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Wed, 27th Feb 2008  New Delhi: This budget season Prime Minister Manmohan Singh and Finance Minister P Chidambaram have their focus on the Indian countryside and the farmer. That explains why President Pratibha Patil's Budget Session speech harped on the word rural.
At 2.7 per cent the farm sector growth rate has fallen to a third of the GDP’s growth rate of 8.7 per cent. Now, the Government that won the election on the aam aadmi plank is already feeling the heat not just from the Opposition but even its allies.
“If they don’t give a justified package to the farmers then it’s going to be a definite loss of face for the UPA,” CPI MP, Sudhakar Reddy said.
While there is a broad consensus on the need for Government intervention to improve the growth rate of the agriculture sector, a blanket loan waiver for farmers across the board may not be a step in the right direction. And although it appears to be a populist measure, a look at the past record will show that it may not even make good electoral sense.
In the 80s former prime minister Rajiv Gandhi championed rural loan waivers through his Loan Mela campaigns. The then deputy prime minister Devi Lal in the National Front government in 1990 announced loan waivers to farmers to the amount of Rs 10,000.
But none of these loan write-offs made any significant electoral impact. Rather it deeply hurt the agricultural credit system. Experts point out that blanket relief never really work on the ground.
“Exam it case by case and if it looks like an insolvency case then it should be considered for a waiver. But politicians want something to be declared across the board,” leader of Shetkari Sanghatan, Sharad Joshi said.
Blanket waivers are something that financial experts are also not game for. “The banks that are sectored by it are basically Government-owned banks. If the Government wants to do certain things then they would do it,” economist with CRISIL, Subir Gokarn said.
The Prime Minister being an economist himself knows that pretty well. But then loan waiver sops have been seen as a winning formula for years and as they say old habits die hard.  | 
