The farmer loans waiver

Some points which come to my mind:

Point 1) Almost every where I hear that the waiver will bring disposable income into the rural sector. This extra income will then according to people like Rahul Bajaj encourage people to spend on goods like two wheelers thus boosting the economy. Others say people will spend on FMCG and food. But where is the money? The fact that a loan has to be waived of means that the farmer took a loan to buy seeds, fertiliser, pesticide and other assortments to carry out farming. Say Farmer A took one lac rupees as a loan from and SBI branch in rural India. He tilled his farm and expected that within a period of a few months he will have a bumper crop, which he will then sell at a good price. He will then pay of the loan from the income and keep the rest of the money for himself. Since there is no tax to be paid he has all the balance money to himself.

Now as opposed to this what has happened is that either the crop failed or the markets didn’t offer a good enough rate. As a result the farmer has no money to buy food far less pay back the loan. Well he makes some attempts, pays an installment or two and then starts defaulting. So the SBI branch is then saddled with recovering a one lac rupees loan.

Point 2) Now the Finance Minister has waived of the loan. What does that mean? Is he giving one lac rupee to Farmer A to the farmer to go and buy a two wheeler and splurge or is he foregoing him from the burden of paying back any money.

Point 3) Now there could possibly a situation where Farmer A took the one lac and didn’t spend a rupee to buy the stuff listed in point 1) for his farm. He was an un ethical farmer. He decided to go ahead and splurge on liquor and those other things. When the time to repay came he expressed his inability citing the world economy and all those things. Now when the Finance Minister announced the waiver what happened? Why should the unethical Farmer A be happy. He hasn’t got one more lac to blow? All that has happened is that he need not worry about suffering for his profligacy. But then he isn’t exactly having any more money for more liquor and all those other things or is he? For a moment if I consider than no he is actually getting money also then too how long does that much money last?

Point 4) So the bottom line in my limited understanding is that the 60,000 crores being waived out is money which has already been consumed in the economy in terms of seeds, fertilisers, pesticides or liquor and other things. It is not new money being introduced into the economy. So where is the expenditure push to the economy?

Point 5) In fact, 60000 crores having to be waived of means that funds are being used for unproductive and inefficient uses in the economy. That same money could have been used for the ladies running the Anganwadi scheme or for teachers or for health.

Point 6) And finally a journalist friend from the Amravati district of Maharashtra which has been in the news for its farmer suicides tells me that the whole thing is a hoax. No body is verifying who the people committing suicide are? Is it for farm productivity related issues or even over a loan that they have taken? Or is a random suicide arising out of errant social behaviours. And are these being clubbed together under an agricultural crisis and thus being utilised to get waivers and handouts. And then the famed politician-burecrat nexus of the country (the famed one which ensures that out of every development rupee only 15 paisa reaches the actual benificiary) mops up all the funds?

Point 7) The real changes which are required in the agricultural sector dont seem to be addressed at all.