ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Short-sightedness of Farm Loan Waivers

The deep-rooted agrarian distress necessitates effective long-term solutions.


With the politicisation of the farm crisis largely driven by electoral exigencies rather than any normative considerations, farm loan waivers have become a favoured policy choice of governments to address the agrarian distress. The farmers had demanded loan waivers to deal with increasing indebtedness and suitable mechanisms to ensure stable and remunerative prices for their produce, given that vulnerability to price movements and the incidence of falling into a debt trap have been high. This has been further exacerbated by uncertain weather conditions.

The Mahatma Jyotirao Phule Farm Loan Waiver Scheme announced by the newly-formed Maha Vikas Aghadi government in Maharashtra is the latest scheme that aims to waive off farm loans up to₹ 2 lakh issued from 1 March 2015 to 30 September 2019. The government hopes to implement this scheme within three to six months. Although in the middle of the electoral cycle, the preceding government had also announced a loan waiver scheme amounting to₹ 34,044 crore in June 2017, in order to provide relief to 89 lakh farmers across Maharashtra after statewide farmers’ protests. But, the implementation of this scheme was hampered by the complexity of eligibility conditions, tedious online procedures and staggered payments of money from the government to the banks. These factors had complicated the process of claiming the waiver.

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Updated On : 7th Jan, 2020
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