Breaking Peter’s piggy bank to pay Paul
Mumbai city news: Soon after CM Fadnavis announced a loan waiver of Rs34,000 crore for farmers in the state, the State Bank of India flatly refused to entertain the bid to write off these loans.
Desperate times, perhaps, call for desperate measures.
The late Sunil Dutt had once told me about how, abandoned by all friends and financiers, he and his wife Nargis had had to look out for themselves and their children – in small change.
One of his most ambitious – and expensive – films, ‘Reshma aur Shera’ had bombed at the box office. Dutt had put all his savings into the production hoping for good returns. But when these did not come, debtors lined up at his door and would not give him a single quarter. Up until that point they did not realise what it meant to be impoverished. But, then, with three young children growing hungry all the time, they simply had no cash to buy even basic food.
So they began to turn their house inside out, looking under mattresses, back of their wardrobes, turned out all their pockets, wallets and purses and even broke their children’s piggy banks. They actually began to pay for food in loads of bit coins – in those days two, five and ten paise.
I have forgotten how that story ended but, obviously, they made good, for their company went on to make many more films. However, I remember Dutt telling me he knew the feeling of abandonment and desperation right from that time - when the family was again deserted as his son, Sanjay, was first caught and jailed for possessing illegal fire arms. But that is another story.
Now, however, I am reminded of this tale of grace under pressure by the Maharashtra government’s similar predicament vis-à-vis famers in the state. Soon after chief minister Devendra Fadnavis announced a loan waiver of Rs34,000 crore for farmers in the state, the State Bank of India chairperson expressed displeasure and flatly refused to entertain the bid to write off these loans on the grounds that it could lead to a major restructuring issue. Yet, barely a few days later, the chairperson was calling for the restructuring of more than Rs4 lakh crore of debt by telecom companies in the country. One farmer from Dindori, who seemed uncharacteristically aware of the economics of the country, then called me to ask if the government believed only in the rich (like top telecom company owners) and was determined to drive poor farmers like him to suicide or, worse, turn them into Naxalites.
Obviously, the sentiment had been conveyed to government ministers in ample measure – in the immediate aftermath of the strike by farmers, many of their interlocutors returned empty-handed, having failed to persuade the farmers to call off their agitation. The feeling of abandonment might have been complete when Union finance minister Arun Jaitley warned the state government that it was quite on its own and would have to fund the deficit caused by the loan waiver through it own resources.
Uttar Pradesh chief minister Yogi Adityanath, who had announced a similar loan waver soon after he took charge in the state, had proposed to raise corporate bonds to cover the deficit. But that was a plan doomed to failure as is now becoming apparent because no corporate house has ever had sympathy for farmers (remember their bitter opposition to the food security bill?) and, as initial reports suggest, have refused to fund the debts of these annadaataas of the country.
So, like Dutt and his family decades ago, the state government too has decided to scrape the bottom of their barrel and break their piggy banks. In government proportions, they have found enough loose change that they believe can finance these debts – unutilised funds, in some crores, from various government schemes that they had forgotten about and which they have now called in so that banks will not have to bear the loss of the loan write-offs. On the surface, the scheme is innovative – had the government not stepped in and waived off the farmers’ loans, most of them were in no position to repay the banks, which would have had to write them off anyway and suffer losses. Now, at least, they can be assured of the state treasury making good on their potential losses.
But my worry is this could be akin to robbing Peter to pay Paul. Moreover, by most accounts, Maharashtra, which is going into a tailspin on various counts, is headed for mid-term polls in November-December this year. I cannot help but think that the government is just buying time until then to silence both the farmers and the banks.
The farmers could then feel more abandoned than ever— and their desperation could then have unfathomable consequences.
