Waiving loans only to wave the nation’s future goodbye?

Waiving loans only to waive the nation’s future?

Why were we mistaken to believe that our dear Prime Minister Modi had exhausted all the tricks in his hat after the sudden implementation of demonetisation and GST? Last year, he started the ‘trend’ of waiving farmer’s loans. Don’t get me wrong, he didn’t start this trend, in fact, loan waiving can be dated back up to the late 1980s and early 90s, right before it was officially launched as a scheme in 1991 by ex-Prime Minister VP Singh. Ever since then, farmers’ loans have been waived time and again by political parties for diplomatic gains.

The most recent case of loan waiving until this year was in February 2017, when PM Modi issued debt relief to farmers prior to the Uttar Pradesh elections. No sooner than later, a chain of state governments and political parties followed and began reassuring farmers’ relief from their loans. It’s almost as if it’s customary for political parties to waive off loans in order to win the elections. It’s become a political weapon used as a means to lure destitute farmers into giving their votes to the aiding political party. While this serves as a temporary medium of comfort for farmers; for the economy, it’s far from that.

This year, Rahul Gandhi, President of Congress promised to waive the loans of three states prior to the state elections held a few weeks ago. Congress rose from the ashes victorious and was voted majority in the states of Madhya Pradesh, Rajasthan and Chhattisgarh. Rahul Gandhi famously known as Pappu assured to clear the loan of farmers within 10 days of being elected, however, he did in mere 2 days of being in power. While this may have won the hearts and the votes of the farmers, it isn’t a lucrative solution. Mind you, an estimate of 55% of the population in India is directly or indirectly associated with the agricultural sector. Politicians like Modi and Gandhi turn to waive off loans as an easy escape to please the public in return increase their vote bank. To clarify things, let me tell you that it’s not just the Modis’ and Gandhis’ waiving loans; in fact, there have been several cases of this in the past decades and so.

What these politicians fail to understand, rather choose to ignore is the fact that in the long run, loan waiving can have a crippling effect on the economy. In the future, this is will lead to an enormous deficit in the government’s budget. The loans waived sum up to hundreds and thousands of crores, which eventually the government will have to repay to the banks. When that happens, it will set the government’s economy and also their vision back by a number of years. Apart from this, major shortcomings will arise in the overall development of the country. The budget set aside for schemes and policies will be encroached to fulfil the debts. Efficiency in the implementation of government schemes will decline, which in return will have a devastating effect on the growth and prosperity of the country. A compromise in projects such as Swachh Bharat and DDU-GKY will have adverse consequences on people of the nation. Another potential threat could be caused to the income of common people. If the government chooses to repay the loan through tax collection, the general public will face the brunt of this. The rate of taxes levied will elevate further decreasing the purchasing power of the people. In any case, waiving off loans is not the fit solution to solve problems. It must be noted that farmers don’t necessarily reap benefits from the waiving of loans. When a farmer’s loan is waived once, the bank hesitates or sometimes even refuses to give another loan to the farmer. Thus, leaving the farmer in a state of disarray.

Having said that, it should be noted that it’s imperative for politicians to adopt newer and healthier ways of campaigning. A machinery needs to be developed that provides farmers with a remunerative price for their crops, and at the same time set a price that’s not excessively high for the consumers, because if the prices are unreasonably high, it goes on to affect the budget of the working class thus leading to issues such as inflation. Even if the government does establish a machinery to safeguard the needs of farmers, do you think we’ll ever truly be free of this vicious cycle of giving and taking and consequently endangering the nation’s future?

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