Loan Waiver and its Myriad Facets

N. S. Venkataraman

The farming community has always been held in high esteem in India which possesses the second largest agricultural land in the world (around 60%), only next to the USA.

So when the farmers feel distressed, the Indian society becomes concerned and wants to do whatever it can, to help remove the crisis.  The government steps in with its schemes, offers and waivers. 

In spite of this, in the last few months, the farming community has become vocal and has also resorted to agitations on one count or the other.  Despite the crisis, such violent protests are inappropriate.

Causes of Farmers’ Distress

In some states like Tamil Nadu and Karnataka, farmers have suffered during the last one year due to drought conditions and consequent failure of crop output.  In other regions like Maharashtra and Telangana, farmers are distressed due to surplus crop production and consequent drop in the market price.

Both are genuine concerns and it is the duty of the country to help the farmers in such a scenario.

Types of Farmers

There are different kinds of people involved in agricultural operations and all claim themselves as farmers.  The question is whether all of them are justified in claiming themselves so.

One section of people has agricultural land in rural areas but live in far off places engaging in some other profession.  They lease their land, but still call themselves farmers.

Another section lives near the agricultural land they hold, but do not themselves plough or cultivate their land.  They employ workmen to do the physical labour and pay them wages. They also call themselves farmers.

A third section holds small area of land and physically works on the land.  They are the genuine farmers.

A fourth section of people are those who do not hold any land, but work on the agricultural fields on daily wage basis.  They are tillers; they cultivate the land, but sadly, are economically the most distressed.

The first three classes of people described above do not recognize these tillers as farmers.  The most affected lot during the distress conditions in agricultural operations are the tillers (agricultural workers) who are left high and dry.

Sops for Farmers

The government has initiated a number of schemes for the benefit of the farmers, such as crop insurance, soil health card, e-marketing of agricultural products, kisan credit card scheme to avail of quick loans and many others.  Additionally, the farmers get other benefits from the government such as free electricity and exemption from income tax. There is no distinction made in providing such benefits to the large, medium and small scale farmers.  Nevertheless, these schemes do not appear to give adequate relief to the farming community.

Demand for Loan Waiver

While the government has given a number of reliefs to the farmers, the major demand of the farmers now is that their entire agricultural loan should be waived all over the country. The government and the banks find it difficult to do so as it would cause a distress situation for the banks and severely affect the finances of the government. But, the farmers do not seem to care about the problems of the government and the banks.

Even so, several state governments have waived agricultural loan availed by the farmers partly and in some states fully in the recent years, in spite of the deficit scenario that the government faces.  Such waiver of loan inevitably would affect the ability of the government and banks to implement development projects and introduce welfare measures for the poor people.

Furthermore, while distress in agricultural operations do cause serious problems to the farmers resulting in default of loans, even during the non-distress period, many farmers default on loan repayment owing to various reasons including their indiscipline in personal and family finance management. The agitating farmers seem to ignore this view.

Violent agitation not appropriate

It is not appropriate that farmers should engage themselves in violent protests like stoning transport buses, blocking roads and rails or unseemly protests like eating rat or undressing themselves in public.

Such behaviour of agitating farmers hurts the nation’s goodwill they enjoyed so far.  Many discerning observers wonder whether farmers should resort to such extreme form of protests.  It makes one wonder whether these agitators are really the hardworking farmers or some people with vested interests whose goal is not necessarily the farmers’ welfare.

We as a nation are concerned when the farmers are in distress. But, the farmers too need to realize that such violent form or unseemly agitations do not help their cause.

It has also been noticed that some of these so-called leaders of agricultural groups talk and behave like politicians rather than like representatives of the farmers.

The farmers need to realize that there are many people who are not involved in agricultural operations but in several other areas who are equally distressed. If everyone starts agitating violently, where will it all end up?

From FF Digital:  A recent news report states that the fishermen now want loan waivers!  Yes, where does it all end?  Any answers?

Mr. N. S. Venkataraman is the founder trustee of Nandini Voice for the Deprived, a non-profit organization.  E-mail:  Website:


6 thoughts on “Loan Waiver and its Myriad Facets

  1. Thank you for the write-up. The issue of loan waivers for farmers is a classic case of the wrong incentives coming out of ‘good intentions’. Once loans are waived, and farmers can count on either the government or the opposition to forgive their loans at the expense of economic logic, what incentive do they have to discipline themselves? The various show-off protests of the farmers are only an indication of their arrogance and indiscipline. Agreed, there may be individual cases of distressed farmers, but why isn’t the government of the day cognizant of this, and work proactively towards the elimination of their problems rather than waiting to waiver the loans afforded to these farmers, which is hard-earned depositors’ money anyway?

    At the least, loan waivers should be coupled with a program of strict farm operations management to ensure that farmland owners are better able to meet their loan commitments the next time they borrow money. In the absence of a thorough remedy, the loan waivers essentially mean farmers will expect ‘free money’ from the government, and leave them with no incentive whatsoever to invest in their farms and improve their own chances. India’s agriculture suffers as a result. One never hears of a ‘reformed farmer’ who has returned back to prosperity and economic sanity in their farm operations after receiving such a loan waiver. Ever.

