Uttar Pradesh

Scheme sans substance

Print edition : July 07, 2017

A farmer spraying pesticides in his potato field in Moradabad district of western Uttar Pradesh. Photo: R.V. Moorthy

Fateh Singh Bhatti, a farmer based in Harnauti village in Bulundshahar. Photo: Venkitesh Ramakrishnan

The Yogi Adityanath government’s waiver plan, constrained by resource crunch, is a non-starter.

There is little doubt that one of the triggers of the farmers’ agitation across India in May and June was the decision of waiver of farm loans by the Yogi Adityanath-led Bharatiya Janata Party (BJP) government in Uttar Pradesh at its very first Cabinet meeting on April 4. The Chief Minister claimed that his government was fulfilling the promise made by the BJP during the election campaign.

“If Uttar Pradesh can do it, why not our government”, was the refrain that came up, almost immediately, from farming communities in other parts of the country. The refrain gathered momentum in the next one month and culminated in intense agitations in Madhya Pradesh and Maharashtra and relatively lesser shows of resentment by farmers in Rajasthan, Haryana and Punjab. Following this, the BJP governments in Madhya Pradesh and Maharashtra announced waivers. But, even as these developments were taking place, the farmers of Uttar Pradesh, the first beneficiaries of the farm loan waiver of 2017, debunked the government’s announcement with varied epithets such as “sleight of hand”, “treachery” and “downright chicanery”.

Responses to the scheme obtained from different parts of the State, including the agriculture-intensive western Uttar Pradesh, almost unanimously reflected this sense of indignation.

The farmers are rankled by several aspects of the waiver scheme, including its conception and implementation. To start with, the waiver was confined to crop loans up to Rs.1 lakh that small and marginal farmers sourced from banks in the financial year 2015-16 to procure seeds, fertilizer and pesticides. Second, only outstanding farm loans until March 31, 2016, are being waived. The impression that the BJP leadership, including Prime Minister Narendra Modi, gave during the campaign for the Uttar Pradesh Assembly elections, was that there would be a comprehensive waiver of agricultural loans. There was no reference to confining the scheme to a particular section of the farming community. The tweaking, both in terms of the category and the time frame, has certainly not gone down well with large sections of the farming community.

Fateh Singh Bhatti, a farmer based in Harnauti village of Sikandrabad area in Bulundshahar district of western Uttar Pradesh, called the scheme “downright chicanery concocted by vile administrative and political barons”. Bhatti was more annoyed with the time frame set for loan waiver than with the classification restricting it to small and marginal farmers. The farmer, who has been cultivating both grains and vegetables for a long time, pointed out that the time frame had been set in such a manner as to exclude a large number of debt-ridden farmers from the scheme.

Bhatti said: “Crop loans in Uttar Pradesh are of two categories. One category is loans disbursed by banks for a nine-month term at an interest rate of 3 per cent. If you do not repay them in nine months the interest jumps to 9 per cent. Obviously, loans of a longer term and higher interest of 9 per cent is not preferred by farmers. So, the normal practice among small and marginal farmers is to opt for the nine-month loan and somehow repay, even taking personal loans at usurious rates, before the cut-off period. Of course, they would take yet another loan later, for the next nine months. Normally, nearly 90 per cent of the farmers take the loans in May and June, before the sowing of the kharif crop in July. In February and early March, the farmer gets some money from the rabi harvest and he makes it a point to repay the loan taken the previous year. So, honest farmers who want to sustain their vocation in the long term take these short-term loans, repay them and take loans again. Only habitual defaulters would be found to be having an outstanding loan in March. Evidently, this scheme has been devised by a devious brain that knows about this behaviour pattern of farmers. In my estimate, only four or five hand-picked farmers in each block will benefit from the waiver scheme and scores of needy will be left out. No doubt, they are playing games with honest farmers while promoting defaulters and a culture of loan defaults.”

Pravesh Sharma, a sugarcane grower from Bhainswal in Shamli district, pointed out that though the scheme was announced in early April, no initiatives were taken by the administration or the banks to implement it. “Who knows when they are going to make a concrete move in this direction? If the track record of payment of arrears to sugarcane farmers is any indication, it is bound to be a long-drawn process.

Suresh Kumar Rana, Minister for Sugarcane Development, who hails from Shamli, has been claiming that the payment for sugarcane farmers has touched record highs under this government, but the fact of the matter is that we are still being paid arrears from January and February. If this is what they call record, you can imagine how this government will function in the normal course.” Sharma did not hide his disappointment with the way in which the Adityanath government was going about fulfilling its tasks and responsibilities.

Absence of resources

Large sections of the bureaucracy Frontline interacted with pointed out that while it was indeed the duty of the official machinery to facilitate the fulfilment of the ruling party’s election promises, its government cannot conjure up resources for it at will. Officials of the Departments of Finance and Agriculture said that resource generation for this purpose had become even more cumbersome following the decision of Maharashtra and Madhya Pradesh to announce loan waivers.

A senior Finance Ministry official in Lucknow told Frontline: “Earlier, there was hope, albeit faint, that the Centre would help out with some allocation, especially because the Prime Minister himself was involved in propping the loan waiver idea in the campaign. But after Maharashtra and Madhya Pradesh followed suit with the scheme and the emphatic statement of Finance Minister Arun Jaitley that State governments will have to find their own funds, Uttar Pradesh is practically in a quandary.” While a plan and budget for the loan waiver is yet to be drawn up formally, initial estimates are that the schemes would cost the State exchequer Rs.30,729 crore. Writing off non-performing assets (NPA) accumulated by commercial and cooperative banks in the agriculture sector would add Rs.5,630 crore to the expenditure. So, the total amount to be spent on this count would be Rs.36,359 crore.

The Uttar Pradesh government plans to float a farmers’ relief bond corresponding to the composite farm loan waiver amount to generate funds for the scheme. Officials admit that the scheme, if implemented properly, would benefit only one-fourth of the small and marginal farmers of the State. Government and bank records show that as on March 31, 2017, the total agricultural loan outstanding in Uttar Pradesh was Rs.1,30,000 crore. In March 2016 it stood at Rs.1,21,000 crore. Since the base figure is accounted for as it existed in 2016, the proposed scheme involving Rs.30,729 crore would meet approximately 25 per cent of the total outstanding agricultural loan of Rs.1,21,000 crore accrued in 2015-16.

In terms of population, the proposed scheme is to benefit about 86 lakh of the estimated 2.15 crore small and marginal farmers of Uttar Pradesh. The total number of farmers in the State is estimated to be 2.3 crores. Apart from this, the proposed scheme will involve writing off the agricultural sector NPAs of about seven lakh farmers. Thus, the total number of beneficiaries under the scheme would be approximately 43 per cent of the small and marginal farmers of the State. Naturally farmers like Bhatti are angry.

“You have devised the scheme to deliberately leave out 57 per cent of the small and marginalised farmers. So you claim that you have fulfilled your election promise though the majority will get no benefit even if that the project is implemented in a foolproof manner,” Bhatti said, adding that Uttar Pradesh may well see the emergence of Mandsaur-like situations, since the hope generated by the loan waiver announcement was fast crumbling even as the farmer was getting a price that was far from fair for his produce.

“The Adityanath government is fortunate in that there are no spirited farmers’ organisations with militant leadership in the State like in Maharashtra and Madhya Pradesh. The existing organisations lack credibility and tenacity. But the sense of hurt that thousands of farmers in Uttar Pradesh feel will not subside for long,” Bhatti stated in a tone of finality.

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