Manmohan Singh is the biggest success in PM's office!

Statistics can often be stranger than fiction.

• How shall we define ‘political success’? By the fact of ‘re-election to the office’.
• The ‘biggest’ political success can be defined as re-election to office by the ‘largest increase in mandate’.

If a politician gets re-elected with the largest increase in his mandate, that should, incontrovertibly, allow him to claim the mantle of 'being the most successful'.

Who can claim to be India’s most successful prime minister?

1. Jawaharlal Nehru - Although he got re-elected more than once, he did not appreciably increase his (already awesome) mandate over his respective previous tenures.
2. Indira Gandhi - She got re-elected after she cut short her tenure in 1971, but added only 36% (from 259 in 1967 to 352 seats) to her previous mandate.
3. Atal Bihari Vajpayee - He got re-elected in 1999, but the BJP’s numbers in parliament hardly budged.
4. Manmohan Singh - He got re-elected in 2009 by increasing his previous mandate of 2004 by a gravity-defying 45% (from 141 to 206 seats).

Manmohan Singh, widely described as India’s weakest prime minister, but who, on cold quantitative statistics, can justifiably claim to be the biggest success in that office! 

The spectacular Lok Sabha polls of 2009

• Congress swept urban areas. (7 out of 7 in Delhi and 5 out the 5 it contested in Mumbai)
• With 21 seats, Congress was the second-largest party in Uttar Pradesh after SP(23) and ahead of BSP(20) and more than double of BJP’s tally of 10. 
• Both the contending alliances, UPA and BJP, had declared prime ministerial candidates – Manmohan Singh and LK Advani .
• The communists collapsed from 59 seats to 24.
• Obvious analyses for the Congress’ amazing re-election in 2009 was (i) the three continuous years of 9% -plus GDP growth, (ii) farm loan waiver just before the voting and (iii) people simply loved Manmohan Singh’s act of political defiance over the Indo-U.S. Nuclear Deal. They saw in him a status quo defying politician who could herald change on a massive scale.
• Very few understood, or cared, about the nuclear nuance. What they latched on to was Singh’s ability to stand up to blackmail in the pursuit of modernity and change.
• In July 2008 left coalition partners saw red over the Indo-U.S. Nuclear Agreement, and withdrew support in parliament, pushing the government into a minority. He sought a vote of confidence in parliament for his minority government. Some deft political management saw the Congress get new allies on board supported the government. When the vote was counted Singh had won 275-256. His beaming face and exultant V wave became Singh’s political signature for the 2009 polls; across the country, he was feted as ‘Singh is King’.
• Congress misread its mandate and harked back to the stasis of garibi hatao (poverty) politics, handing a neat walk-over to Narendra Modi in 2014, who instinctively understood the political message of 2009 better than the victors themselves.

We will vote you in, provided you can deliver real and discontinuous change to us. We were promised this in 2009, and again in 2014. But we were let down by both Manmohan Singh and Narendra Modi. So for 2019, please go to your drawing boards and figure it out!

Read the source article

This is a kind of economic collapse

JNU professor Himanshu says the economic slowdown is not the result of a one-off event like demonetisation, nor a technical problem but the slump began almost two years ago. This is a kind of economic collapse. The first step to tackle it is to acknowledge it.

