In the run-up to the 2019 poll, the country needs not farm loan-waivers but pro-farmer policies
The Indian economy will be in a cyclical phase of loan-waivers now that the Congress has come back to power in three crucial States. It is the banks, who hold people’s deposits, and not the Governments that are an easy prey. But nobody seems to be concerned about alleviating farmers’ distress logically. Then there arises a problem of perception too. The present RBI Governor, Shaktikanta Das, said that besides being a stakeholder, the Government runs the economy and manages the financial institutions. Das is correct to the extent that the Government manages the institutions. This is the task bestowed upon the Government by the people but it has to be as per people’s wishes and not as the Government decides. People are rarely even consulted.
The economy is run and managed usually by entrepreneurs and financial institutions. The Government is an institution that was formed by the people to take care of issues of daily management. Its role was that of a custodian and not the owner. Governments that adhered to it, possibly the Atal Bihari Vajpayee did and to some extent the United Front too, made the people happy. So, whichever party forms the Government, it has to adhere to the basics and should not gloat over the euphoria of numbers. People expect that as custodians of their money and managers of institutions, the Government must protect their wealth. Since 2014, seven States have unveiled loan-waivers, totalling to nearly Rs 182,802 crore. Agriculture economist Ashok Gulati reckoned that in the run-up to the general election, farm loan-waivers may touch Rs 4 lakh crore as other States are expected to join the fray. Let the nation also not feel that sudden changes in the RBI will make the stock market buoyant. The same happened in March 1992 which later opened a can of worms — the Harshad Mehta stock scam. The present move may come as a boost but the stock market is not really an indicator of the economy. It is definitely not at present. The buoyancy is often the result of behind-the-scenes operations.
Despite occasional gains, the value of the rupee remains volatile. This needs to be taken with a pinch of salt as it results in an unstable economy, uncertain job markets, makes the investors wary and the stock movement unreal. For much of this year, the Urjit Patel-led RBI was seen resisting pressure as well as entreaties from the Government, industry and financial firms to ease lending and capital norms for stressed public sector banks (PSBs), particularly those under the prompt corrective action framework, to open a special liquidity window for non-banking financial companies with a precarious asset-liability position and to push the flow of credit to small enterprises. Das has not spoken on any of these specific issues that caused a strain in the relationship between the Government and the RBI. Poll manifestoes of the five States, too, were silent on these issues. Of course, voters do not understand intricate issues. So, populism marked the electoral campaigns in the states. Union Finance Minister Arun Jaitley was right in saying that populism does not help in the long-run. Political parties practise it to get the numbers to form a Government. Ignoring numbers of the finances causes the real problem. The industry, the biggest defaulter in loan repayment, is also known to have withdrawn the largest cash along with many other players before the elections. Why? Everyone knows the answer.
So except for a cosmetic treatment, not much can be realised and PSBs, who hold people’s deposits, are in severe crisis due to NPAs. It is true that this Government did not proffer the bounties. Their predecessors did. But once again, people have the problem of a cyclical nature of politics. So, if this Government is finding it difficult, would the next Government not do it? Or would they again play with people’s money to which no Government has the right to lay their hands on? The sufferings of the people, forget about mitigation, is mounting. The RBI was supposed to raise interest rates to help the poor depositors, senior citizens, women and the deprived Jan Dhan account holders. The rate rise is required not just to help the depositors but to protect the nation’s wealth. People’s money is not for the big corporates. The farmer and MSMEs also have a claim to it.
Loan waivers create an unwanted culture. As elections approached, farmers, who could repay loans, didn’t. The industry willfully ignored its duty. Meanwhile, the Government is recapitalising banks with the taxpayers’ money. This is a vortex and the only solution is to raise farmer incomes with a proper farm policy in place. People need succour and protection. The year 2019 will belong to those who can ensure relief and safety of banks. Yes, the Government has been given the task to direct the economy but it can’t run it. It has to fulfill its tasks without hurting the people, their deposits or threatening to play with their wealth in the banks. India needs pro-people, pro-farmer policies for livelihood creation.
(The writer is a senior journalist)
