Punjab: Why Short-Term Measures Like Farm Loan Waiver Will Not Solve Farmers’ Distress

Punjab is a northern state in India, comfortably nestled with five rivers flowing through the state. With a history of having several of its regions a part of the great Indus Valley Civilization, the state always boasted of its extremely fertile soil making agriculture a significant part of its economy. Rice, sugarcane, and cotton are grown in the state with wheat being the largest grown crop. Fruits and vegetables are also widely grown in the state. Punjab is considered the “Wheat bowl of India” since it produces up to 164.720 lakh net tons of wheat.

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Heaven screaming for help

The state that paved way for the Green Revolution in the 1960s, has witnessed a drastic fall in the agricultural output over the years, with the farmers drowning in debt.  The cost of inputs like labour, fuel, and fertilizers have increased over the years with the price of output remaining stagnant. The once fertile soil has turned to be running out of water-retention capacity due to increased use of chemicals and pesticides. Inadequate rainfall adding to the woes of the farmers. The groundwater is being used to irrigate 73% of the land in the state which has led to a sharp decline in the groundwater levels. In addition, there are no regulations on the digging of tubewells.
Wheat and Paddy come under the category of crops with a guaranteed minimum support price (MSP). However, growing paddy is stripping the land of water that affects the fertility of the soil in the long term. The prices of other crop are uneven and unregulated. When the farmers try growing other crops, marketing and earning from them becomes tricky. With farming becoming increasingly impracticable, the small farmers are leasing their land instead of farming it to avoid losses. For all the reasons mentioned, the farmers resort to debt from the financial institutions or private moneylenders. These debt-ridden farmers when unable to repay the loans succumb to the pressures and commit suicide.

There are around 10.93 lakh farmers across Punjab, of which 2.04 lakh (18.7%) are marginal farmers (those having less than 2.5 acres of land), 1.83 lakh (16.7%) small farmers (those having 2.5 acres or up to 5 acres), and 7.06 lakh (64.6%) farmers have more than two hectares.
Captain Amarinder Singh, the Congress candidate, before 2017 Assembly Polls promised that his government would eradicate the instances of farmer suicide with a complete loan waiver scheme however with coming to power the scheme came with a catch.
The loan waiver scheme covered only those loans that were taken from banks and cooperative societies. It provided relief to marginal and small farmers for loans up to Rs 2 lakh availed from the lending institutions.

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Debt-ridden farmers take their own lives

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An astounding 900 farmers and labourers have reportedly committed suicide in the last two years.

The reports of several farmers committing suicide over a period of two years hint at the government’s failure to provide a safety financial cushion to them. The farmers who resorted to extreme steps of taking their lives have either not been covered under the waiver-scheme or had taken loans from private moneylenders. The Tribune reported that a 40-year-old debt-ridden farmer Gurmel Singh committed suicide after he was unable to repay the farm loans. In his suicide note, the victim cited mounting debts as the reason and stated that the state government did not provide any relief.

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State Government’s reaction

Chief Minister Captain Amrainder Singh indulging in political blame- game, said states alone cannot do everything and they need assistance from the Centre as well. He was speaking during the launch of the third phase of his government’s loan waiver scheme at Anandpur Sahib on 24 January.

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A permanent fix from the Experts

Senior Agricultural Economist, Professor Gian Singh says that loan waiver was not a permanent solution to farmers’ miseries. According to him, a permanent solution would be when the farmers do not need to take loans in the first place or if, at all they do, they are able to repay it with ease.
Director, Institute for Development and Communication, Professor Pramod Kumar said, “The answer does not lie in debt waiver, it lies in increasing the MSP [Minimum Support price] to increase the productivity. Therefore, the need is to rethink over the agriculture policy. The basic question is how to double the income of farmers that is the fundamental question which all these governments have started addressing now. The need is to involve policies which can increase the farmer’s income or double it so that farming as a venture becomes profitable or liveable.”

“If this is not done they [farmers] will never be able to emancipate themselves from the vicious debt cycle. The governments will come and waive-off loans but the farmers will continue to live under a debt trap till their income is not doubled.”