No loan waivers for 40% eligible farmers in three key states: Nabard study
What is the news :
- A joint study by Nabard and producer group Bharat Krishak Samaj has found that in the three states of Uttar Pradesh, Punjab and Maharashtra, which had loan waivers in place since April 2017, almost 40 per cent of highly distressed farmers’ had not received any benefit from the waivers.
- The study also found that waivers increased chances of willful default by farmers; 72-85% of respondents felt that they pushed honest farmers to default on farm loans
Background :
- A farmer in India is plagued with multiple challenges that makes farming a highly risky business.
- To alleviate the hardships of the farmers, a popular political policy choice has been Farm Loan Waivers (FLW). Since 2012-13, 13 states and UTs have implemented farm-loan-waiver schemes; some states have done so more than once.
- More states are likely to follow suit as they go for assembly elections in 2022 onwards.
- Farm loan waivers are expensive; some states fund their waivers by reducing allocations in their capital outlays while others increase their expenditures pushing up their fiscal deficit (data from RBI 2018). Growing number of political parties are finding it expedient to promise farm loan waivers particularly closer to election time.
- Not much thought is given to the fiscal, economic, and even the social impact of FLWs on the economy, particularly on the credit culture. Therefore, it becomes necessary that concrete evidence in this regard is collated, and analysed. This study attempts to do that.
About the Project
- The primary objective of the Project was to analyse the motivation, design, implementation and impact of farm loan waiver (FLW) schemes in India.
- This has been done using primary and secondary data.
- The study focuses on the impact of FLW on farmers, on the economy, finances of the state governments, and banking and credit discipline.
- As stated before, the survey of farmers was conducted in three states- Punjab, Uttar Pradesh, and Maharashtra.
Benefits of research :
- The learning from this entire research will be useful for governments to understand factors that cause distress to farmers and will enable them to formulate policies targeted to alleviate distress of farmers. This should also help governments take informed decisions when formulating future farm loan waiver schemes.
- The study also helps in creating, for the first time in India, a comprehensive document on farm loan waiver schemes.
- It will contribute to developing a deeper and more scientific understanding of the ground realities on the issue of impact of farm loan waivers on the agriculture sector, the banking sector and the overall economy.
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About NABARD :
- National Bank for Agriculture and Rural Development(NABARD) is an apex regulatory body for overall regulation of regional rural banks and apex cooperative banks in India.
- It is under the jurisdiction of Ministry of Finance, Government of India.
- NABARD Formation: July 12, 1982
- NABARD Headquarters: Mumbai
- Chairman – Govinda Rajulu Chintala
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