• The economy is in a trough. GDP growth dipped to 5.7%. The Index of Industrial Production for July came in at 1.2%. Consumer Price Index showed that the inflation rate had risen to a  high of 3.4%.
• While Finance Minister Arun Jaitley acknowledged that the GDP numbers for the April-July quarter were of concern, BJP president Amit Shah told that the slowdown in the economy was due to “technical reasons”.
• These numbers might be an early warning of possible stagflation with low demand, high unemployment, decline in GDP and persistently high prices.
• There are many reasons for the collapse of domestic demand and the economic crisis India is facing and the government has limited room to manoeuvre and bring the economy back on track.
• RBI has confirmed, what all of us knew, demonetisation caused much pain without any gain. But demonetisation was not the trigger for the economic collapse one is witnessing today.
• It is a kind of economic collapse. The data is clear on this. Since 2015-16, growth rates have been going down. These numbers represent a very serious set of problems with the economy that have been neglected for a long period of time, which is why they have come to bite us today.
• Some of these problems started in 2013-2014. Wages had started turning negative in real terms since 2013. The problem of non-performing assets had appeared by then. The global recession was visible. These factors were well-known. The one big trigger was in August 2014, when primary commodity prices collapsed following a fall in oil prices. This hit farmer incomes hard.
• The droughts of 2014 and 2015 were difficult to deal with and agriculture GDP contracted and these factors severely dented agricultural incomes. With wages going down, rural demand collapsed by 2015.
• Jobs were not being created and wages were turning negative in real terms – growing slower than the rate of inflation.
• The government neglected the severe depression in rural demand for a long time that eventually spilled over to other sectors. Exports had been falling and the government ignored the trouble spots. Private investment has slowed down and credit growth is at its lowest.
• Construction has been the bulwark of employment in the non-agricultural sector in the past 10 years. But the government was in denial till chief economic advisor accepted the possibility of demand deflation in the economy. But this admission should have come earlier.
• In a normal monsoon year in 2016 after two consecutive droughts, when the situation was improving, demonetisation broke the back of the informal economy. It acted almost like a drought does on the economy. Demonetisation delayed hopes for the revival of the economy, and demand deflation was extended.
• Surely, GST has impacted the informal sector in terms of taxes and cost of compliance, which basically means hiring consultants. If it hits the unorganised sector, then manufacturing will be in deeper trouble in the coming quarters.
• The current scenario is uncertain about the next two to three quarters with no signs of private economic activity reviving. Worse, agriculture will make a very low contribution to growth with food grain production remaining flat. The livestock sector has been hit by political beef controversy that could contract the livestock sector as well. Excluding cotton, all major kharif crops have shown a decline in acreage.
• This year even though monsoon was good but its distribution is unlikely to contribute much to GDP in the next quarter.
• There are no visible signs of green shoots right now in the economy. The SBI has already pared down the growth rate for the entire year to 6.5%. There is almost a consensus emerging that the mess in the economy is far more serious than what people had assumed earlier.
• Farm loan waivers by nine states have sucked up the resources of state governments – there is a decline in capital formation in the states. That is telling us that state government expenditure towards investment is going down. The spending capacity of states has been squeezed quite dramatically and total fiscal deficit of states has increased. This impact the government’s ability to ramp up expenditure in the coming months to revive demand. By the end of June, the Central government had already reached 92.4% of its fiscal space. So, there is not much manoeuvring room left for either the states or the Centre.
• Government might have to breach the fiscal deficit target to revive demand. The government is hoping to collect more from non-tax revenue sources. It had a lot of hope for one source initially – dividend from the RBI which has been dashed. Two other sources the government is banking on are telecom auctions and disinvestment of PSUs. Both depend a lot on market conditions. Even though it has floated the idea of selling off Air India, it may not materialise soon. Given the market situation and the heavy squeeze on the telecom sector caused by the launch of Reliance Jio these decisions could get delayed.
• This is similar to what happened during the time of the AB Vajpayee government (1998-2004). At that time, too, the government failed to recognise that there were problems. The “India Shining” slogan came out of not recognising the economic situation. Inflation was low, wage rate growth was low, agriculture had almost collapsed. Foodgrain production on per capita basis had turned negative. This is true with this government also. Foodgrain production was 265 million tonnes in 2013-2014 and it has been projected up to 276 million tonnes for this year. So in four years, it has gone up by just 10 million tonnes, the lowest in the last 15-20 years. This is lower than the rate of growth of the population. In terms of per capita, that means foodgrain growth is negative. Incomes are negative in real terms. Agricultural investment is negative. This is similar to the NDA government period 1998-2004.
• But 2008 was different because the problems that hit our shores spiralled out of a global crisis. We had one of the best runs of growth between 2004 and 2008. The government distributed a lot, it earned a lot. The agriculture sector was clocking around 4% growth. Incomes were rising. Global commodity prices were rising, so terms of trade shifted in favour of the agricultural sector and farmers benefitted. Construction and manufacturing were growing at their fastest rates. That gave us the cushion to go in for a fiscal stimulus and revive demand.We were not so directly exposed to the financial crisis in developed economies and domestic demand was the prime driver. Right now, the engine of the economy – domestic demand – has collapsed.
• 2018 will be the last Budget the government will be presenting. In 2019, it would be a vote-on-account. The first thing is to acknowledge the gravity of the problem. The government has played blind for long to what has been happening in the economy. The finance minister has come on record to say that these are of concern. That is the first time the government has acknowledged such concerns. But if they actually have a very good idea of the magnitude of the problem is unclear. Right now the engine of the Indian economy, domestic demand, has collapsed.
• The share of private final consumption expenditure as a share of gross domestic product, it was roughly 62% during the third quarter of 2016-2017 – this is the festive season, so private consumption is usually high. Then, mid-way through this quarter, demonetisation happened and sucked out buying power. Compared to the third quarter of 2016-2017 with severe disruption in its second half, the share of private final consumption expenditure in gross domestic product has come down now. in the last quarter, it was down to 57%. That should be a worrying sign.
• There have been too many disruptions in the economy at the same time. What is needed is somebody who can work hands on with the economy.
• The entire economic policy-making group including the RBI in it. The policy-making is never one individual, it is a collective effort. Unfortunately the government’s ability to tap into a pool of economists and experts is very limited. Niti Aayog is in transition now, RBI is already under fire, the chief economic advisor may change now. There needs to be a point where experts, economists and policy-makers come together.
• Differences are bound to be there. No two economists are going to have the same opinion. This government has far less differences than the previous one and that is its problem. Somehow the government must seize the moment and act fast. If this continues for long, it will take a disproportionately greater effort to recover to what is now considered a normal 7% growth rate.

