Monthly Archive December 27, 2018

Telangana is Proof Farm Loan Waivers Aren’t a Long-Term Solution

The government has to evolve policies suitable to a particular state and fine-tune them according to local needs.

‘Nothing succeeds like success,’ first written by Sir Arthur Helps in Realmah in 1868, is going to guide political parties while they draft manifestos for the next parliamentary election. It seems that the Rythu Bandhu (RB) scheme – also known as the Telangana model of direct investment support (DIS) to farmers – has caught the imagination of our politicians. Odisha and Jharkhand have already announced a modified and improved version of this scheme while teams from various states have been visiting Telangana to study the RB model – a welfare programme to support farmer’s investment for two crops a year.
But did the RB model alone help the Telangana Rashtriya Samiti (TRS) sweep the recent assembly elections?
Farm loan waiver
In its manifesto, the TRS promised to waive farm loans of up to Rs 1 lakh. In fact, in the 2014 assembly elections also, the party had made a similar promise. The outstanding crop loans in 2013-14 were about Rs 14,897 crore. Initially, the government did not want to include loans taken against gold or gold jewellery, post-harvest loans and the ones to tobacco and sugarcane farmers.

However, due to widespread protest by farmers, all these were included in the write-offs and finally, the government paid Rs 16,124 crore to fulfil its promise. This is estimated to have benefitted nearly 36 lakh farmers. But due to budgetary constraints, the loan waiver was done in four instalments spread over 2017-18.

A question thus arises: why could the Rs 16,124-crore waiver not achieve its objective of making farmers debt free? Also, how will a waiver of another Rs 24,000 crore make their farming viable?
Rythu Bandhu scheme
The state government undertook a massive exercise of updating land records for the implementation of the Rythu Bandhu scheme. Teams of officers from the revenue and agriculture departments visited over 10,800 villages and verified 72.13 lakh land titles in order to free them from litigation. As part of the scheme, the state spent a total of Rs 12,000 crore during Kharif and Rabi seasons – Rs 4,000 per acre was given to land-owning farmers for each cropping season, irrespective the of size of land holding.
Refusing to learn from Punjab’s water crisis – which was aggravated due to free electricity – the Telangana government also announced that free power would be made available to farmers starting January 1, 2018.
The effectiveness of four years of loan waivers and one year of Rythu Bandhu in Telangana would be known only once data on over dues of farm loans and farmer incomes is released by NABARD, RBI and NSSO. The first two will do well to release detailed data on loan waivers so that the country gets to know the impact of frequent loan waivers on repayment behaviour of borrowers, and the benefit it brought to various crops grown by farmers.
Procurement of agricultural produce
Direct investment support on the lines of Rythu Bandhu is surely a better model than physical procurement of agricultural produce (except wheat and rice, which are required for PDS) or price deficiency payment, both a part of the Pradhan Mantri Annadata Aay SanraksHan Abhiyan. Price deficiency payment scheme was tried in Madhya Pradesh in Kharif 2018, but it failed in its objective because extensive paperwork and monitoring of mandis was required to make it effective. Moreover, traders’ collusion artificially depressed the mandi prices in Madhya Pradesh.

Telangana chief minister K. Chandrashekar Rao. Credit: Twitter

It does not, however, mean that states with a robust procurement infrastructure (like Punjab, Haryana, parts of UP, MP, AP, Odisha and Chhattisgarh) should immediately abandon procurement of paddy and wheat and take to DIS in lieu of procurement. This will result in an immediate crash in prices as the arrivals in mandis is concentrated over a short period of 3-4 weeks. DIS cannot compensate for this price crash and the farmers in these states, accustomed as they are to selling at MSP, are not going to accept such a situation.
Also read: Fact Check: Has the BJP Really Fulfilled Its MSP Promise as It Claims?
State-wise policies
So, the government has to evolve policies suitable to a particular state and fine tune them to local needs. In the last three years, especially after demonetisation, farmers have been hit hard due to the crash of prices in mandis. Neither loan waiver nor DIS addresses this problem sufficiently. Sustained reform of marketing of agricultural produce in mandis is necessary in order to free agricultural trade from the clutches of middlemen who decide the price a farmer gets at a mandi.
Several years ago, the National Egg Coordination Committee created a demand for eggs by highlighting its nutritional benefits. A similar campaign for processed and refrigerated food may create a demand for fruits and vegetables frozen through individually quick frozen (IQF) items. In a glut market, perishable produce can be bought by processors to be used for IQF. The country is now used to buying frozen peas and there is no reason why similarly processed vegetables and fruits cannot succeed in the market.
While repeated farm loan waivers will surely destroy the repayment culture, even a blanket DIS is unlikely to succeed in alleviating the distress of farmers if manipulation of mandi prices continues unchecked.

