Farm loan waiver is “the worst thing to do” and farmers who are better off will benefit at the cost of tax-payers, Lord Meghnad Desai, renowned British economist and Member, House of Lords, UK, said. Such waivers are the “most awful thing to do for the financial markets”, he said.
According to him, nearly 75 per cent of the farming community — that includes both marginal and small farmers — find farming unviable and not generating new employment. The alternative for such smaller farmers is to shift to other sectors. The solution lies in “fewer farmers” and perhaps an “incentive scheme” that will help move them away .
“They (state governments) cancel farmer debts which is economically not rational. It (debt waiver) is terrible. The answer in this country has been subsidies,” he said on the sidelines of the 53rd convocation of the Indian Statistical Institute (ISI) here.
Drawing parallels to the non-farm sector, Desai maintained that non-payment of loans by a blue or white-collar employee would have led to legal action against the defaulter.
“I wish the Indian tax-payer would stand-up and complain. Because if you are an urban worker and you can’t pay your mortgage, the government is not going to cancel it,” Desai said adding farmers are like “private sector businessmen”.
“So, if a private sector businessman fails to make loan payments then why should the common tax payer pay for it out of his pocket?, ” the economist asked. In fact, Desai questioned as to why a insolvency and bankruptcy- type Act should not be extended to include the farm sector. He maintained that there was no difference between political parties and both Congress and BJP have opted for farm loan waivers.
“There is a lot of noise. But basically, the UPA policy and the NDA policies have not been different. They are all statist (statism), they all do subsidies and they all give away money,” he said.
Economy on track
According to Desai, the economy and “growth” continues to be on track with India being the fastest growing economy.
“For an economy that has been growing at 3 per cent for the first 40 years, a default growth rate of 7 per cent is very good,” he said. The problem though lies with conflicting numbers on employment generation. This has to be resolved and India, he felt, is “under-counting (its) jobs”.
“If the economy is growing by 7 per cent and for it to have no job growth, then it means productivity has to grow by 7 per cent. But that has not been the case. So we are clearly under-counting jobs,” he said.
Desai said: “employment opportunities have been created”, but people only consider the white-collared ones during discussions.