Uploaded February 2019 | Updated September 2026, 1 hour ago
Waiving off agricultural loans by state governments has assumed great political appeal in India. During the last year, several states in India have cancelled such loans. Political parties are displaying rare unity in striking off loans for appeasing distressed farmers.
This lecture argues that farm loan waivers are not a solution to the long-term objective of raising farmer incomes and alleviating rural distress. On the contrary, the populist race-to-the-bottom set off by waivers can have adverse implications including affecting balance sheets of banks and reducing credit flow to farmers.
The lecture identifies and characterises the issue as a governance problem and point to the imperative of institutions and markets working together for enhancing economic prospects of farmers in India.
Waiving off agricultural loans by state governments has assumed great political appeal in India. During the last year, several states in India have cancelled such loans. Political parties are displaying rare unity in striking off loans for appeasing distressed farmers.
This lecture argues that farm loan waivers are not a solution to the long-term objective of raising farmer incomes and alleviating rural distress. On the contrary, the populist race-to-the-bottom set off by waivers can have adverse implications including affecting balance sheets of banks and reducing credit flow to farmers.
The lecture identifies and characterises the issue as a governance problem and point to the imperative of institutions and markets working together for enhancing economic prospects of farmers in India.