The Wire: Wide Angle: Episode 10: Demonetisation Anniversary

UP makes mockery of farm loan waiver

• In the run up to the assembly polls, during Mar 2017, that Prime Minister Narendra Modi promised that if BJP is voted to power in the state, loan waivers will be the top priority at the first cabinet meet. The promise turned out to be effective and got votes for the BJP. However, to avoid making it seem like they had failed the voters, the Adityanath-led government delayed the first cabinet meeting to put off any decision on loan waivers. Later, the Centre refused to offer money, which forced the government to use state's own resources.
• In its first cabinet meeting in April 2017, the UP state government announced that under the farm loan waiver scheme, crop loans up to Rs 1 lakh will be waived off for small and marginal farmers. However, as cabinet ministers ceremoniously distributed loan waiver certificates to farmers across districts, it turns out that many of the beneficiary farmers have received waivers of amounts as petty as Re 1 or Rs 1.50 for over 17,260 farmers.
• One of the more predictable outcomes of the massive farm loan waivers is, while they are a solution to relieving rural distress in the short-term, they also result in a reduction of capital expenditure on agriculture and allied activities, rural development, irrigation and flood control by an average nearly 30%. Cut in capital expenditure in productive areas likely to act as a drag on growth for such states.
• UP’s expensive farm loan waiver has forced the Adityanath-ruled state to cut back on revenue and capital expenditure in key areas like energy, transportation, social welfare and nutrition.

Modi never walks the talk. He is worse than Congress in this aspect. During UP elections, his announcement of farm loan waiver made all the UP farmers believe that everyone will get farm loan waiver. After winning, centre backed out of its commitment and state was to shoulder the burden the loan waiver expenses. Citing resources constraint the farm loan waiver was limited to Rs. 1 lakh for small and marginalized farmers only and even that turned out to be mockery and farce. As usual Modi never touches this embarrassing item again in his life. Rules must be modified to instantly dislodge PM, CMs & Ministers from their positions and debarring them from public positions for next five years for failing on publicly made promises.

Growth may not be in 6.75-7.5% range: Economic Survey

Read in English - Economic Survey says growth may not be in 6.75-7.5% range

• GDP Growth during 2015-16 was 7.9%. GDP Growth during 2016-17 was 7.1% ... against anticipated 8.5% due to demonetization. 
• GDP Growth during 2017-18 is projected to be 7.7%, but the Economic Survey has a pessimistic view on growth forecast with downward risk to the earlier estimated growth range of 6.75-7.5% GDP growth for 2017-18. Growth is expected to undershoot the earlier range.
• CPI inflation to be below 4% by March this fiscal, which only indicates anemic condition of economy.
• The challenges included are appreciation of the rupee, farm loan waivers, rising stress on balance sheets in power as well as telecom and transition issues arising from implementing the Goods and Services Tax (GST).
• Fiscal slippages due to series of deflationary impulses that are weighing on an economy yet to gather its full momentum.
• Farm loan waivers by states would touch Rs. 2.7 lakh crore and could cut economy demand by up to 0.7% of GDP.
• Fiscal deficit will be 3.2% of GDP in 2017-18 as compared to 3.5% last fiscal.
• Since February 2017, the rupee has appreciated by about 1.5%.
• The bank NPA's rose from 9.2% in Sep 2016 to 9.5% in Mar 2017.
• Reliance Jio’s entry with free voice and data has led to a brutal price war in the telecom industry, hurting revenue and profitability of incumbents amid ballooning debt, increasing the sector’s share of non-performing assets, which is a cause for worry, the Economic Survey said. Ironically, Reliance Jio was funded by same banks to the tune of Rs.1.80 lakh crores which has exposure in telecom sector to the tune of Rs. 5 lakh crores and their diminished EBITDA has lost its ability to service massive debt. 
• A positive unintended consequence of demonetization is that about 5.4 lakh new tax payers* have joined the tax net post note ban, which probably could have been achieved even without note ban.
  *mostly between Rs.2.50 & Rs.3.00 lakhs taxable income with aggregate tax payment less than Rs.100 crores.

