It is politics, dear, that rules the roost! Once again it became evident that political compulsions, not economics, are the real guiding force behind governance in a democracy like India. 
The Modi government on Wednesday decided to continue the cheap loan scheme for farmers started in 2007-08. It will extend subsidised loans up to Rs 3 lakh to those farmers who make timely payments. Farmers have to pay an interest of 4 per cent and the rest 5 per cent will be borne by the Centre.
Prime facie, it sounds good. But only on Sunday the Finance Minister had indicated that the centre would shun populism and tread on the path of financial prudence. He had told the state governments in very certain terms that if they wished to waive farm loans off, they had to mobilise the resources required for it on their own, and that the Centre would not come to their rescue.
However, only 72 hours had passed and the Centre decided to subsidise the farm loans – with an intension to assuage the feelings of enraged farmers. In the backdrop of farmers’ agitation in the BJP ruled state of Madhya Pradesh, which is threatening to spread across the country, the Union cabinet’s decision assumes more significance than usual. 

The Reserve Bank Governor Urjit Patel had recently cautioned about the fiscal deficit getting out of control if states kept waiving farm loans off. SBI chairperson Arundhati Bhattacharya has also said that the sops to farmers put pressure on banking system. The alarming picture presented by central bank and other PSU banks had prompted the Finance Minister to exercise financial discipline, but the political considerations forced the hands of the Centre to continue the scheme of farm loan subsidy. 
However, this is a temporary measure. It cannot go a long way in alleviating the conditions of farmers. The centre must try to address the real issues plaguing the farming sector. The real problem is that farmers do not recover even input cost of their crops. In a double whammy for them, if crop yields are less, they obviously suffer and if they produce bumper crops, prices start plummeting. Unlike other industries, farmers do not have control on selling prices of their produce.
Although the Centre has fixed the minimum support prices of certain crops, farmers are forced to sell their food grains below the fixed prices. Most of the farmers cannot afford the cost of storage and wait for the time when prices soar up. The cost of transporting perishable items to mandis is sometimes more than what they actually fetch in the marketplace.
Then what is the way out of this quagmire? Will the government keep on resorting to short term measures to meet the exigencies as is visible today? If we have to address the issue for once and all, the government has to come out with a proper policy and mechanism to ensure that farmers get profits out of their occupation. Implementation of Swaminathan Commission report, which has recommended an MSP by adding 50 per cent more in the input cost, could be one of the measures to mitigate the miseries of farmers. 
It is common sense that if a business runs into losses, there is no point in continuing with it. However, the irony is that farmers do not have other options but to engage in farming despite losses year after year.  Failed crops or bumper crops, it is farmers who bear the brunt and get caught in debt traps which results into suicides. 
The BJP had recognized issues haunting the farming sector well. This is why its prime ministerial candidate Narendra Modi had promised during the 2014 election campaign to implement the Swaminathan Commission report. However, after coming into power, his government put the issue on backburner. With the government terming the MSP which is 50 per cent more than the input cost as impractical before a bench of Supreme Court in February 2015, it raised the doubts about its intensions too.
The government still says it will double the income of farmers by 2022. But the billion dollar question is that if the government finds profitable MSPs as suggested by Swaminathan Commission impractical, how will it double the income of farmers? 
It seems neither the government has a strong commitment nor any long term plans to mitigate the problems of farmers. Given that it had made tall promises to the farmers, the government will come out with measures like interest subsidy as and when exigencies arise in order to save its face. Keeping in mind assembly polls, other BJP ruled states may also go for loan waivers with implicit nod of the Centre.
After all, in an electoral democracy winning elections is more important for a political party than anything else. As the BJP has set the target of returning to the power at the Centre in 2019, it will become imperative for the Modi government to put politics before economics. Thus, politics will rule over the economics. And, this will be real predicament for the country and farmers alike.
 

                                                                              (The author is Executive Editor, Live India TV. Views expressed are personal)