The farm loan waiver race is hotting up.
On Tuesday, it was the Madras high court’s turn with its directive to the Tamil Nadu government to expand its farm loan waiver scheme substantially. It was also the day Uttar Pradesh chief minister Yogi Adityanath delivered on the Bharatiya Janata Party’s electoral promise with the announcement of a farm loan waiver at his first cabinet meeting.
On Wednesday, Maharashtra chief minister Devendra Fadnavis—with opposition pressure to follow in UP’s footsteps increasing—had to buy time by saying that his government would study the UP model and was working on how a loan waiver could be granted. And the Punjab government is considering how to deliver on its own electoral promise of a waiver.
This is, as we have noted before, bad news all around. The UP waiver cost Rs36,359 crore. A Maharashtra waiver would cost Rs30,000 crore. Expanding the Tamil Nadu waiver would add a financial burden of Rs1,980 crore. And pressure on other state governments to follow suit is inevitable. So much for credit discipline.