Punjab farmers find no solace in farm loan waiver
The farm loan waiver terms make little sense in Punjab where average landholding is over three times the national average.
Punjab farmers find no solace in farm loan waiver
The farm loan waiver terms make little sense in Punjab where average landholding is over three times the national average
Mon, Dec 24 2018. 09 47 AM IST
href=””>Sayantan Bera

Jagdeep Singh with a photo of his father, who committed suicide on 11 December, at Sangatpura village in Patiala. Photo: Sayantan Bera/Mint
Patiala/New Delhi: All that Jagdeep Singh wants is a few hours of peaceful sleep. The 24-year-old from Sangatpura village in Punjab’s Patiala district had no clue that the morning of 11 December would change his life forever. At six in the morning that day, he woke up to the sudden death of his 45-year-old father, a farmer and village head, who drank pesticide while his mother was getting the tea ready. The father had run up a debt of ₹40 lakh following several years of losses in farming and dairy businesses, and a failed attempt to find Singh a job in Dubai, which cost nearly ₹14 lakh.

Singh, who holds a master’s degree in history, returned from Dubai after a 11-month wait to find a driver’s job and took to farming. He now gets up at four in the morning. The nights go by worrying how the family land mortgaged to banks can be freed. After a hard day’s work tending to the cattle and the wheat crop, his eyes swell up by evening. Singh repeatedly grasps his hair while speaking. “I am hoping my (younger) brother will find a job… but that may not be enough to pay back the arthiya(commission agents in wholesale markets who advance credit to farmers).”

Since April last year, eight state governments, including Punjab, have announced a staggering ₹1.9 trillion in farm loan waivers. However, no relief has reached the Singh family so far. In June 2017, the newly elected Punjab government led by Amarinder Singh of the Congress approved a farm loan waiver packageestimated to cost ₹10,000 crore. However, a year and a half later, just a fraction of farmers has benefited because of the strict conditions put up by the state.

Exactly a week after the death of Singh’s father, on 18 December, Congress president Rahul Gandhi upped the ante against Prime Minister Narendra Modi. Gandhi said he would not let Modi sleep till the centre announced a nationwide farm loan waiver. Gandhi cited the example of newly-elected state governments led by the Congress in Madhya Pradesh and Chhattisgarh, which signed on farm loan waiver schemes within hours of taking charge, in line with the party’s pre-poll promise, and said that the Congress would announce a national farm loan waiver scheme if the party were voted to power in the 2019 Lok Sabha elections.

The Punjab experience, however, does not inspire confidence. Till date, ₹3,500 crore loans of 428,000 farmers have been waived, according to Jasbir Singh Bains, director of agriculture in the state government. The farm loan waiver has covered less than a fifth of the 2.6 million farmers in Punjab. The total disbursal is just 35% of the promised ₹10,000 crore.

Though Jagtar Singh and Jaswant Singh of Namana village fulfil the condition for debt relief set by the Punjab government, they are still waiting for their loans to be waived. Photo: Sayantan Bera/Mint

Though Jagtar Singh and Jaswant Singh of Namana village fulfil the condition for debt relief set by the Punjab government, they are still waiting for their loans to be waived.
“During the election campaign, Amarinder Singh promised to waive loans of all farmers, but a set of conditions imposed during the rollout ensured that most were left out,” said Jagmohan Singh, state general secretary of the Bhartiya Kisan Union, Dakaunda, a farmers’ group.

The conditions for availing the farm loan waiver make little sense in a state like Punjab where the average landholding is more than three times the national average. For instance, according to the agriculture census released this year, the average landholding in Punjab is 3.6 hectares (ha), but the state government decided to waive loans up to ₹2 lakh for only small and marginal farmers, who own up to 2ha. This ensured that farmers like Jagdeep Singh, whose family owns 2.4ha, were excluded.

There’s more. The conditions say that only those loans taken by small farmers (who own between 1-2ha) will be waived where the principal and interest overdue did not exceed ₹2 lakh. This meant that a 1.5ha farmer, who owed banks even a rupee over ₹2 lakh, was excluded.

