Gujarat had witnessed great agricultural growth followed by agrarian distress with the approach of elections. The Congress has promised farm loan waivers but the ruling BJP has pledged to make agricultural loans interest free and that only for financial years 2015 and 2016. The gross value added by the agricultural sector contracted indicating that the states phenomenal agricultural growth had been belated. Deficient rainfall has been a factor. Cotton has suffered a setback especially in the last decade. Small and medium manufacturing enterprises in Gujarat have taken a hit owing to demonetisation and the introduction of GST. Gujarat faces the same economic challenges as other states consequently. The poll issues in Modi’s home state are a national challenge.
India has experimented repeatedly with farm loan waivers with Sonia Gandhi spearheading the initiative. But it has in the long run proved counter- productive. Both farmers and the macro-economy have been adversely affected. Fall in the growth of cotton cannot be counteracted by eliminating interest on loans. More effective and permanent solutions are necessary. The state should come to the rescue of farmers by providing them access to new varieties of seeds. SMEs provide the majority of jobs and should be freed as much as possible from the stranglehold of regulation. Gujarat in the last decade provided an exemplary economic model. The Congress promise of farm loan waivers may not cut any ice with PM Narendra Modi on the campaign trail attacking the Congress for not highlighting a development agenda.