‘Congress’s farm loan waiver gimmick does not help 80% who are poor’

Explaining how his DBT benefits poor farmers, Modi reiterated his commitment towards Hindu refugees while standing in support of Pandits

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Modi on farm loan waiver

Jammu: Prime Minister Narendra Modi attacked the Congress on Sunday for using farm loan waiver as a gimmick ahead of the election to win votes and said the party’s previous such initiative benefitted only middlemen and select farmers.

Why waiver does not help

The prime minister listed out various measures, including direct income support of Rs 6,000 to farmers cultivating on up to 5 acre of land, being taken by the central government to ensure welfare of the peasants neglected by the “previous governments”.

“Congress always left out 70-80% poor farmers from the benefit of their farm loan waiver scheme. What about these people?” he asked.

Indeed, studies show that big and mid-size farmers are the ones who gain the most from farm loan waivers. Scholars point that the loan waivers during the one loan cycle prompt banks to reduce credit outlay for small or marginal farmers during the next loan cycle.

Modi said the PM-Kisan scheme has been allocated Rs 75,000 crore annually which will mean Rs 7.5 lakh crore will be deposited in farmers’ account in next 10 years.

The scheme aims to cover 90% of farmers who have less than five acres of land and Rs 6,000 will be transferred to their accounts annually in three equal installments of Rs 2,000, Modi said, adding that efforts were being made to ensure release of the first installment at the earliest.

Attacking the Congress for promising farm loan waivers, the Prime Minister said it was a temporary solution for the problem, which the Congress uses to win elections only.

The Congress had promised to waive loans of farmers in 2008-09 which were in the range of Rs 6 lakh crore but when it came to power it only gave relief in loans worth Rs 52,000 crore, he said.

“CAG report found that about 30-35 lakh people who received these waivers were not even eligible to get it,” Modi said at the rally in Vijaypur near here.

Ridiculing the loan waiver scheme announced by the new Congress dispensation in Madhya Pradesh, the prime minister said some beneficiaries have been given cheques of Rs 13 only.

“People know the track record of country’s ‘naamdar‘. They get ‘fever’ of loan waivers just before elections…They try to act as ‘messiah’ of farmers by announcing farm loan waivers once in 10 years,” he said referring to the UPA’s 10-year rule between 2004 and 2014.

Critics of loan waiver outside BJP

According to Parshuram Ray, director of the New Delhi-based Center for Environment and Food Security, the loan waiver is “an electoral sop that involves a lot of statistical jugglery and very little of real hope for Indian farmers.”

Writing for the Federal Reserve Bank of San Francisco, Susan Desai said In 2017, at least four states Uttar Pradesh, Maharashtra, Punjab and Karnataka, announced farmer loan waivers, with estimated cost of about $ 13.6 billion. Experts project that if the loan waivers are implemented nationally, will cost about 2–2.6% of GDP ($ 40–50 billion). The RBI opposes the loan waivers. The waivers hurt India’s public sector banks which are already under stress. Many farmers in other states have stopped paying loans and are withdrawing deposits from banks in anticipation of waivers. In some states, the default rate has increased to 50%-60%.

The BJP could not escape this populism, much as the prime minister is critical of waiver schemes today, as seen in the examples of waivers by Uttar Pradesh and Maharashtra governments.

The BJP had announced loan waivers for farmers in Uttar Pradesh ahead of the Assembly elections in 2017.

After assuming power, Chief Minister Yogi Adityanath had announced loan waivers of up to Rs 1 lakh for small and marginal farmers.

Cost of waiver

According to a Karnataka report, for loans taken from Cooperative banks and nationalised banks, the state is responsible for paying the interest and the principle. The loans taken from private moneylenders will be simply nullified.

Urjit Patel, former governor of the RBI, stated that a waiver “… leads to crowding-out of private borrowers as high government borrowing tends to increase the cost of borrowing for others.” He said that waivers could eventually affect the national balance sheet.

Development projects inaugurated

Modi laid foundation stones of various development projects worth Rs 6,000 crore which include setting up of All India Institute of Medical Sciences (AIIMS) in Vijaypur, a bridge over river Chenab, pollution abatement project on rivers Devika and Tawi, a campus of Northern Regional Centre of Indian Institute of Mass Communication and University Institute of Engineering and Technology in Kathua.

For Hindus, for Pandits

Addressing a public rally in Vijaypur, the prime minister cited proposed amendments in the Citizenship Bill saying the country stands with those who faced persecution on the basis of their faith.

“We have brought the matter of change in Citizenship Bill with a commitment. Those (people) who had to part with India due to some condition in 1947, if they face persecution on the basis of their faith then the country has to stand with them,” he said.

The Citizenship Bill seeks to grant nationality to non-Muslims who fled religious persecution from three neighbouring countries — Afghanistan, Pakistan and Bangladesh and entered India before December 31, 2014.

Protests were witnessed in some States of the Northeast over the Bill, which has been passed by Lok Sabha.

Modi also talked about a “very emotional issue” of Kashmiri Pandits, saying he has been bearing the pain of their exodus. He said the central government is committed to ensure respect and dignity of the displaced community. “The pain that they had to undergo. That they had to leave their homeland. I have never said this before but I have been feeling this pain of their within me,” the prime minister said.

Modi said the government is going to build 14,000 bunkers in border areas of Jammu to ensure safety of people. “The government is dealing strictly with the terrorism (being faced by the state),” he said.

For soldiers

The prime minister accused the Congress of lying on the issue of ‘one rank, one pension’ (OROP) to retired defence personnel. “How much they (Congress) lie? They talked big on the issue of welfare of ex-servicemen and allocated a meagre Rs 500 crore whereas this government has allocated over Rs 35,000 crore which included arrears worth Rs 11,000 crore,” he said.

Guru Nanak’s birthplace could have been part of India

Modi said that if required attention had been given to the issue of Kartarpur corridor, then the pious land of Guru Nanak Dev would have been part of India.

The corridor, whose foundation stone was laid late last year, will connect Darbar Sahib in Pakistan’s Kartarpur, the final resting place of the Sikhism founder Guru Nanak, with Dera Baba Nanak shrine in India’s Gurdaspur district and facilitate visa-free movement of Indian Sikh pilgrims, who will only have to obtain a permit to visit Kartarpur Sahib, established in 1522 by Guru Nanak.

During the address, the prime minister hit out at so-called “wise and big people” in the opposition parties for ridiculing his government’s Jan Dhan scheme of financial inclusion, saying the bank accounts opened under it will help in ensuring that the benefits of recently-announced PM-Kisan Samman Nidhi programme reach its right beneficiary.

“Those ridiculing me have now realised what these accounts will be used for,” he said.

Referring to upcoming general elections, the Prime Minister said the ‘jung (war)’ of 2019 is for taking country ahead.