The idea that the loan waiver won the hustings is not very bright. The loan waiver was not NREGA, which only had winners and even if some didn?t like it, villages are moral places and so the biradri won?t oppose employment. But the loan waiver had some winners and some others who were left out. Also, there was probably a regional slant. The loan waiver clearly didn?t work politically in most areas where we have the semblance of financial institutions which work well. And in areas where it worked the reason was probably that other things were not working and this was in effect a subsidy.
Dilliwallas getting sound bites from a raw MP will go to town, because their favourite theories didn?t work and so we cling to straws. But actually, in areas where we have established financial institutions like cooperatives, we had reported last year the discomfiture with the loan waiver the way it was. There was a cut off point and many in the dry areas thought it was unfair. In particular, those who had repaid their loans were not too happy.With the experience of the VP Singh loan waiver, almost everybody knew that the cooperatives would suffer and loans would be more difficult. Maharashtra has the strongest cooperative structure and we had reported the lukewarm response from there.Look at the results.In Ahmedanagar the BJP won. At Hattindale in Kolhapur the Shiv Sena won, also in Shirur, Satara and Aurangabad. This is classic cooperative territory. There are similar stories from Vidharbha(Jingoli and Raver), from Parbhani and Bhandara and from Beed, Jalgaon and Dhule close to the Gujarat border. In Gujarat, the Congress lost many of the strong cooperative areas to the BJP and in many seats where veteran Congressmen like Atma Ram would have won they lost.I know of the disquiet in these areas personally.
In UP, the story is probably different as also in some other parts of North India. I am reminded of an MP telling me in Barabanki last November that a higher sugar price was needed for marriages to be successful. Here though the big winner was the NREGA.
The more important question is, why we think that the loan waiver was a big success as a political measure? I would suggest that there is a larger paradigm problem and a detailed political economy policy question. The larger paradigm problem is that it is becoming very difficult for many people to accept that in this election Rahul Gandhi called the shots ideologically. He raised in his civilised way, the real issues of inclusiveness as the basis of security and development and he did it there where it mattered. People were responding we argued from the areas we went to, and there is an invisible network which our pundits miss out in all elections.
The loan waiver argument was very important is a last desperate attempt to show that their explanation is still important. This is like every economist having his own graduate school theory about why India develops rather than the reality. The policy question is that a loan waiver if it has to be successful has to be a part of a development design. It must not choke the channels of credit in the way the VP Singh loan waiver did and Dr Manmohan Singh couldn?t repay the cooperatives until 1996. This destroyed their balance sheet. In the late eighties the loan waiver was prepared in advance, the cooperatives were compensated and the credit scheme was a part of an agroclimatic package development.
The Congress did reasonably well inRajasthan, Gujarat and other areas where the drought had eroded paying capacities. The issue in Vidharbha and in the tribal areas of Parbhani, Jalgaon and Dhule is development strategies and not very unproductive or even suicide prone agriculture. The sugar belt in Maharashtra or the cooperative belt in Gujarat is not to be taken by symbolism.
I have nothing against loan melas as an individual. It won?t work in developed and diversified agriculture. For others, as I say if you don?t have a policy strategy for agriculture it is the best fallback. But let?s not kid ourselves on it being a political bonanza or a solution to our problems.
?The author is a former Union minister. Email: yalagh@gmail.com