“With costs of farming going up and returns plunging, a waiver of ₹2 lakh means little to us; we will be back to where we are in no time,” said Nirmal Singh, a farmer from Narmana village in Patiala’s Nabha block. “But this farm loan waiver is more a formality and less a reality… it’s like luring a hungry child with a toffee and then taking it back,” he smirked.

A crowd of farmers gathered around Nirmal Singh complained that as most families did not divide their land between members (say, a 3ha farm is still shared by the father and an adult son and his family), the waiver has eluded them.

Congress would announce a national farm loan waiver scheme if the party were voted to power in the 2019 Lok Sabha elections, party president Rahul Gandhi has said.

For the once-prosperous farmer in Punjab, the cradle of India’s Green Revolution, a debt of ₹15-20 lakh is common and debts of more than ₹40 lakh in a single family are not unheard of. While part of this is driven by the need to keep up with societal pressures—such as spending ₹25 lakh on a daughter’s marriage—the debt crisis deepened as a result of commercial banks flushing farmers with credit to meet their lending targets. Desperate for a solution, the government is now contemplating an Act that places a limit on the number of guests attending a marriage and a forensic audit of the agriculture credit portfolio of commercial banks.

Data from the draft state farmers’ policy released earlier this year shows that Punjab’s requirement of crop loans is around ₹24,000 crore per season, while outstanding loans advanced by banks is ₹60,000 crore.

“There are around 26 lakh (2.6 million) farmers in the state, but banks have issued more than 40 lakh (4 million) Kisan Credit Cards. Over a period of 11 years (2004-05 to 2015-16) the credit offtake has increased by around eight times, while the value of production rose just three times,” said Ajay Vir Jakhar, chairman of the state farmers’ commission.

The 23-year-old Kiranjit Kaur of Mansa district, whose father committed suicide in 2016, adds yet another dimension to the crisis. “I have seen scores of families losing everything to pay for private education and health emergencies… More than loan waivers, we need better public health facilities and schools,” said Kaur, who now helps families, in which farmer suicides have taken place, receive state compensation.

Odisha new initiative KALIA

Notification on KALIA scheme
1. Rs. 5000 per family per season, starting from this season itself – 5 cropping seasons are being committed to for comprehensive coverage of 30.2 lakh small and marginal farmer households. This is being called support to cultivators for cultivation. Rs. 3016 crores as outlay for this.
2. Then there is livelihood support to 10 lakh landless households under agriculture and allied activities – Rs.12,500/- per household. Rs.1250 crores as outlay for this.
3. Financial assistance to vulnerable cultivators/landless agricultural labourers – lumpsum Rs. 10,000 per family. 10 lakh such beneficiaries. Rs.500 crores outlay.
4. Life Insurance cover of 2 lakhs for 57 lakh beneficiaries with outlay of 85 crores. This also has a personal accident insurance cover.
5. interest free crop loan – down to 0% from 1% – interest subvention cost is expected to 110 crores to the state government.

MP government waives Farmers Loans

The new Chief Minister of Madhya Pradesh Mr. Kamal Nath signed file waiving of farm loans up to 2 lakhs for all farmers. All this would be one time waiver. It is expected to cost about Rs. 56,000 cr.

How to do Farm Loan Waivers Right

Rishab Mehta who was involved in the process of loan waiver in Maharashtra writes about how to do Farm Loan Waiver right! read the article here

