Farm debt mediation for India

How to cite this journal: Author, Date of the post, WMO Conflict Insight, Title of the post, ISSN:

Farm Debt Mediation is hope for Indian farmers in distress, whereas the jargon of Farm Debt Waiver is the prevalent custom. Farm Debt write–off in the banking and finance segment are so common, and the terminology frequently finds a place in the election manifestos. This article is exploring the possibility of Farm Debt Mediation for India.


Farm Debt Mediation enables the Farmers to mediate their disputes with creditors, and the mediation process provides the farmers an opportunity to explain what is or has wedged on their capacity to repay debts and to seek mediation facilities for an outcome that enables and empowers farmers to face the creditor for a structured negotiated deal and to avoid the risk of legal proceedings.

Farm Debt Crisis and suicides

India being an agrarian nation with 70% of the population depending on agriculture, farm debt crisis happen so regularly, due to climate change, policy change, input cost surge, monsoon failure, and mental health issues. Over 12000 suicides were reported due to the same every year since 2013. Of the total suicides, 10% are from the farming communities. NCRB data points out that 2474 suicides out of 3000 farmer’s suicides in 2015 are the victims of unpaid loans from local banks in India.

Farm Debt Waiver

Farm Debt Waiver schemes do benefit the farmers, but it often ends with severe issues including a selection of beneficiaries and impact on creditors. Farm Debt Waiver schemes are self-defeating, as it destroys the credibility of farmers and their repayment history. In the end, such schemes affected the flow of credit to the farming sector and demolished the credit market in the farm segment of India.

Farm Debt Mediation – A solution!

The significant argument of this article is for a policy change from Farm Debt waiver to Farm Debt Mediation. Rising farm debt in Australia enabled them to initiate Farm Debt Mediation is an indicator towards the future for farming communities in any nation. In 2008, in Queensland, various rural groups and a number of banks executed a public agreement referred to as Queensland Farm Finance Strategy and Farm Debt Mediation Scheme which are similar to the Farm Debt Mediation Act 2011 of the Victoria, modeled on New South Wales legislation. In Victoria, over 180 Mediations have taken place with 95% of those Mediations resulting in a settlement agreement between parties. The Farm Debt Mediations require the banks to initiate third-party mediation prior to the commencing and enforcement of proceedings against farmers in default of loan facilities.

New Legislation is advocated: – Farm Debt Mediation & Settlement Act

The Farmer Associations in India and the Banking and Finance Consortium, in association with NGOs, can take a lead role in the creation of a platform for Farm Debt Mediations in India. Accredited Mediators with exposure to Farm lending and Rural Finance can be empaneled with the platform, and affordable professional services can be offered at various centers is advocated. This can be facilitated by appropriate legislation by the concerned state governments, considering the geographical situation and financial profile of the farming community and the banking institutions.  We can invite recommendations for the suggested: – Farm Debt Mediation & Settlement Act for the states in India.


Farm Debt Waiver schemes should give way to Farm Debt Restructuring by creating a National Foundation for Farm Debt Mediation cum Arbitration. The proposed Farm Debt Mediation & Settlement Act ideally defines what a Farm Debt is and shall form a National Foundation for Farm Debt Mediation cum Arbitration. The Mediation cum Arbitration envisioned is tripartite including the appropriate government representative to facilitate the process of Debt restructuring by subsidizing the Farmer debt, increasing the tenure, or by reducing the monthly installments due and incentives to prompt Farmers in the reschedule agreement reached in the process of recommendations and submissions to the Mediation cum Arbitration.  This in fact can help the government machinery to do away from the traditional methods of Farm Debt Waiver schemes which are based on political considerations rather than on scientific economic principles and dispute resolution methods. The proposed process can not only help the farming communities to save money and time from the traditional litigation but also get empowered and satisfied in the self–determined and government-assisted tripartite Mediation cum Arbitration process with the creditors.

Leave a Reply