When the TVK won a surprise victory in Tamil Nadu earlier this year, it was attributed to a yearning for a change from the established pattern of politics. One of the first things the TVK government did was issue a White Paper on the state’s fiscal situation. Despite being one of India’s most developed states, Tamil Nadu’s finances are far from enviable, especially when it comes to its own tax revenue mobilisation and debt. White Papers, however, cannot restore fiscal health on their own. While they are often a useful tool to berate political predecessors in government for the state of the exchequer, the future of the fisc is determined by the government’s current actions. It is in this context that the TVK government’s conditional farm loan waiver is disappointing, signalling more than its actual impact. The waiver, announced on the 100th day of the TVK government, is limited to cooperative bank loans and will cost just about ₹1,000 crore to the government. Coming in the middle of an ongoing dispute with Karnataka over sharing of Cauvery water because of low rainfall this year, this might be the government’s olive branch to the state’s farmers who are angry about water shortfall.
Pragmatically, it makes sense. But pragmatism often settles into status-quoism, creating drag on factors like the state of government finances. When a political debutant succumbs to such tactics, it indicates a lack of political imagination and conviction over heralding a new political economy deal. This is where Tamil Nadu’s farm loan waiver is disappointing, despite its small fiscal impact or the relief it will bring to farmers.
