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

DebtSubscribe to Debt

Farmer Suicides in Punjab

The article is based on a primary survey carried out to ascertain the magnitude and determinants of deaths of farmers by suicide in six districts of Punjab. It recommends the provision of financial compensation to victim families, waiving of debt, and strengthening of public healthcare and education system as the main policy measures for addressing this tragic phenomenon.

Impact of Public Debt on the Economic Growth of Subnational Economies in India

This study examines both the short- and long-run impact of public debt on the economic growth of Uttar Pradesh during the post-reform period of 30 years by employing the vector error correction model. The empirical analysis revealed that the increase in public debt-to-gross state domestic product ratio and interest payments burden would have an adverse impact on the long-run economic growth of UP, while having no significant impact on the short-run growth. It is also notable that the effective interest rate has negatively correlated with the gross capital formation in UP, and the latter has shown significant positive long-run association with the economic growth. In order to attract investments and economic growth, the state Government of UP should continue a countercyclical fiscal stance that would help in adhering to fiscal sustainability rules by smoothing out the repercussions of the COVID-19 pandemic.

The Renewed Fear of Bad Debt

The evidence of a decline in the non-performing assets ratio in India’s banking system points to a significant improvement in the health of banks. However, this may have occurred partly through the use of write-offs that erode the capital base of banks and also because of the time-bound moratorium on debt repayments announced as part of measures to address the effects of the pandemic on small units and other selected borrowers. In the circumstances, even though new pandemic-linked lending to micro, small and medium enterprises was partly guaranteed by the government, a rise in the NPA ratios and further erosion of bank capital seem inevitable.

Surviving Debt and Survival Debt in Times of Lockdown

This research has been made possible due to the financial support of the Agence Universitaire de la Francophonie (AUF), through the COVINDIA project, which combines food distribution to villagers and a survey of villagers’ survival tactics and strategies. For more details, see https://odriis.hypotheses.org/projects#covindia . We sincerely thank Barbara Harriss-White, Judith Heyer, Solène Morvant-Roux, and Jean-Michel Servet for their helpful comments on an earlier draft.

Suicide by Maharashtra Farmers

The present paper relies on the census survey of the suicide-affected farmers’ households from the two most vulnerable districts of Maharashtra from 2014 to 2017 when the largest number of farmers’ suicide cases was reported after the 2008 farm debt waivers. A complex mix of social, economic, and psychological factors play their role in translating into farmers’ suicide. The study covers the districts of Usmanabad from Marathwada and Yavatmal from the Vidarbha region of Maharashtra, respectively.

States’ Debt Burden Surges to a 15-year High

Strengthening the pandemic-devastated state finances will help boost both welfare and growth.

Government Policies Drive Farmers to Penury

Ironically, agricultural households now earn “more” income from wages than from crop farming.

Asset Reconstruction Companies and the Bad Debt of Indian Banks

The finance minister’s Budget speech 2021 revealed the government’s plans to establish an Asset Reconstruction Company to take over bad debt from the books of public sector banks for eventual disposal. That suggests that the ARC route rather than recapitalisation would in the coming months be the main means of refurbishing capital in the public banking system. Since there are as many as 28 ARCs already in existence, the reason why the creation of one more would resolve a problem that is expected to worsen over the coming year is unclear. In fact, past experience indicates that ARCs have not helped enhance the actual recovery of lock-up in stressed assets. This suggests that the move is a means to postpone the problem of bad debt resolution so as to avoid having to recapitalise the banks with budgetary resources, which would widen the central fiscal deficit.

Economic Ideology for Well-defined Policymaking

Wonked! India in Search of an Economic Ideology by Vivan Sharan, New Delhi: Bloomsbury India, 2019; pp 320, ₹ 599.

Lucrative Defaults by Hungry Corporates

The implementation of the Insolvency and Bankruptcy Code, 2016 has led to aggressive competition to acquire firms that have been subjected to the resolution process. This suggests that the default that required the creditors to bring these firms to the National Company Law Tribunal was not due to poor fundamentals. Moreover, the decision of the original promoters to try and enter the fray as bidders for defaulting firms indicates that they too do not see the firms and the activities they are engaged in as unviable. Yet, there is much pressure on the government to favour those who seek to game the system.

Should States Target a 3% Fiscal Deficit?

India’s current fiscal rules target a 3% fiscal deficit for the central and state governments. Though states have largely adhered to their borrowing ceilings, subnational debt is proliferating. A significant reduction in subnational borrowing is required to stabilise the states’ debt around the desired level of 20% of gross domestic product. Symmetry should not be forced on central and state borrowing flows, given their widely divergent levels of debt stocks.

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