Agrarian Distress

The objective of the article “Are Loan Waivers a Panacea for Rural Distress?” by Nilanjan Banik (EPW, 1 December 2018) is to analyse the implications of loan waivers in mitigating the rural distress, more specifically the agrarian crisis. The main finding is that the “loan waivers are not the solution to the farming crisis and they may help any political party win an election once.” It is timely in the context of the assembly elections in five states and the upcoming general elections in 2019. The author needs to be appreciated for bringing out the subtleties of loan waivers, which cut across various disciplines of social sciences, and their interlinkages.

To start with, it has brought out the economic feasibility of loan waivers and how they contribute to the fiscal deficit. Socially, it explored the utility of money saved from loan waivers, to marriages and for consumption purposes over farm productivity, and politically, how the loan waivers provide a vote bank to the parties to win over the elections. Most importantly from an agrarian perspective, the study clearly pointed out the limitations of loan waivers and their inaccessibility to the small and marginal farmers. It is an eye-opener for the government as it highlighted the limited access of institutional credit to the small and marginal farmers and the variations in the interest rates of formal and informal credit sources. A critical point is how most of the small and marginal farmers are being trapped in a debt crisis, which lead to farmer suicides, through informal credit systems.