Interest-free working capital support is a short-term palliative for cash-crop distress. Critically examine with reference to FCV tobacco growers.

Flue-Cured Virginia (FCV) tobacco, grown mainly in Andhra Pradesh and Karnataka, is an auction-traded cash crop outside MSP. The Centre's one-time interest-free working capital assistance of ₹50,000 per barn to about 44,000 AP growers — roughly ₹220 crore, paid by DBT — eases an immediate cash crunch, but leaves the structural sources of distress untouched [1].

Merits: why the support is justified

• Liquidity bridge: given mid-season, with about 100 million kg auctioned since March 2026, it funds household needs, repayment of institutional loans and inputs for the next crop [1].
• Crowds out moneylenders: it replaces high-cost private borrowing with zero-cost credit for the marketing gap [1].
• Clean delivery: DBT to the barn holder limits leakage and intermediaries [1].
• Proportionate: growers cannot negotiate shifting global demand or trade barriers; ₹220 crore is modest against tobacco exports of ₹12,005 crore in 2023-24 [2].

Limits: why it remains palliative

• Advance, not transfer: the 2023-24 precedent of ₹10,000 per grower was recovered from the grower's own auction sale proceeds [3]; the real public cost may be only forgone interest.
• Exclusion by design: the benefit follows the barn licence, so growers without barns, unregistered growers and hired curing labour — the most credit-starved — are outside it [1].
• Moral hazard: the Tobacco Board fixes crop size per barn, yet excess and even unauthorised tobacco has repeatedly been allowed sale penalty-free [4], encouraging the oversupply that relief later cushions.
• No exit path: transfers cannot restore price realisation (2023-24's record ₹288.65/kg [2]) nor fund diversification, which WHO FCTC Article 17 obliges India to promote and which remains among the treaty's least-implemented provisions [5].

Interest-free assistance is thus a necessary shock absorber rather than a cure; repeated across stressed seasons, it risks becoming the sector's business model. Pairing it with quota discipline announced in advance, stronger export facilitation, and an optional diversification payment linked to surrender of barn licences from the Grower Welfare Fund would convert episodic relief into durable farmer resilience, reconciling livelihood security with India's tobacco-control commitments.