amnesty FM

Just like Jaswant Singh was called the rollback FM for rolling back the price hike in fuel after announcing it in his budget last decade, they say P Chidambaram is the Amnesty FM for his super sized write off of Rs. 60,000 crores in small farmer loans. Of course, everyone says that all this is being done with the polls in mind, but this still needs to be looked deeper, because there are more shades to this decision than just the polls.

Farmers with land holdings of 2 acres or less are eligible for this write off, to begin with. Now there are a few things that even in my ignorance, I can more or less figure out. First, and probably the biggest cliche of all is that our agriculture sector is in such a pathetic condition that it can't survive without such bailouts. Most of the small and marginal farmers simply can't produce enough from their small land holdings to even break even. I feel that the biggest reason for this is India's very poor farm productivity, which is even below the global average.

I think another point to look at is that the number of small and marginal farmers who actually get loans from the public sector and co-operative banks are actually actually not as large, with private money lenders still lending to many of these farmers.

And no matter what, I am sure most of them who worked hard and cut into their savings and consumption to pay off their loans probably feel cheated, and I think the FM should have done something for them as well. Maybe he could have offered them new loans at a much lower rate. Besides, its not that these farmers whose loans are written off have a clean slate. They have no choice but to go in for new loans.

The FM says that he is simply wiping the dust off these loans for the banks. Which is a good point, because many of these loans were NPA's for these banks already, and with the FM saying he has the money, maybe they will receive some of the money which they probably wouldn't have received before.

The bottom line is that agriculture needs a much bigger and comprehensive push that just debt write offs. On TV, they had a few farmers from Punjab who said the same thing about not having any incentives for the farmers who actually worked hard to pay off their loans. Also, one of them urged the FM to teach them how to fish, and not give them fishes. Good points, and I think the second Green Revolution can't come any sooner.