Farm loan waiver tops Yogi Adityanath govt’s agenda in Uttar Pradesh
- L&T CFO R Shankar Raman: Don’t see private sector coming back for the next couple of years
- MakeMyTrip CEO Rajesh Magow rejoins Flipkart board after 2 years
- Opening bell: Asian markets open mixed; Tata Sons in news
- Indian economy in a tailspin: What went wrong
- Rural inflation much higher than urban in the last three years
New Delhi: Sticking to its electoral promise, the Bharatiya Janata Party (BJP) government in Uttar Pradesh (UP) under chief minister Yogi Adityanath is giving top priority to farm loan waivers.
Once implemented, loan waivers would mitigate the debt woes of the farmer, but pose a fiscal burden on the state government.
Senior ministers in the Uttar Pradesh cabinet said the government was already in touch with the Union finance ministry to discuss the modalities of the farm loan waivers promised during the polls. Uttar Pradesh has been one of the worst-hit states due to two consecutive years of drought in 2014 and 2015 that worsened rural distress.
“We are committed to farm loan waiver. Prime Minister Narendra Modi made the commitment and we will come out with a detailed plan on farm loan waiver. We are in touch with the Union finance ministry,” said a senior cabinet minister of Uttar Pradesh, on condition of anonymity.
However, finance minister Arun Jaitley made it clear on Thursday that the fiscal onus of such a loan waiver will be on the states. Replying to a question in Rajya Sabha on who would foot the bill of debt waiver promised by some state governments, Jaitley said the Centre has its own schemes under the budget to support agriculture and will not fund the waivers promised by the states from central funds.
“States have to find their own resources to support farmers. It will not happen that the Centre will help one state and not help another state,” he said in his reply to the budget debate in Rajya Sabha.
A recent report of State Bank of India (SBI) said the Uttar Pradesh government will need Rs27,419.70 crore to waive off loans of farmers. The last big farm loan waiver took place in 2008 when the United Progressive Alliance announced a Rs60,000 crore debt waiver package for small and marginal farmers. A loan waiver has many adverse consequences, besides the fiscal hit to the exchequer. For one, it encourages farmers to delay or default on loan repayments in the hope that the government will announce another waiver.
After the 2008 waiver, many bankers complained about rising loan defaults in the agricultural sector even when there was a good harvest. SBI chairman Arundhati Bhattacharya recently flagged the negative effects of a loan waiver on the credit repayment culture among farmers.
Also, it goes against the National Democratic Alliance’s philosophy so far of empowering the poor rather than handing out economic entitlements.