Read - Economic Survey is a wake-up call for Centre

Even as the unintended consequences of  arrogant, audacious & attrocious demonetization of Modi are surfacing at regular intervals and estimated to normalize in about two years time, the hurriedly implemented mangled GST, with in six months of note ban, has created avoidable numerous troubles to trading, manufacturing and informal sectors disturbing supply chain of commodities is unpardonable another adventure by Modi for political and personal glorification gains rather than in public and national interest. Almost all segments of economy are suffering and the most prominent being loss of millions of jobs and distressed agriculture. For increasing speed of travel, if your car driver presses brakes instead of accelerator, again and again, what will you do? Simply change the driver. Right. Driver Modi must be replaced, if our nation needs to progress.

UP Farmers cheated by Modi & BJP

• Recollect the opinion polls during UP elections 2017, which confirmed absence any kind of wave and predicted BJP as largest single party falling short of majority and SP+Congress combine close behind and BSP at a distance. Few days before start of polling, Modi dramatically promised farm loan waiver for small and marginal farmers of UP that helped BJP rode to resounding victory.
• Astonishingly, farm loan waiver was a failed strategy and Congress style of populism was always thrashed as an ill for the economy and strangely adopted by Modi-BJP in UP elections. Earlier, when Modi denied help to AP CM for farm loan waiver in fulfillment of his election promise, he was hailed for his financial prudence.
• One of the triggers of the farmers’ agitation across India in May and June was the decision of waiver of farm loans by the Yogi Adityanath-led Bharatiya Janata Party (BJP) government in Uttar Pradesh.
• The BJP governments in Madhya Pradesh and Maharashtra announced waivers, following violent agitations by farmers.
• The farmers of Uttar Pradesh, the first beneficiaries of the farm loan waiver of 2017, debunked the government’s announcement with varied epithets such as “sleight of hand”, “treachery” and “downright chicanery”. Unanimous sense of indignation was reflected among farmers due to its tweaking, in terms of the category and the time frame, has not gone down well with large sections of the farming community. The impression that the BJP leadership, including Prime Minister Narendra Modi, gave during the campaign for the Uttar Pradesh Assembly elections, was that there would be a comprehensive waiver of agricultural loans.
• The scheme downright chicanery concocted by vile administrative and political barons. Farmers were more annoyed with the time frame set for loan waiver restricting it to 40% of small and marginal farmers. The time frame had been set in such a manner as to exclude a large number of debt-ridden farmers from the scheme.
• Evidently, this scheme has been devised by a devious brain that knows about this behavior pattern of farmers and they are playing games with honest farmers while promoting defaulters and a culture of loan defaults.
• Though the scheme was announced in early April, no initiatives were taken by the administration or the banks to implement it. When they are going to make a concrete move in this direction? 
• Large sections of the bureaucracy points out that while it was the duty of the official machinery to facilitate the fulfillment of the ruling party’s election promises, its government cannot conjure up resources for it at will. 
• Earlier there was faint hope that the Centre would help out with some allocation because the Prime Minister himself was involved in propping the loan waiver idea in the campaign. But after Maharashtra and Madhya Pradesh followed suit with the scheme and the FM's emphatic statement that State governments will have to find their own funds, UP is practically in a quandary. The initial estimates are that the schemes would cost the State exchequer Rs.36,359 crore, which would meet 25% of the total outstanding agricultural loan of Rs.1,21,000 crore accrued in 2015-16. The scheme would benefit about 86 lakh of the 2.15 crore small and marginal farmers while total number of farmers are estimated to be 2.3 crores. 
• The scheme deliberately leaving out 60% of the small and marginalized farmers is no fulfillment of election promise and UP may well see the emergence of MP-Maharashtra like situations, since the hope generated by the loan waiver announcement was fast crumbling even as the farmer was getting a price much lower than fair for his produce.
• The Adityanath government is fortunate in that there are no spirited farmers’ organisations with militant leadership in the State like in Maharashtra and MP. The existing organisations lack credibility and tenacity. But the sense of hurt that thousands of farmers in UP feel will not subside for long.

My View:
Modi has no habit of walking the talking. Modi suffers from worst possible type of corruption; an insatiable desire for personal glory at any cost; an extremely deep moral and spiritual corruption. Modi belongs to the line of autocratic ideologues rather than the western tradition of revolutionary neo liberalism, or marxist rationalism. He would do anything to win elections and stay in limelight and publicize failures as achievements. Farm loan waiver is an U-turn from BJP's stated objectives of farm loan waiver, which hitherto was Congress style of populism and criticized by all and adapted by Modi only to win UP elections which is having snowballing effect on the entire nation and subjecting state government finances and banking system to severe duress. Development of infrastructure and progress of nation has gone back by at least 10 years. Senseless demonetization and unprepared GST roll out will have its own effects on our economy. Almost his schemes swachch bharat, make in india etc - all failed and bleeds exchequer without any tangible results and yet publicized as successes. With all these Modi is proving again and again as the worst economic manager our country ever had.

