Have farm loan waivers backfired?

The state has spent enormous sums—₹43,000 crore in the last five years—on compensating farmers for crop losses due to natural calamities, and equally large sums on two loan waivers in recent years.

- Surendra P Gangan

MUMBAI: This raises a pressing question: have state and central governments done more harm than good by failing to promote self-reliance among farmers?

When this was brought to the attention of chief minister Devendra Fadnavis recently, he asked the state agriculture department to suggest amendments in its policies to focus on capital expenditure, to build agri-infrastructure. The goal, he said, should be making farming sustainable and climate-resilient, thus ensuring enhanced income to farmers. Populist schemes such as the ₹1 crop-insurance scheme, and election-related announcements such as loan waivers are not beneficial in the long run, say officials from the agriculture department.

A new focusThe presentation, on March 20, revealed that ₹43,000 crore was spent on compensating farmers for crop losses owing to natural calamities in the last five years, including over ₹10,000 crore paid by the state towards premium for crop insurance.

Astonishingly, none of the money was spent on building infrastructure to minimise the risk of losses due to natural calamities. Rather, the state assumed an additional annual burden of ₹6,000 crore by introducing the ₹1 crop insurance scheme—a plan that benefitted insurance companies more than it did farmers.