A Freebie With Limitations

Speaking at an event in Baramati, deputy chief minister and finance minister of Maharashtra, Ajit Pawar, said something that politicians nowadays try very hard to avoid—that farmers ought to pay up their loans. He said there would be no last-minute reprieve. And this despite the waiver being a promise made by his alliance in its manifesto during the Assembly elections last year. He said it wasn’t possible immediately because the state’s finances could not afford it. That was also a result of populism, like writing off electricity bills. Farmers could still get a 0 per cent interest loan but, for the moment at least, nothing beyond that.

The reason for such a public pronouncement was many farmers holding back repayments expecting an announcement. Pawar said they should not harbor hopes even for the coming year. There is no reason to blame the farmers though. They had been habituated to the idea that a loan is not necessarily to be returned because various states, including Maharashtra itself in the past, had passed such a measure. That is one of the perils of waivers. When it is done, the expectation is that it would be a one-time affair and with the debt being eliminated, life could return to normal for all parties. But it is never that simple.

Once the waiver genie is let out and maybe shows its magic in terms of the votes it notches, it becomes a baseline for all future elections for all parties. If everyone is going to promise it then there is no political gain. Instead, what is at stake for the party not putting it on the table is just a loss of votes.

Plus, a blanket waiver is fundamentally a bad idea. It encourages future defaults. It is unfair to the farmers who actually paid their loans off. A loan is not a grant. It is a business transaction between lender and borrower. Farmers can be in dire straits and need relief from the state, but if the way to do it is to free them of borrowings, then it makes it more difficult for them to get a loan the next time. And they will need it because the distress is not going to get over with one waiver since the fundamental conditions that led to the debt don’t change.

Ajit Pawarelectoral populismFreebiesMaharashtrapoliticsWeb Exclusive