‘Loan Waivers Encourage Defaulters, No Such Scheme Being Considered Right Now’, Clarifies Centre

Union Minister of State for Agriculture Parshottam Rupala. (pic via Twitter)

Despite the BJP’s loss in three state elections and the Congress’s promise to waive farmer loans, Union Minister of State for Agriculture Parshottam Rupala clarified that the Central government was not considering any further farm loan waivers any longer, reports The Hindu.

During his election campaign speeches in Madhya Pradesh and Chhattisgarh, Congress president Rahul Gandhi had promised to waive farmers’ loans within ten days of coming to power.

In reply to Shiv Sena MP Bhavana Gawali Patil, Rupala said that the Central government is not considering any loan waiver scheme for farmers for now and listed out the adverse effects of doing so.


“Such waivers may impact the credit culture of a state by incentivising the defaulters even if they are in a position to repay the loan and thus create/amplify the moral hazard by discouraging those borrowers who have been regular in repaying their loans,” he said.

“Further, each waiver granted makes it even more difficult to reject any future similar demand,” he added.

He, however, admitted that the primary cause of suicides according to the National Crime Records Bureau’s data was debt and farming-related issues. He further added that the Centre has initiated and will initiate measures to reduce the debt burden and making credit more readily available to farmers.

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