Waiver epidemic spreads

Has the political class gone bonkers about loan waivers? And why just politicians? Everybody who is somebody, everybody who thinks they are somebody, armies of nobodies, every class—the infection has not spared anybody. It is becoming an epidemic, if it already hasn’t already become yet. Can India overcome it?

The story began when Prime Minister Narendra Modi and Bharatiya Janata Party president Amit Shah, the two men who matter in the ruling dispensation, decided to leave no stone unturned to win Assembly elections in Uttar Pradesh. The promise of farm loan waiver was one big blunder that they made (In my reckoning, they would have comfortably won even without this irresponsible pledge). It is impossible that nobody in the government knew about the depravity and danger of the promise. But the Big Two, always too clever by half, chose expedience over prudence. The rest is history.

The Rs 36,000-crore waiver spurred the farmers and their representatives elsewhere to demand similar relief. The intensity of protests grew in Maharashtra and Madhya Pradesh; in MP, there was violence that led to the killing of half a dozen people; many more were injured; property was destroyed, vehicles burnt, and normal life was disrupted.

Maharashtra Chief Minister Devendra Fadnavis yielded to the protesters, foregoing loans of Rs 30,000 crore owed by farmers with up to five acres of land by October 2016. Chief Minister Shivraj Singh Chouhan has announced a few steps. But there is no abatement in similar demands. The Congress government in Punjab is watching anxiously how the situation unfolds. There have been similar demands in the state. “We want a complete waiver [of loans],” said Bharatiya Kisan Union (BKU) president Balbir Singh Rajewal told Hindustan Times (June 12). “Our course of action will follow the government’s announcement (on debt waiver).”

It is sickening to know that politicians refuse to see the writing on the wall. Insouciant about the problems faced by the cash-strapped government it leads in Punjab, the Gujarat unit of the Congress has demanded that the government should forego agriculturists’ debt. Just to harass the state government.

BJP leaders in Congress-ruled states, too, are unwilling to learn any lessons from the unsavory incidents in MP and Maharashtra. BJP Leader Jagdish Shettar in Karnataka wants that the state government should waive off farm loans.

Politicians are not the only ones blind to the reality. State Bank of India chairperson Arundhati Bhattacharya recently wrote to the Telecom Secretary, “The stress in the sector has reached highly unsustainable levels after the entry of new players and launch of free services, which led to erosion of EBITDA (earnings before interest, taxes, depreciation and amortization) of the telecom service providers… The data with us suggests that the total EBITDA of the telecom sector on an annualized basis is Rs 65,000 crore, which is clearly unsustainable for debt of more than Rs 4 lakh crore.“

She wants fiscal sops for the sector so that the banks like hers are protected; in effect, the taxpayer should pay for the imprudence of bankers (and of politicians who control public sector banks). She has been rightly accused of double standards, for she had criticized the UP government’s farm loan waiver in March.

Meanwhile farmers are indulging in willful default. The Times Of India (June 13) reported that they have stopped repayment of money owed to financial institutions. “Several bankers TOI spoke to confirmed that there was a rising trend of farmers refusing to clear dues, an issue that was also flagged at a meeting on Monday convened by the Finance Ministry. The total farm loans are estimated at a little under Rs 10 lakh crore.” They are unbothered by the fact that poor credit discipline creates difficulties in getting loans in the future. There is, however, no point in blaming them alone as everybody else too is determined to undermine the financial system.

Perhaps the current madness would pass soon, but it won’t be without damage. And they talk about doubling farmers’ income by 2022!