DNA Edit – Lollipop credit: PM has done well to reject Congress bait on loan waivers

Prime Minister Narendra Modi has done well to reject the Congress bait and avoid a slug fest over populist farm loan waivers with his main political rival. Narendra Modi, addressing a public rally in predominantly rural Ghazipur in eastern UP, said that the Congress promises on farm loan waivers were based on falsehood. Quoting the example of Karnataka, he said that the ruling party there had promised relief to 'lakhs’ of farmers by waiving off loans, but in reality barely 800 got some compensation. He was also reacting to Rahul Gandhi’s recent statement that the Prime Minister would not be allowed to sleep until a comprehensive loan waiver was announced for the benefit of farmers nationwide. The Congress believes that the promise of a loan waiver helped them win elections in the recently-concluded Rajasthan, MP and Chhattisgarh state assemblies. But the Prime Minister has held firm. Taking aim at farm loan waivers, Modi said that the only visible signs of what he called were Congress 'lollipops’ was that lines for urea had reappeared in the states where such rash promises had been made. Instead, the Prime Minister concentrated his fire on the inability of successive Congress governments to implement recommendations of the Swaminathan Commission report on the farm sector and said the Congress had not implemented  the policy of offering competitive minimum support price (MSP). But as explained deftly in these columns ( ), loans are not waived, but transferred from the books of the farmers to the state budget. So no one is doing anyone a favour by making such grandiose announcements.

The states will have to borrow money to pay the banks who have handed out these loans. Most states do not have the revenue to pay the banks, so the interest burden from the borrowings will be paid out from capital expenditure. Result: critical infrastructure projects in urban and semi-urban areas will stand neglected. Interestingly, BJP’s own election manifesto comes close to offering a solution to the farm crisis, a formula that will work for all stakeholders involved, if implemented right. The idea of creating a producer company jointly owned by the farmer and the state, could lead to what can be called a farmers’ market. The Finance Minister has already given 100 per cent tax exemption to such producer companies. The onus is on state governments to create these producer companies and help farmers get their produce to the city consumers.  It is a good idea for the BJP - allegedly facing a backlash from angry farmers - to implement and showcase this model in their own states. If they are able to do so successfully, they would have helped create a template before the country. That, more than anything else, will go a long way in redeeming the party in the eyes of the farmer community, which as everyone knows, is the most powerful political constituency in this country. India, it is instructive to remember after all, is still predominantly an agriculture country. If a political party has a grip on the farmers, he has a grip on the country.