Why Telangana election might become a proxy battle between TRS and farmers
Why Telangana election might just become a proxy battle between TRS and farmers
By CR Sukumar, ET Bureau | Dec 01, 2018, 11.00 PM IST
Agriculture is a major economic activity in the state, where about 41.75 lakh hectares or 37.25% of land is under cultivation.
Telangana Chief Minister K Chandrashekar Rao (KCR) seems to be on a damage-control mode. With assembly polls due on December 7, he has been on a whirlwind tour of the state to ensure that a scheme his government launched to help farmers does not backfire.
Rythu Bandhu, the farmers’ investment support scheme announced in February, offer cash benefit of Rs 8,000 an acre (Rs 4,000 each in kharif and rabi seasons) annually to agricultural landowners. The scheme, however, excluded “tenant farmers”, or those who till the land but have no legal ownership on it.
The government issued “pattadar passbooks” to beneficiaries, the landowners, while deleting the column on tenants from the passbooks. The government said the idea was to clean up land records and help identify owners of the land. The state, which has earmarked Rs 12,000 crore for the scheme in 2018-19, said if the passbooks are not linked with Aadhaar, the land concerned could be considered benami.
Civil society activists and farmers’ union representatives, however, say it is a deathblow to tenant and tribal farmers in the state as they will not get any money despite being the cultivators. A sister scheme called Rythu Bheema offers group life insurance.
Telangana has 57 lakh agricultural landowners, according to government records. But there are no official records on the number of tenant farmers; estimates, however, say a large number of farmers are tenants.
Agriculture is a major economic activity in the state, where about 41.75 lakh hectares or 37.25% of land is under cultivation. In the 1980s and ’90s, thousands of landlords, mostly in the northern region of the state, had left their villages due to Naxal violence. The rebels distributed lakhs of acres owned by these landlords to poor and landless farm labourers. But these marginal farmers do not have the title to the land.
The tenant farmers pay the landowners rent or give them a share of the produce. The cultivator bears the risk of crop failure. With the fire of discontent due to Rythu Bandhu threatening to spread across the state, the KCR-led Telangana Rashtra Samithi has promised alleviating measures.
The party’s manifesto committee chief K Keshava Rao says the issues being faced by the poor farmers will be addressed. The final manifesto that will be released by December 2 will take care of the small and marginal farmers, he says.
KCR has promised to address the issues of tribal farmers and give passbooks to them, too, within six months of coming to power. He continues to be silent over the fate of tenant farmers. Downplaying the issue, TRS’ deputy floor leader in Parliament B Vinod Kumar says the government has after a deep and careful study decided to delete the “possession” column from the pattadar passbooks. This column was deleted to clean up land records and because the column was also leading to disputes between landowners and tenant farmers, he says.
“The government will extend the Rythu Bandhu and Rythu Bheema benefits to tenant farmers provided there is a formal tenancy agreement with landowners.” To matters worse for tenant farmers, banks disqualify them from loans if their names are not on the passbooks. Having the government-issued loan eligibility cards is another way for these people to get credit access.
“The KCR government’s move has taken away the limited privileges that tenant farmer had for decades,” says Kanneganti Ravi, a member at the Centre for Sustainable Agriculture and convenor of the Telangana Rythu Joint Action Committee. “Forget about getting Rythu Bandhu money, now these tenant farmers cannot even claim any government benefits or relief measures. They cannot access bank loans either.”
Almost all political parties are promising to extend the scheme to other sections of farmers and also increasing the sop to Rs 10,000 a year from Rs 8,000 now. However, an association of the scheme’s beneficiaries, Rythu Bandhu and Rythu Bheema Labdidarula Samakhya, has raised objections.
L Pandu Ranga Reddy, president of the body, says it will be difficult to identify tenant farmers as the column in the passbooks pertaining to tillers has been removed. “No landowner would give in writing to a tenant that the land has been leased.”
In June, the TRS government said new passbooks were being issued to some 57.24 lakh farmers and cheques have been issuedto 52.64 lakh farmers who have linked their passbooks with Aadhaar. About 90% of the beneficiaries have been covered and the balance 10% would be covered as soon as some technical errors were sorted out, it said.
The state has released Rs 6,000 crore in the first round. The second round of Rythu Bandhu cheques have also been disbursed but details of the number of farmers and amount aren’t available. The scheme has only helped rich landowners get financial assistance running into lakhs, says Bhutham Veeraiah, general secretary of the Telangana Rythu Kooli Sangam, an affiliate body of CPI-ML. During the first tranche of Rythu Bandhu cash disbursals, in May, there were several news reports of rich farmers coming to their villages in high-end cars to receive the cash benefit.
