Budget 2019: Farm loan waivers have been the easiest tool in the hands of politicians to garner votes from the man who puts his sweat and soul in the agrarian fields to generate grains and food for the fellow countrymen besides contributing maximum to the country’s GDP. However, the same man aka farmer lingers on in a debt-ridden state, fulfilling only means and earning literally from hand to mouth.


Though farm loan waivers sound good for the benefit of the farmers; however, the reality is that governments cannot fund these farm loan waivers from empty/constricted coffers of the exchequer. Furthermore, such waivers disrupt the credit cycle of the economy and mutilate lender confidence. As per current year stats, a meagre 6.37 per cent loans were disbursed by banks to the agriculture sector in 2018, which is the least in the past 10 years. Which also means, that the sector depends highly on private moneylenders to fulfil its day to day financial needs.

As Interim Budget 2019 is just a few weeks away, announcing farm loan waivers could be on cards by FM Arun Jaitley; however, the party has long stayed away from such populous measures (costing defeat in 3 states in December 2018), thereby what could be it that can revive the lives of struggling farmers and bring them at par with the rest of the economy.

As per experts, the solution lies in strengthening the payback capacity of the farmers rather than resorting to such populist measures. The agriculture sector in India is highly disorganized. Farmers reserve their production and wait for the right time to sell it. A lot of produce is either perished or degrades in quality by the time this ‘right time’ arrives.

Quality storage of agricultural produce must be enhanced by the government in conjunction with the farmers. Farmer Producer Organisations (FPOs) is the answer to overcome quality storage and financing of farmers through the year, easing their financial distress and dependability. However, bringing more and more farmers to the FPOs is a challenge that needs to be addressed first.

Though Modi-government has directly as well as indirectly helped India’s agriculture sector by setting up roads in rural India for better infrastructure, agro-processing financial institutions, grain agricultural markets (e-NAM), testing facilities and warehouses, setting input MSP at 1.5 times the cost of the Kharif produce in Budget 2018 besides enhancing crop insurance, but the road to strengthening the position of a farmer is long. The NDA has set 2022 as the goal to realize its Agricultural reforms, but that seems far-fetched given the ground-reality of agrarian unrest right now.