waive these loans even in one year, the Congress will have to reduce spending in other departments by 38% since state governments have little power to raise revenue of their own. The allocated expenditure under the agriculture head is only Rs 4,539 crore. So, the expenditure under agriculture will have to go up 11 times if spending on all other aspects of agriculture is reduced to zero. This story is repeated in each state where loan waivers are promised. All political parties know that the fiscal space to execute loan waivers at the level of states simply does not exist. Yet, they continue to promise loan waivers. To add to this, loan waivers are not even the fix that Indian agriculture needs, as The Wire has pointed out on several occasions. The key problem facing India’s farmers is that they are unable to get remunerative prices for their crops. Market prices continue to be below Minimum Support Prices (MSP) for a majority of the crops. Major vegetables such as onion, potatoes and tomatoes continue to be at the mercy of heavy market volatility. Onions, for instance, were fetching as low as Re 1 per kilogram for the farmer last year in large parts of the country. Potatoes, too, have suffered the same fate for much of the last three seasons. But, in these situations governments have done little to come to the aid of farmers preferring to leave them to their devices. On the other hand, when retail prices of onions started hurting the urban middle class last month – by touching prices that they had touched 21 years ago implying that food inflation has remained low – the government was quick to intervene and announce stock quotas, minimum export prices and decision to import the bulb with a view to reducing the price of onions reflecting its inherent anti producer bias. Being out of power for over five years at the Centre, the Congress ought to think harder on how to solve the problem of stagnant farm incomes in the country. If its unable to do better than promising farm loan waivers – which it knows it will be unable to deliver – questions can be asked about its intellectual capacity to think seriously about solving the farm crisis.