Rural revolt destroys Modi's 3rd year celebration plans

• Humongous plans for the third anniversary celebrations of the Narendra Modi led National Democratic Alliance (NDA) government were announced in mid May. The 22 days celebrations were to be conducted from May 25 to June 15 by the BJP.
• These celebrations of the BJP-led NDA government will be centred around PM Modi, with a ‘Making of Developed India (MODI)’ festival as the highlight, as 450 leaders, including Union ministers, BJP chief ministers, MPs, MLAs and office-bearers spread across 900 cities and towns starting May 26 to educate the masses about its achievements since 2014. A control room is being set up in Delhi to monitor the programmes and visits of the BJP leaders between May 26 and June 15.
• The plans visualised Modi writing two crore letters and sending 10 crore SMS messages to common people, front-page advertisements in 400 newspapers across the country displaying Modi’s visuage and listing his government’s achievements, 30- and 60-second advertisements on television and radio on all the 22 days of the celebration period, and 300 multimedia exhibitions in various States.
• Booklets titled “Then and Now (UPA and NDA)”, to highlight how the country had marched ahead under Modi. The agriculture sector is given special focus in the booklets. 
• The government’s promotional programmes did not make any reference to its pre-election promises on the agricultural front and its failure to fulfill them. Instead it talked about the government’s ambitious rural development initiatives aimed at doubling farmers’ incomes in real terms by 2022 and uniting the fragmented markets to achieve the goal of “one nation, one market”.
• This self-aggrandizement project ran to the satisfaction of the various organizers for about a week, that is, until June 1, 2017, the day farmers’ organisations in Madhya Pradesh and Maharashtra started separate agitations demanding farm loan waiver and a hike in minimum support prices (MSP) in tune with the promise made by the BJP governments both at Centre and in the two States. 
• The BJP had promised during the 2014 Lok Sabha election campaign that it would implement the recommendations of M.S. Swaminathan commission 2006 that suggested that the MSP should be above 50% profit margin on input cost.
• Barely a week after the commencement of the farmers’ agitations, the grandiose third anniversary celebration plans were in a shambles, thoroughly exposing the hollowness of the government’s claims, especially about enhancing the rural economy and boosting farmers’ interests. The eventful one week witnessed intensification of the agitations in the two big States, Maharashtra and Madhya Pradesh, with farmers dumping milk and vegetables on roads and damaging vehicles, resisting attempts by the police and the security forces to quell them. The escalated violence resulted in the killing of six farmers in police firing in Madhya Pradesh.
• The responses from the BJP, including CM's Fadnavis and Chouhan  were to brand the agitations as politically motivated vandalism sponsored by the opposition Congress and NCP. They insisted that the farm sector was successful under the Modi regime and that the farmers’ agitations were entirely unwarranted. So much so that both the leaders either refused to initiate talks with farmers’ representatives for discussions. But none of these tactics succeeded. The developments since June 1, 2017 and the nationwide response, put them on the back foot. While Fadnavis announced a loan waiver for farmers with less than two hectares of land, Chouhan, after launching a dramatic indefinite fast to bring peace and calm down the agitating farmers, announced that purchasing farm produce at rates lower than the MSP would be treated as a crime.
• MP CM SS Chouhan should have been asked to step down for his failure to assess brewing discontentment among farmers and mismanaging the whole situation. The fact that compensation was increased from Rs.5 lakhs for each dead person increased to Rs.10 lakhs and then to Rs.1 crore indicates panicky management.
• There is no guarantee that the resentment in the two States and in the farm sector in the rest of the country will subside. Already, farmers in Haryana have launched an agitation demanding loan waiver. In Maharashtra leader of the Swabhimani Shetkari Sanghatana (a BJP ally), has issued a warning that “If the promises are not kept, the agitation will resume with greater vigour.”
• In Madhya Pradesh there are signs of farmer organisations regrouping to launch a more concerted movement.
• The promises made by Fadnavis and Chouhan and the Union government had not adequately addressed the underlying factors that had forced farmers to take the path of agitation. These leaders have been dictated by political brinkmanship throughout, and this does not help in finding lasting solutions to farmers’ grievances. The current announcements fall in the same bracket.
• The demand for loan waiver came up in Madhya Pradesh and Maharashtra because Modi himself spearheaded this brinkmanship during the campaign for the UP Assembly elections promising loan waiver for farmers. Such was the rhetoric that Modi said the loan waiver would be the first decision of the new Cabinet. He also said the Union government would contribute towards the expenditure incurred by the loan waiver. The BJP was elected to power in the State and the new government, under Yogi Adityanath, was forced to live up to this rhetoric and announce loan waiver. It is this that triggered the current phase of farmers’ agitations in other States.
• In both the States, the agitation gathered strength not in areas where there was crop failure but in places where crops were abundant but farmers were denied remunerative prices.
• Madhya Pradesh farmers were aggrieved that the State government was propagating falsehoods about the farming sector. The Chouhan government had been claiming a 20 per cent growth in agriculture in the past five years. The government received the Krishi Karman award (excellence in agriculture) five years in a row for this.
• The BJP leadership have tried to underplay the role of the demonetization drive in creating agrarian distress while RBI stated how the demonetization drive and cash shortages have caused panic in the farm sector and suggested policy interventions may be envisaged to arrest the slump in prices.
• BJP's determined refusal or inability to address comprehensively issues pertaining to the farm sector and measures such as loan waiver might bring temporary relief to farmers, larger policy initiatives were required to bring lasting stability to the farm sector.
• The most important thrust of these initiatives and incentives should be to rescue the farming sector from the predations of the middlemen, money lenders, traders of spurious inputs, corporate sector and their interests. This predation has been marching on and on over the past two and a half decades. Governments after governments and political parties after political parties have asserted they understand the dynamics and perils of this predation, but at the level of policy and governance they have all played the facilitator role to the deprivations of these forces. 
• The question is whether any government will show the political will to take on this problem and thus protect the farmer and through that the country itself. As things stand now, there is not much hope for this fundamental course correction.

