Take farm loan-waiving off the table: Raghuram Rajan on solving farm distress

New Delhi: Rural India and rural distress remain among the top strategic policies of the country’s political parties during election campaigning and around elections. Farm loan waiving and increase in the Maximum Selling Price (MSP) are common election strategies of political parties during election campaigns.

However, ex-RBI Governor and economist, Raghuram Rajan said that political parties should stop stressing on farm loan waiving and it should be taken off the table. “I have written to the Election Commission saying loan waivers should be taken off the table,” he said.

His statement came when he, along with 13 other eminent economists, was addressing press briefing organised by University of Chicago Center in Delhi.The panel included current IMF Chief economist, Gita Gopinath, Abhijit Banerjee, E Somanathan, Amartya Lahiri, Rohini Pande and Karthik Muralidharan.

Rajan has written about the issue to the Election Commission of India in a report. The report stressed on the fact that agriculture and farmers are one of the major sectors of the nation and required increased investment and structural reform in agricultural and land policies. The report also suggests that we should focus on what the hindrances and complications are and work on more job creation such as scaling up industry and the services sector, implementing land and labour reforms, and creating and maintaining more independent regulatory institutions.

“And I think our farmers deserve no less. We need to create environment in which they can be a vibrant force and I would say more resources are definitely needed. Whether loan waivers are the best? I think it’s highly questionable,” Rajan said.

Though he called the “7% growth in 25 years” an applaudable job, it couldn’t create enough jobs, it did not benefit all the sections of the society, he said. Growth in itself is not enough, it needs “macro-economic stability”, he added. “250 per job and these are not priced jobs. These are actually low level jobs. So, it does suggest enormous demand for jobs,” said Rajan.

An estimated 250,000 farmers have committed suicide in the last 15 years, and the United Nations Commission on Sustainable Development observed that, between 1997 and 2005, a farmer committed suicide every 32 minutes in India, according to a report by Forbes. In thse recent, 10,000 farmers marched to the Parliament, in November, this year.