A National Bank for Agriculture and Rural Development (NABARD) sponsored study on the impact of farm loan waivers in India has called for the creation of a real-time dynamic distress index of farmers. Stating that indebtedness is more a symptom of farmer distress than its immediate cause, the study concludes that farm loan waiver is more of a quick fix than a permanent solution and hence technology enabled targeted approaches to identify and address farmers' issues like a real-time distress index should be tried out.

The report, prepared by researchers Shweta Saini, Siraj Hussain and Pulkit Khatri, says the index can integrate the available high-frequency data on weather conditions, existing and upcoming climatic conditions, debt burden on farmers, data on agricultural commodity prices, etc., and monitor them on a real-time basis to track and predict the level of farmer distress.

"Technology breakthroughs like use of space technology, AI and blockchain in agriculture can be harnessed to bring dynamism and credibility to the system. Results from this index can be used by the policy makers to plan and design a timely and targeted method of supporting distressed farmers. Depending on the kind and severity of distress, the support can be given as a combination of unconditional grants, loan restructuring and/or a complete loan waiver. This type of data-backed real-time intervention will not only help alleviate distress of farmers, but will also provide governments with much needed policy bandwidth to effectively time and plan a targeted, and efficient policy support for the distressed farmer," the study concludes.

According to the researchers, the farm loan waiver should be reserved as a tool "as it was originally designed to be: a one-off event meant for situations of extreme plight like severe and widespread drought or flood". "It was to provide temporary relief to the distressed farmer until underlying conditions improved. Therefore, rather than relieving all the borrowers, irrespective of the distress levels, from their responsibility to repay the loans, the governments should instead nurture a healthy credit culture and invest in farmers and their farming so as to empower them via a robust ecosystem that helps him grow in a sustainable and a profitable manner," the study points out.

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