If a free society cannot help the many who are poor, 
it cannot save the few who are rich ... John F. Kennedy

My View:

While Modi talks about corruption, black money etc, these lavish celebrations would have costed over Rs.10,000 crores and the bills picked up by central & state PSUs, BJP and its crony businessmen, eventually burdening the common man. This sort of corruption is worse than receiving bribes as quid pro quo. Needless to say every BJP party activist associated with these celebrations will make few lakhs to few millions of rupees, across the nation. It is clear that BJP doesn't have any agenda for alleviating the problems of farmers and rural masses except some quick fix solution and publicizing them as achievements. Gandhi once said "India lives in its 600,000 villages, not just Delhi, Bombay, Calcutta & Madras." While Modi quotes Gandhi & Patel as convenient to him, he is really never bothered about villages and its economics dynamics. Among Indians 60% belongs to lower class & poorer sections, 30% middle class, and 10% upper & rich class. It is clear that Modi is concerned about middle & upper classes only except shedding some crocodile tears once in a while. Modi has wasted 3 years in celebrations, foreign jaunts and hollow publicity. Emulating Congress model of governance (excepting some name & color changes) Modi is sure to pay a bitter price in 2019 elections, similar to that of Vajpayee & Advani in 2004.

Read 'Rural Revolt' in Frontline July 7, 2017

RBI warns against farm loan waivers

• Farmer loans amount around Rs. 3 lakh crores and farmer suicides during past two decades exceeded 3.18 lakhs. Needless to say agriculture is in distress last two decades. Mechanization, modernization, land reforms for land holding consolidation, warehousing, irrigation, quality inputs, marketing etc requires investment of about Rs. 3 lakh crores per annum for next 5 years. otherwise farmer will continue to be debt ridden and farmer suicides will remain unabated.
• No political party will win 2019 election without farm loan waiver promises. Till then farmers will avoid paying loan repayments, especially after Modi farm loan waiver promise for winning UP elections 2017.
• Large waivers like this will pull down economy backward by 2-3 years and state governments running risk of economic collapse is all the more likely. But no escape.
• However these amounts are not so great when compared to Bank's NPA's in excess of Rs.8 lakh crores and another Rs. 6 lakh crores as stressed investments in Telecom sector. After all Agriculture is livelihood for majority of Indians (less educated and less skilled) and the only avocation in rural India.
• This is the price nation has to pay for neglecting rural India and chasing dollars and in the process making rich more richer during the past 25 years of liberalization.

If the RBI agrees with the finance ministry all the time, then it is superfluous; 

And disagrees all the time, then it is obnoxious ... YV Reddy

RBI Governor is neither subordinate nor equal to Finance Minister ... YV Reddy

My View:

RBI which kept stoic silence for Modi's senseless demonetization that costed nation over Rs.128,000 crores during Nov & Dec 2016 months and insurmountable consequential damages, warning Modi now on farm loan waiver consequences makes me believe that it is a conspiracy by Modi & BJP to avert farm loan waivers after UP, for Modi is no friend of farmers and rural India.

