Why loan waiver is a Bad Idea for India?

There is no doubt that despite achieving high growth rate since post liberalization phase, agriculture sector remained lack luster. The growth rate in agricultural sector not only saw a variable pattern, but during some years it displayed a negative growth. Our coutry is still heavily dependent on agriculture. Nearly 58% of the population is directly or indirectly dependent on it, yet the contribution of agri-sector is just around 15% of the GDP. This means more than 58% of the population generates 15% revenue year on year.

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This is not good for economy.

Since their income is less, hence they are from the most vulnerable section of society. If 58% of the population will be vulnerable than nation will itself be vulnerable. Every year we listen the news of farmers’ suicide. When a person doesn’t find any ray of hope for survival, he takes such an extreme steps.

Reasons of farms distress in India.

Too many people involved in this activity which is less remunerative than service and manufacturing sector.

Dependence on monsoon which is simply unpredictable even for scientists.

Low productivity per hectare compared to other big agricultural producer countries. For example USA produces double quantity of Paddy from the same field size. We have 2.4% of the total land area of the world but more than 17% of the population.

Low level of technological awareness in agricultural field.

Poor irrigation system.

Poor and informal credit system. Since farming is a risky business in India and Farmers are predominantly poor in our nation, so they need credit before each sowing season for seeds, fertilizers and pesticides. But many of them are unbanked and away beyond the reach of formal credit system. Hence they take loan from Moneylenders at exorbitant rates and even in slightest of variations in their expenditure pattern such as any marriage ceremony, illness etc. they are web trapped.

The list goes on and on. Even though the problem persists for many decades, the government did not perform well in addressing their issues permanently. Only band aid solution was provided and that too at the time of election.

Waving of farmers’ loan is one such example. Farm loan waiver means government pays the loan taken by the farmer back to the Banks in case if the farmer is unable to repay it.

No doubt majority of  Indian farmers are cash strapped but waving of farmers loan only for the sake of winning the election is not good for the nation’s economy.

Some of the reasons could be:

It destroys the formal credit system of the nation.

Every time government wave off the loans, the burden falls on the government. Indian economy has always seen a high Debt to GDP ratio. This additional burden worsens the condition.

Fixed Capital Formation gets severely impacted because of the loan waivers. For example in Uttar Pradesh nearly Rs. 36,000 crore was waived off. This could have been utilized in building infrastructure such as rail, road educational institutions, hospitals etc.

It impacts farmers’ behavior and in anticipation of loan waiver before elections, they become willful defaulters and they shy away from paying it

India is already struggling with Non Performing Assets. These unpaid loans also have a role to play in it.

Loan waiver can’t help the all the famers as India still lacks financial inclusion in credit system. Many of the farmer takes loan from money lenders and loan waiver is only helpful for those who have taken loan from formal credit agencies.

So instead of giving loan waiver government should make effort for the permanent solution to the permanent problem. Some of the measures in right direction could be increase in investment in farm technology, increasing the formal credit system among farmers, interest subvention, increase in irrigation facility, better remunerative price and procurement policies.  

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The Transformation?

Might is always right. Victory covers all your incompetence.Till yesterday, an Indian leader ridiculed and belittled by millions, became an overnight hero. The transformation from “Pappu” to “Param Pujya” is indeed baffling for me. To win an election in India doesn’t need competence. If that could have mattered, I find Sachin Pilot, Jyotiraditya Scindhia, Sashi Tharoor, JayRam Ramesh and many other more befitting to be the leader of opposition by a democratic election. But we are in India. Development matters least to electorate. If it could have mattered,Lalu Yadav could not be the CM for three consecutive terms while indulging in all corruption cases. Her wife, a highly in competent lady couldn’t have became the CM.

In India to win election you have to be good at numbers. How many Muslims, Dalits, OBCs, Brahmins are there in which constituency? You must know this. Are there any possibilities of communal right that can be fanned before election, yes, this also forms possible criteria, if you want to polarize the elections in your favor.

Britishers were intelligent, not because they had Industrial Revolution much before anywhere else in the world but because they knew Divide and Rule policy. Indians were ruled by many invaders not because we lacked strength or capacity to defeat them, but because we had championed the art to remain divided in all situations.

Divided by castes, Ruled by others. This seems to be driving motto of our civilisation from ancient past.

सुना है चुनाव है….

सुना है चुनाव है,
बहुत निकट है
परस्थितियां भी अबकी
घोर विकट है

भवसागर की छोड़ो,
किसे पड़ी है?
यहाँ चुनावी नैया
मझदार खड़ी है

“विकास” रूपी पतवार
गर्त में गया है
प्रतिमा के सिवा नहीं,
कुछ भी नया है

रफाएल पर विपक्ष का
पुरजोर है हमला
“भ्रष्टाचार मिटेगा”
क्या ये भी था जुमला?

जीवन में सहर्ष जो कभी
राम नहीं गाते हैं
मरणासन्न हो उन्हें क्या
राम याद आते हैं?

…….अभय ……

Note: A true poet doesn’t side with any establishment. Neither Left nor Right. Read it in this perspective.

Lowdown of Simultaneous Election

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When it comes to the celebration of festivals, probably no other country in the world can beat us in terms of sheer numbers which we have here in India. The dates of our annual calendar are always filled with colours, signifying one festival or the other. Festivals are generally a cultural and historical attribute of the society. But they are not only restricted to these aspects. Like other democracies, we have political festivals too in the form of elections, but here also we outnumber the other democracies.

We have adopted three tier of government in our polity. First at Central level, next at state level and third at local level. To elect the representatives of all three levels we have separate elections of Parliament, state legislature and to the Urban Local Bodies (ULB) and Panchayats. In recent years, on an average we had two elections each year and many ULB elections. To conduct an election is a massive exercise in India, reasons are: humongous size of country as a whole as well as states (many of them are large than many European Countries), diverse population, administrative and infrastructural cost and many more.

