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Farm Loan Waivers Are ‘Problematic’, Help Very Few Farmers: Raghuram Rajan Denounces Rahul Gandhi’s Poll Promise
Former RBI governor Raghuram Rajan. (Flickr/IMF)
Former Reserve Bank of India (RBI) governor Raghuram Rajan on Tuesday (26 March) stated that farm loan waivers are ‘problematic’ and that they do not help in relieving the burden off marginal farmers, reports Business Standard (BS).
“...I have always said that farm loan waivers are problematic and various bankers have also opined that it kills the credit culture. It's very difficult to lend to those people once again. So they also suffer in credit down the line even though they may get some short-run benefit. So those are my objections," he said.
He said that loan waivers were ineffective because they targeted only those farmers who have taken loans from the system and leaves behind those more impoverished farmers who take loans from the money lenders or agricultural workers who never get a loan in the first place.
Earlier a Niti Aayog Member and agriculture policy expert Ramesh Chand had echoed similar sentiments. “The biggest problem with loan waiver is that it will benefit only a small fraction of farmers...I am not at all in favour of loan waiver," he had said in an interview.
Waiving Off
As of January 2019, at least 11 States have announced schemes to waive outstanding farm loans: Madhya Pradesh, Uttar Pradesh, Karnataka, Tamil Nadu, Maharashtra, Chhattisgarh, Punjab, Andhra Pradesh, Telangana, Assam and Rajasthan. Opposition parties rule most of them.
Also, as part of his poll campaign, Congress President Rahul Gandhi recently announced a nationwide farm loan waiver if voted to power in the 2019 general elections.
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