Farm loan waiver is a necessity

• About 50% of the population is engaged on agriculture directly, which makes farmers the most influential group of voters. Though not occupationally organised, their votes matter a lot and being perceived as pro-farmer has historically been the necessary requirement for being a popular political force in the country & states.
• In Feb 1990, Madhu Dandavate, V P Singh’s Finance Minister in  NF government, announced a debt relief scheme for farmers covering waiving overdues or outstandings of farmers and artisans up to Rs 10,000, and involved a fiscal cost of Rs.10,000 crore.
• Soon after the Modi government took over, bankers and RBI had warned the Finance Ministry of the dangers of such write offs. There was little support then from Delhi for the huge loan waivers announced by the newly formed states of AP and Telangana. As the Modi government worked on its first Budget, bankers, led by SBI chief Arundhati Bhattacharya and RBI Governor Raghuram Rajan, got together to stymie the proposal — finally forcing the state governments to settle for a rescheduling of the loans.
• Prime Minister Narendra Modi made the first pitch at a UP elections 2017 political rally where he said, “I will make sure that the first cabinet decision after forming the government in Lucknow is to waive farmers’ loans. That pronouncement cast the die for UP, a state already struggling under a huge debt burden, writing off farm loans aggregating Rs 36,359 crore,  up to Rs 1 lakh for about 21.5 million small and marginal farmers.
• Urjit Patel, RBI Governor, has voiced concern publicly over the latest loan waiver — saying it engendered a moral hazard and undermined the honest credit culture. As a matter of policy, nationalized banks do not write-off loans. The states will have to repay them on behalf of the farmer.
• There does exist a distinction between farmers owning five acres of land and farmers owning land more than five acres. Such a distinction is not per se discriminatory. No one has a right to get a waiver of the loan availed by him. 
• Hardly 30% of the farmers access institutional credit. A large section of those who access credit from banks are large farmers. Most small and marginal farmers took private loans as the process of obtaining institutional credit was cumbersome. 
• The UP Govt wants to finance this waiver by issuing state backed farmers relief bonds issued by a state organisation, which the govt repays at a later date. Such a large waiver scheme would negatively affect the state budget deficit levels, endangers its credibility and makes it tougher to obtain loans in the future. But Govt bonds are not debts in the state budget and do not affect the fiscal deficit significantly. At present, UP’s estimated fiscal deficit is Rs 41,400 crores.
• Development economists feel farm loan waivers are short-term measures, but are nevertheless necessary in times of severe drought or floods. However, they said that there was a deeper systemic problem that has pushed farmers strongly into the debt cycle.
• The price for farm produce has stagnated over the years. On the other hand, cost of agricultural inputs have soared. This has drastically pushed up the cost of production. For example, after decontrolling fertilizers in 2010, the cost of a few fertilizers have gone up over 1400%. Whereas the Minimum Support Price for paddy has gone up a mere Rs 470 or 68% in the same period. Unless the government reduces cost of production and increases agriculture profit, farmers will remain caught in the debt cycle and the cycle of farm loan waivers would be inevitable.
• The waiver of farm loans was not wrong in a situation where a debt-ridden farmer is debilitated by climatic conditions. The writing off farm loans adversely affecting the fiscal situation in states is small compared to subsidies doled out by govt for the corporate sector which is not seen as a burden.

What ever can go wrong, has gone wrong with rural India.

If a free society cannot help the many who are poor, 
it cannot save the few who are rich ... John F. Kennedy

Government's view of the economy in a few short phrases: 
If it moves, tax it. If it keeps moving, regulate it. 
And if it stops moving, subsidize it ... Ronald Reagan

My View:

Today in India farm holdings are largely fragmented with 90% farmers owning or cultivating less than 5 acres. The anti farmer government policies on fertilizers & support prices, bankers reluctance to lend aggressively to farmers, rampant adulteration of seeds & pesticides, labour issues arising out of MNREGS, erratic irrigation & agriculture power supply, climatic uncertainties and menace of middlemen in procurement of farm produce have resulted in once profitable agriculture activity into a non-remunerative activity. Improper storage facilities, badly implemented crop insurance schemes are bane to farmers. Lacking skills & capital, farmers are  trapped in agriculture permanently, irrespective of viability. Most government promises are just eyewash and at times of crisis farmers are silently left to their fate compelling suicides. In 1980's & 90's farmers availing crop loans were rare just below 10% and today they are over 90%. With reduced incomes and higher interest burden (70% credit is private credit at higher rates) farmers making both ends meet has become an impossibility. 

Farming is livelihood for vast majority of lower classes, less educated, less skilled people of India (who are hitherto not employable in formal sector) and present policies are farming destructive. For a populous country like India, self sufficiency in food grains is a must. India is just self sufficient in food grains only because 40% of its population who are poor are surviving on just one square meal a day. If all rural people drops their non remunerative avocation and migrates to urban areas in search of livelihood it will be catastrophic for nation to face acute food shortage and its weak urban infrastructure will simply breakdown.