 So the idea to conduct simultaneous election has been in and around in past also. But recent aggressive push by current government under the stewardship of Prime Minister has made the pitch higher. The only difference in the demand of holding simultaneous election is that the PM has pitched to hold the election of all three elections at one shot including Panchayats.

What’s the history?

Simultaneous Election is not a new concept to India. We had first general election in 1951-52. After the first Parliamentary Election, we had the simultaneous election to the parliament and state legislature till next three times also i.e. in 1957, 1962 and 1967. After 1967 general election, the stronghold of single party domination in India got loosened in few states and it gave the space to the regional parties. But at few occasions regional parties formed coalition government which did not complet its full terms and resulted in premature dissolution. Same thing happened to the Central Government in 1970 and due to lack of majority the Parliament, it got dissolved and fresh elections were held in 1971. Since then the sync which has prevailed over the Parliament and state election finally broken and we reached at point where every year we have more than one elections.

Argument for Simultaneous Election:

The proponent of the joint election rightly points out several benefits. One of the major flaws of having multiple elections, they say, is that it always keeps the government in “Election Mode” and they are hardly able focus on governance. Every election to the state is seen by the political analysts and commentators as the litmus test and they term them as quarter final, semi final to the General Election. In democracy no party wants to lose the momentum, hence government indulges themselves to the populism leaving space of prudence in governance.

When election dates are declared, Model Code of Conduct (MCC) comes in to force, where there are several restrictions on government to announce or materialize the schemes for the welfare of the people. Having multiple elections means several MCC and government find themselves hamstrung.

Conducting various elections means administrative as well as financial burden on the limited resource of the country. Requirement of the relocation of police force, election equipments, and mobilization of district administration is cumbersome as well as costly.

Government Teacher plays a very crucial role in conducting the election. But this is not their primary task. It affects the education of the students of the government schools who are already at the disadvantaged side due to several limitations when compared to their counter part of private schools.

There is no doubt that election commission as well as government is trying very hard to reduce the corruption in the election, but despite of several measures, corruption is rampant in election. Money power speaks loudly during the election. Hence more election means more use of dirty money and more loss to democratic ethos.

Frequent Elections also disrupts the normal life by suspending or affecting the supplies of the essential commodities, by jamming the traffic for election rallies, huge rise in noise pollution etc.

One of the debilitating features of the Indian election is that many parties tries to divide the society on  caste, communal, gender line etc. for their vested interest of winning the election, which is highly undesirable for the social fabric of life. When more election happens there are more chances of division in the society.

So keeping all these points in mind, holding simultaneous election seems plausible and desirable thing to ponder upon.

Ideas against it:

Former Chief Election Commissioner S Y Qureshi has notably mentioned that “Having simultaneous election is desirable but not feasible”. There are multiple constitutional, practical and administrative restriction prevents this idea from materializing. Indeed, the concerns are genuine.

The first concern is that it negates the principle of Parliamentary Democracy (PD) and Constitution. In Indian PD a government at center is entitled for five year of governance if they secure majority and can dissolve it according to the whim of the ruling party and can be removed by passing no confidence motion. This idea is true as well for the state legislature. So when holding both election will be materialize, this principle has to die down.

The second concern is that this is against the idea of Federalism. Imagine a situation when no party will be able to secure majority in the state election and neither nay coalition government is formed, then according to prevailing procedure President Rule will be applied. So will the President rule be for the entire five year period when the next election will be held? And what if the Central Government falls in mid way? All the 29 state would have to go in for the election again, even when there is a stable government in states?

The next concern is that, state and national issues are different and hence the elections are held differently. But according to IDFC, a research institute, there has been a tendency with the voter that they increasingly vote for the same party if the elections are held together. In recent times that number is about 77% percent which is huge. Keeping this figure in mind, it appears that it will only help the national party and the regional party will be seriously disadvantaged and which is against Democratic Principle which provides level playing field for other.

The other advantage of the separate election is that it keeps the government at toes all the time and prevents them from being despotic through the exercise of their voting power. Last but not the least is the concern of “Political Consensus” on such a contentious issue which needs Constitutional Amendment.

Expert and Panels opinion:

Way back in 1999 Law Commission in its 170th report on “Electoral Reform” has suggested the idea of Simultaneous Election. Though, it was kept in cold storage since then. Recently Parliamentary Standing committee setup for the specific purpose also suggested the holding up simultaneous election but with some modification and further suggestions. Out of many, one is of having state election twice, one with parliament and other in midterm of it. Former President Shri Pranab Mukharjee, while addressing joint session of parliament, also opined in favour of simultaneous election.

So overall we can see that there are numerous benefits lies in holding all the elections at one go, but there are genuine and serious challenges occupies in its implementation which certainly can’t be ignored. The most serious challenge is the constitutional, challenge to the idea of Parliamentary Democracy and Federalism. But looking as a whole, the benefits outnumber the challenges. Prior to GST, Centre had different tax means and the state had different ones. Post implementation GST is touted as “One Nation, One Tax and One Market”, which apparently can be seen as from being a federal subject to Central Subject. Now both are clubbed together for the benefit of both and all party came to consensus along with states,  what we call it a greatest example of co-operative federalism.

Same idea and principle should be applied here. A rigorous discussion and deliberation should be held inviting all the stake holders which includes all the political parties (including regional ones), member from the academia, civil societies, expert from the constitutional realm and if needed foreign experience should also be taken in account. Finally, to quote Victor Hugo “no force on earth can stop an idea, whose time has come” seems quite reasonable here. The whole idea of democracy hinges on consensus, we have to see that are we able to reach to consensus on this idea or not?