Perhaps the one thing for which this year's budget will be remembered for long is the announcement of Rs 60,000 cr ($15 bn) farm loan waiver; the relief amount is roughly around 3% of all the loans in the entire banking system of the country. It is no secret that the agricultural sector is facing a grave crisis caused by an inescapable cycle of debt that has compelled more than 1,50,000 farmers to commit suicide since 1997. The National Sample Survey Organization (NSSO) points out that about half of India's 100 million farming families are in debt. Against this backdrop, the debt relief package aims to give marginal (holding up to 1 hectare) and small farmers (holding 1-2 hectare) a new lease of life. Under the scheme, all agricultural loans disbursed by scheduled commercial banks, Regional Rural Banks (RRBs) and cooperative credit institutions up to March 31, 2007 and overdue as on December 31, 2007 will be covered.
The largest ever debt relief package of all timewhile rekindling hopes amongst some four crore farmers, including three crore small and marginal farmershowever, has not gone down very well with critics and the opposition parties. Many term the move as a populist one, given that general elections are hardly a year away. Some argue that the relief package fails to address the real issues affecting the Indian agriculture, while others feel that it is too small to have any real impact as it covers merely one-fourth of the total debts of the farm sector; it is said that three-fourths of the loan are from local lenders who charge usurious interest rates, forcing many farmers, who are unable to repay such high-cost debts, to commit suicide. Another ground on which the mega loan package has been criticized is that the benefits could accrue to only those farmers with a holding size of less than 2 acres. "Comparing farmers owning two hectares in Punjab with those with holdings of similar size in Rajasthan or Vidarbha is unfair. The size of holdings in distressed areas should be much bigger," a leading daily cited noted agriculture economist MS Swaminathan as saying. |