In order to ensure decent livelihood for farmers and at the same time ensuring cheap and affordable food to all spectrum of poor people of country and in the absence of reliable inputs, crop insurance and marketing systems etc it is imperative to provide at least 60% of entire crop expenses as subsidy, 40% paid at the beginning of season and final 20% after verification of before harvesting as direct credit into their bank accounts. This subsidy can be rationalized as reliable systems develop and come into operation. This is not to save or enrich farmers but to stay put farmers in non remunerative agriculture and averting the nation from food crisis. 

Until then periodic farm loan waiver schemes is a necessity and inescapable, no matter what our insensitive economic pundits from air-conditioned ivory towers say.

Modi, the Prime Minister of Gujarat & UP

Centre announced waiver of farmer loans in UP in fulfillment of Modi's election promise in the just concluded UP Assembly election winning with huge majority, at an expense of Rs.50,000 crores. BJP is still unable to finalize CM candidate and new government yet to be formed and union agriculture minster announced in parliament that central government will pick up the bill. While helping distressed farmers is appreciable the same would have been for all farmers in the country, not just UP.

• This is in contradiction of Centre's outright rejecting the demand of AP & Telangana government's request, 3 year ago, for RBI & Banks assistance in rescheduling the loans and eventual waiver by state governments citing banking norms and credit discipline.
• Farmers are in distress and debt ridden in the entire country, not just in UP. This Centre's loan waiver for UP only is grossly discriminatory.
• Going forward, farmers will never pay back loans, even if they can, awaiting waiver in next elections within 5 years.
• This will destroy public sector banks, which are already saddled with over Rs. 6 lakh crores NPAs mainly due to defaults by industrialists.
• Just 3 days ago, SBI Chairman Arundhati Bhattacharya said such sops may disrupt credit discipline among borrowers.

Apart from plethora of issues being faced by farmers, the foremost & utmost is the MSP (Minimum Support Price) of Centre which doesn't even cover expenses where as logically MSP should cover all expenses plus 50% profit margin for decent farmer livelihood. Lower MSP enables produce buyers to buy below MSP prices pushing weak farmers into distress and debt ridden. Mechanism must ensure that farmer is enabled to sell his produce at above MSP, which was forgotten several years ago. Other problems are non-timely availability of fertilizers and substandard seeds, pesticides, non availability of labour due to MNREGA, storage facilities etc. Erratic rains compounds farmers risk. Crop insurance with easy process of claims is a must.

Crop loan waiver has a major devastating effect of non availability of bank credit in future with fear of non-recovery and farmer will slip into hands of ruthless money lenders with interest rates 4-6 times bank rates. Today only 25% farmers (who are owners of land only) gets bank credit for crops and it must be ensured all farmers whether land owner or not must get crop loan if he is genuinely cultivating. Unless all these issues are resolved within short time frame, farmers will continue to be in distress and nation's future food security comes under threat. And uncontrolled rural to urban migration will not only increase rural distress but also stresses weak urban infrastructure.  

The practice of attending farmers issues once in 5 years during election and forgetting them thereafter must be stopped. It must be on year to year basis at budget time and uniform for all farmers of the country.

My View:

Farm loan waiver and rural focus are policies of Congress, never of BJP. Now I see BJP shifting towards rural issues and copying Congress. Anyway, 70% of population are rural & agriculture based and can't be ignored by rulers. All constitutional office bearers must remember that they are oath & constitution bound, not their election promises which are often senseless and mindless.

Modi, Jaitley & RBI have forgotten all the rules, regulations & principles cited while rejecting cooperation to AP & Telangana for farmer loan rescheduling & eventual waiver by state governments where as now centre waiving UP farmer loans without even being asked by UP Government is height of their arrogance & stupidity and doesn't go well with preservation of unity & integrity of India. Centre's discriminating attitude between states ruled by BJP and non-BJP will ignite north-south divide apart from being unconstitutional, illegal and violation of oath. Shamelessness & arrogance at its peak with Modi reducing himself as Prime Minister of Gujarat & UP.

14th finance commission has not made any provision for this type of money transfer from centre to UP and Budget 2017 has no mention about this item at all. How will this be done? When centre could do UP farmer loan waiver without budget & 14th Finance commission provision, why cant it grant special status to AP as promised while passing AP Reorganization Bill in Parliament in 2014? Any answer from Modi, Jaitley, Venkaiah Naidu etc? They won't answer because they are answerable to none.

PS: Unless rules are modified restricting spending money strictly as per provisions of approved budget and discretionary spending money is restricted only during war & natural calamity times by executive orders, irresponsible and unmonitored spending through banks and PSU's will go un-audited by CAG and unnoticed by parliament and is detrimental to fiscal discipline.