“The Rythu Bandhu scheme has benefited the absentee landlords more than the cultivating farmers,” says Veeraiah. Nearly 80% of agricultural land in villages are being cultivated by tenant farmers, he said, though government records show otherwise. A large number of tenant farmers have plots up to three acres to cultivate.
“The scheme was not made applicable to tribal farmers either — this section cultivates on about seven lakh acres of forestlands. Similarly, tenant farmers cultivating around 1.5 lakh acres of endowment lands and waqf lands were also denied the scheme.”
In a state that comes second in farmer suicides, after Maharashtra, says Ravi, tenant farmers bear the brunt all the time. Land revenue officials had even stopped recording the names of tenant farmers for several years now, he says.
A study by his non-government organisation, Rythu Swarajya Vedika, and Tata Institute of Social Sciences showed more than 75% of the farmers in Telangana who killed themselves between June 2014 and April 2018 were tenant farmers, and 94% were marginal, small and landless farmers. The study also found that most farmers who killed themselves had no access to bank loans and were heavily dependent on moneylenders. Nearly half of these farmers had no outstanding bank loans but had an average of Rs 4 lakh per head of private loans.
“Our study showed that most of these tenant farmers couldn’t benefit from the loan waiver schemes often announced by governments as they were denied formal bank loans. Though the Andhra Pradesh Land Licensed Cultivators Act-2011 provided loan eligibility cards to tenant farmers, it was not implemented effectively. In some instances, thanks to certain proactive district collectors, a few thousand tenant farmers were granted loan eligibility cards.”
Referring to the body blow from the TRS government, Ravi says, “Some 20 lakh tenant farmers across the state are now frustrated that they have been denied Rythu Bandhu support, bank loans and loan waivers.” Rythu Bandhu has made landlords return to villages. They are threatening the tenant farmers tilling their land, says Veeraiah of CPI-ML.
“In many instances, the absentee landlords, now back in control as their names are on the pattadar passbooks, have forced the tenant farmers to buy their land.” He says the distress is high in the districts of Karimnagar, Warangal, Komuram Bheem-Asifabad, Adilabad, Khammam, Bhadrachalam-Kothagudem, and Jayashankar-Bhoolapalli, and some parts of Mahabubnagar and Medak. The situation has started getting more politicised now.
In its election manifesto, the Congress led coalition, People’s Front, has promised to extend the benefits of Rythu Bandhu to tenant and tribal farmers. “There has been widespread discontent among the farmers in Telangana since the TRS government’s land regularisation scheme recognised the rights of historical owners of the land rather than the tenant farmers, who account for over a third of the farmers in the state,” says Mallu Bhatti Vikramarka, chairman of Telangana Pradesh Congress Committee’s Campaign Committee.
Land rights were always central to many critical movements in the region, including the peasant rebellion of the late 1940s and the Naxal movement in 1960s and 1970s.
“The ensuing elections in Telangana will be a fight between the common people and feudal forces,” adds Vikramarka. In a communique dated October 13 that was distributed in the affected areas, state secretary of Communist Party of India (Maoist) Haribhushan said: “The TRS government has retrieved land from Dalits, tribals and downtrodden communities in the guise of land resurvey and handed the lands back to the landlords. The Rythu Bandhu and Rythu Bheema schemes were actually aimed at benefiting the rich farmers and landlords. These schemes have hurt the poor farmers.” Echoing similar views, Telangana Jana Samithi President M Kodandaram says thousands of farmers across the state have lost their rights because of the government’s programme.
“In many cases, farmers weren’t issued passbooks. They could not get Rythu Bandhu money or bank loans. The state’s farm sector is under severe distress today as agriculture products are not getting remunerative prices. The loan waiver promised by TRS is yet to come.”
Another factor has added to the farm distress. Tenant farmers who agree to pay landlords higher upfront rent to grow commercial crops such as cotton and chillis ended up with huge losses as market prices were unremunerated, says Veeraiah. Adverse feedback from lawmakers and ruling party cadre on the growing distress at the ground level may have made the chief minister rethink on denying benefits to tenant and tribal farmers, says political analyst Manchala Srinivasa Rao.
“For the first time, KCR has acknowledged the issues facing tribal farmers. At public meetings in north Telangana, which has a high population of tribal farmers, he was seen repeatedly promising them that he would soon confer them with rights to the forestlands that they have been cultivating on for decades,” adds Rao.
The farmer discontent comes even as the state is yet to address the woes of at least 50,000 farmers who lost their lands to government projects — especially the Kaleshwaram irrigation project and Singareni Coal Collieries’ open cast mining — but have not received compensation according to the Land Acquisition Act 2013, says Rachna Reddy
Bollu, the advocate who has fought dozens of farmer cases in various courts. Going by the turmoil in rural Telangana, the forthcoming elections might well turn into a battle over cultivating rights of agricultural land, and, therefore, a proxy battle between the KCR-led TRS and distressed farmers.