Of loans and votes
Demands for writing off farm loans are once again in vogue—and, as expected, politicians across the country are more than willing to concede ground, no matter that it is fiscally irresponsible to do so. Such waivers and interest rate subventions are little more than political gimmicks.
Loan waivers offer little relief to the needy, as studies by the Reserve Bank of India and Associated Chambers of Commerce and Industry of India, among others, have shown. And they erode the sector’s credit culture, burden the exchequer and, finally, distract from the actual reforms that agriculture desperately needs.
Yet, on Thursday, the Union agriculture minister confirmed that his party will keep its promise to Uttar Pradesh voters and waive farm loans in the state. It will probably do the same in Uttarakhand as well. No surprise, this has already sparked similar demands in Bharatiya Janata Party-ruled Maharashtra, even though the party hadn’t promised any waivers there, as well as in Karnataka, where the Congress is in power. This way lies blatant fiscal irresponsibility.