The Game Of Loans

Farm loan waivers have often served as populist carrots to woo the populous farming community before polls in India. A close look at the trend.

- Prabodh Krishna

Bernard Baruch, a financier who was an economic advisor to the United States President Franklin D. Roosevelt once said, “Vote for the man who promises least, because he will be the least disappointing”. Is it a homily, we wonder, that farmers in Madhya Pradesh (MP) should have heard? Before the Madhya Pradesh Legislative Assembly polls, the Congress Party promised to waive loans of up to Rs 2 lakh of some 51 lakh farmers who had applied for the relief. As a poll strategy, it was scarcely innovative, for the tradition of wooing the populous community of Indian farmers with promises of debt write-offs dates way back to 1987.

Chaudhary Devi Lal, then chief minister of Haryana, had been the first to announce a loan waiver for the state’s farmers. The prevailing political environment demanded that he do. The 1980s was when the success of the Green Revolution of the preceding decade had brought to the fore new social groups. The economic ascendance of the middle peasants coalesced with the political ascendance of the Other Backward Classes (OBCs) around the Mandal Commission agitations to politically mobilize this hitherto under-represented group. As the farmers’ community got politically organized, it began to demand subsidies for agricultural inputs such as fertilizers, farm equipment, electricity, a minimum support price (MSP) for farm produce and subsequently, loan waivers.

India’s agrarian history has since been speckled with various episodes of mass loan waivers for the farming community by state governments. The measure has won votes for the political parties that reached out to farmers. In the last Assembly elections in Madhya Pradesh for instance, the pre-poll commitment made by the Indian National Congress to write off debts of farmers with banks and financial institutions of up to Rs 2 lakh within a certain time frame, did translate into votes.