“Peanuts” was how one rural politician described a 6,000 rupee ($84) yearly handout to small farmers promised in Friday’s budget. As Indian Prime Minister Narendra Modi tries to secure the support of rural voters in a forthcoming election.
Recent polls predict Modi’s ruling Bharatiya Janata Party (BJP) to emerge as the biggest party in the vote which is due by May. But that it will fall short of a majority as the main opposition Congress party gains ground. Late last year the BJP lost power in three big agrarian states to Congress, which has promised to forgive farm loans as farmers struggle with huge debts and falling crop prices. Several farmers told Reuters after interim finance minister Piyush Goyal finished presenting this government’s last budget that it had not swayed them to vote for Modi’s party.
“The government is trying to lure farmers by offering peanuts,” said Raju Shetti, a farmer leader and member of parliament in the western state of Maharashtra. “These measures will hardly make any difference to our earnings,” Shetti said the proposed sum was negligible compared to the losses incurred by farmers due to the fall in crop prices in recent years. Blaming Modi for resorting to big imports despite bumper local crop production in a bid to keep inflation in check.
A steep drop in prices of crops like vegetables and pulses led to protests across the country in 2018. In response, the southern state of Telangana, run by a regional party, has started paying farmers Rs 20,000 per hectare a year.
“Our debt burden has risen because we have been making losses,” said Jitendra Nirwal, who grows sugarcane in the northern state of Uttar Pradesh. “The government should have waived farm loans.”
Farmers borrow from banks to buy seeds and fertilizers. But erratic weather and falling crop prices cripple their ability to repay. After defaulting on bank loans, farmers were forced to borrow from private moneylenders charging exorbitant interest rates.
In 2008, the then Congress-led federal government announced a national loan waiver programme costing nearly Rs 72,000 crore in a move that helped it retain power the next year. Its new governments in the states of Madhya Pradesh, Rajasthan and Chhattisgarh have promised or already forgiven farm loans worth billions of dollars.