Source:

https://www.civilsdaily.com/news/op-ed-snap-from-plate-to-plough-if-you-want-to-help-farmers/

https://www.civilsdaily.com/news/odishas-kalia-to-attack-poverty/

 

Model Answer:

Introduction:

Agriculture Sector is considered as ‘Prime-Mover’ of the economy and is also categorized as ‘Priority-Sector’ for financing various activities. Farm Loan Waiver scheme is among the many steps that have been taken to address the issues of farmers.

Main Body:

• Farm-loan waivers do little to resolve the agriculture crisis, albeit a small section of farmers getting a temporary escape, the concomitant after-effects of loan waivers affects the sector and the economy.
• Several independent reports found farmers turning deliberate defaulters in the hope that their loans will be waived sooner or later. Various banks reported heightened bad loans in the kharif loan recovery season of November-December 2017 post the slew of farm-loan waivers.
• Third, with waivers becoming a pre/post-poll expectation among farmers, they end up making the formal system wary of extending credit.
• Fourth: farmers, defaulting in anticipation of waivers, lose out on other benefits too. For instance, accounts of many farmers anticipating waivers were sub-standard at the time of enrolment under the farm insurance scheme (PMFBY) and, thus, the compulsory coverage was not extended to them.
• At the macro level, waivers lead to crowding-out of private investment as increase in government borrowings to fund waivers tends to increase cost of borrowing for private borrowers. Thus, higher fiscal deficits may not be offset by higher GDP gains and may eventually stoke inflation.

Instead of announcing farm loan waiver like other States, the Odisha govt has approved KALIA scheme amounting to Rs. 10,000 crore to accelerate agricultural prosperity in the State and to reduce poverty.

Key features of the scheme:

• As per the scheme, an amount of Rs. 10,000 per family at the rate of Rs. 5,000 each for Kharif and Rabi seasons shall be provided as financial assistance for taking up cultivation.
• The assistance will be provided to take care of sustenance of farmers not able to take up cultivation due to old age, disability, disease or other reasons.
• The scheme also has a component for livelihood support for landless households. The landless households will have the option of selecting any of the units. The scheme, among others, will particularly benefit scheduled caste and scheduled tribe households.
• Deserving families will be identified and selected by gram panchayats. About 10 lakh households will be covered over two years under this scheme at a cost of Rs. 100 crore.
• The scheme also include life insurance coverof Rs. 2 lakh and additional personal accident cover of Rs. 2 lakh will be provided to both cultivators and landless agriculture labourers covering about 74 lakh households.

Significance of the scheme:

• The KALIA is historic and it will further accelerate agricultural prosperity in the state and reduce poverty.
• It is a progressive and inclusive scheme and will make a direct attack on poverty by way of massive investment in this sector and making benefits reach the most needy through Direct Benefit Transfer (DBT) mode.
• Ten lakh landless households will be supported with a unit cost of Rs. 12,500 to take up activities like goat rearing units, mini layer units, duckery units, fishery kits for fishermen and women, mushroom cultivation and bee keeping.
• Apart from small and medium farmers, the benefits will also be extended to sharecroppers, who are the actual cultivators, and landless agricultural labourers – an aspect unique to the scheme.
• KALIA scheme covers 92 per cent of the cultivators and almost all landless agricultural labourers.

Leaders of various peasants’ organisations under the banner of the All India Kishan Sangharsh Coordination Committee (AIKSCC) denounced the populist ‘KALIA’ scheme by the Government and dubbed it as a “lollypop”.

They doubted the sincerity of the Government as there is no budgetary provision for the scheme and said it is to confuse the farmers and general public as the elections are approaching.

Conclusion:

• To be sure, the agriculture sector needs government support but loan waivers are not the solution.
• On the contrary, expenditure on loan waivers will eventually leave less fiscal space for public expenditure in agriculture. India needs massive investment in areas such as irrigation, water conservation, better storage facilities, market connectivity and agricultural research.
• The problems in Indian agriculture are structural. They need long-term solutions. Loan waivers will only end up complicating the problem.
• The Indian economy has suffered a lot due to competitive populism in the past. It’s time parties and governments addressed the real issues.