    Liked by 1 person

  2. Loan waver and farmer’s suicide are two issues interrelated in a complex tangle.. Loan waver has taken roots for many years now and assuming frightful proportions . Perhaps initially loan waver by the govt started with genuine intentions to help the distressed farmers but gradually it assumed different dimensions with leaders of the farmers encouraging them to escalate their protests. In turn the political party in power also saw it as an opportunity to gain popularity and the brunt fell on the banks who were forced to fall in line because govts of the day lacked vision to preempt the situation arising. The next stage was that persons who were not farmers in the real sense as categorised in the article jumped into the fray while the farmers really affected were left in the lurch while the so called farmers’ leaders saw this as an opportunity to enrich themselves at the cost of the farmers. Therefore over the years it assumed many dimensions and there are reports that those who committed suicide were for complex of reasons. As I see the situation emerging as a strange phenomenon deteriorating into a habit as a game of attrition between loan waver and suicide because the govt is at a loss to come up with a long term viable solution considering all aspects and only resorts to tide over the situation in a knee jerk reaction while poor and really affected farmers have become a pawn in this political drama


  3. I agree with the author’s advice: “It is not appropriate that farmers should engage themselves in violent protests…..”, as our Constitution does not permit violence in the name of democratic protest. But, may we know, in the same breath, who is responsible for the long mounting NPAs in banks and other financial institutions? What steps were or are being taken to recover the big loans taken by big people and what action taken against the big bank officials allegedly responsible for the bad debts? Did Vijaya Mallya cheat so many banks to the tune of so many crores of rupees overnight? Or, did he steal all that money so as to assume the innocence of the bankers? Are/were the governments democratic in allowing him to go off the hook? Look at the way how most of our MPs, MLAs and all other sundry politicians and bureaucrats amassed and added to their assets, according to their own election affidavits, without any accountability. Is the government democratic and constitution-bound in simply watching this and doing nothing? What about the astronomical salaries, perks, freebies, not to speak of unwritten privileges enjoyed by our elected representatives (there are just sarpanches, who enriched themselves more than the most of the state and central ministers!)? Are the cooperative banks democratic in their functioning? Who are their Directors? Did they lend to the small and marginal farmers? Did they recover the loans advanced to the big people? It’s easy to sermonize the farmers not to cry aloud. But is it difficult for the government to recover big debts from big people, check the DAs of politicians and bureaucrats, or to figure out non-farmers from farmers and deal with them appropriately, instead of resorting to wholesale condemnation? Let the government follow the rule of law and equality before law in all aspects so that nobody will have any grouse against the government. Above all, the loan waiver to farmers, by now, has become more of a political gimmick than a welfare measure. Just note the politicians of all hues, not only in Maharashtra but elsewhere too, who never bothered nor uttered a word about the farmers, have become their champions overnight with an eye on their future vote banks! Any dispute?


    • You have to look at the incentives Mr. Rangarao. The cacophonous rhetoric would perhaps have you believe, and many like you who follow the press, that Mr. Mallya and his ilk are to be punished and them alone. There is a nexus there and this needs to be investigated.

      But to use Mr. Mallya or Mr. Nirav Modi as a scapegoat to give license to farmers to engage in riotous behaviour is simply misplacing the basis of the argument.

      For one, the farming community in India are the most pampered flowers ever. They do not pay taxes – not one rupee. They get price support for their product in the form of minimum price ie. even when their crop is not as valuable, they get paid above-market prices. Their input costs are often subsidised ie. someone else pays for it. They are shielded from overseas competition by high tariff barriers, so they hold the Indian consumer hostage. Their lands are state-protected – buying agricultural land is the test of one’s patience. Plus, entry into the agriculture profession is restricted, a clear form of reverse discrimination in today’s supposedly anti-caste India. To top that, farmers play the politicians one against the other to get larger and larger loan waivers ie. they are simply not going to pay the money they borrowed under proper terms of contract, good crop or bad.

      In short, farmers get paid to breathe. And despite all this, they simply suck at their jobs. Less than 1% of Japan’s workforce is involved in rice cultivation – they are self-sufficient in rice. China too has greater yields per hectare in practically every crop. Less than 4% of the US workforce is involved in agriculture; they are self-sufficient in most things.

      And who pays for all this hokum? People like you and me who are regular middle-class workers who have to pay income tax judiciously, who have to follow the rules and at least pretend to care for them, people who genuinely care for the financial health of the country and hesitate to go crying to the government to cover our backsides. Where is the loan waiver for the middle-class? Where is the minimum price support for middle class output? Where are the subsidies?

      The results are clear for all to see. The middle-class, bereft of any government support and left to fend for themselves, is the banner line for India today, making Indians proud with their success in India and overseas, earned in spite of rather than because of the government. The farmers, held hostage by their own greed, are the poster-child for India’s backwardness and live little improved from the 1970s.

      Politicians from both the BJP and the Others are to be blamed for this competitive socialist BS. Get the farmers to up their game and tell them there is a limit to taxpayer’s patience. Get them to behave.


      • And, your idea of democracy seems to imply competitive cries to the nanny-state to cover one’s backside forever and ever. This is simply not sustainable in the long-term. Democracies should reward hard work, fortitude and smartness, not sloth and parasitic behaviour.


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