Congress chief Rahul Gandhi did not live to praise himself for the successful signing of the files related to agricultural debt waiver. He took the support of Twitter yesterday and expressed his heart with his word through Twitter but for the last few days, The annoying users of social media platforms are making most of their jokes about them. Of course, it believes the fact that taxpayers are angry with the subsidy to the Indian farmer.
Actually, a clever politician, who can notice the growing urbanization of India, should now celebrate the city-dwellers instead of the rural people. But that is another story. Many people have argued that agricultural debt forgiveness is bad economics and good politics. Populism can work now but it binds poor economics because it does not solve the real crisis.
Indian politicians have celebrated farmers but have enabled policies, and worse still encouraged crop patterns that have led to the fiscal ruination of farmers across the country. Loan waivers might make for great headlines but almost every State Government is acutely aware of their financial position.
It was only recently proven in Karnataka that the small text in any waiver has so many terms and conditions applying to them that few of the really impoverished benefit. And even if they do, loan waivers, instead of being the smartly designed financial literacy programmes, mean that farmers eventually end up in debt again a few years later. Some are pushed towards middlemen because banks refuse to finance them after the write-offs. They might only be outside the formal financial system.
And it is the farmers who have declined, not farming. Indian food production is touching record highs which, coupled with better cold-chains and transportation infrastructure, has meant that India, a nation that not so long ago imported food, now produces a lot more than it needs. And supply and demand is basic economics after all; if the supply is more than the demand, prices will fall. But try explaining that to a farmer who gets a rupee per kilogram for his onion crop. The only sustainable way out of this crisis for millions of Indian farmers is to get them out of tilling the soil into the factories. This will boost economic productivity and also address severe under-employment problem in the country.
Unfortunately, while Indian politicians were dithering and succumbing to farming lobbies that wanted to plant sugarcane in water-scarce Marathwada and in the Cauvery catchment zone, or growing Basmati in water-scarce Haryana, they must remember that 40 years ago to the week our eastern neighbor pretty much decided that farming was an unsustainable way of keeping its economy going.
China got its people out of the land into the factories and its growth in those four decades has been incredible. It has lifted half a billion people, almost all farmers and farm workers, out of extreme poverty. Of course, there has been a price that China and its people have paid — the price of free speech and the democratic process. What that also means, however, is that India has missed the bus of rapid industrial growth.
There might be another one coming through, but for that, we need to put the money on the ground investing in human capital, such as in children of these farmers, putting them in better schools and colleges. Farm loan waivers solve nothing, they will keep farmers poor and keep the povertarian politicians and elitists in power. It is not a price worth paying.
