Cascading effect of farm loan waiver is considered one of the most hazardous appeasement in present economic scenario.
This year after the huge victory, Yogi's UP govt waied off 36000cr farm loan. Maharashtra is lining up for 35000 cr waiver apart from that Devendra fandavis is also planing to give 10000 rs for every farmer has 5 acer or less land holding which will cost around 6000 cr rupees. Madhya Pradesh govt is intend to follow the same trend.
Center is planning to give interest subsidy worth 20000cr.
All of these adds up to 97000 cr rupees.
If this trends continues and all states waive farm loans it will be around 2.75 lakh crore rupees 2% of India GDP.
The World Bank reports says 'Loan waiver scheme had no effect on productivity, wages or consumption. It led to an increase in default among borrowers that were previously in good standing.'
ICRIER says 'Generalized debt relief, discourages prompt repayment with expectation of more such waiver'.
But for the matter of fact no such voice is being heard about corporate loan waiver no group of intellectuals or economists shown concerns over the corporate loan waiver issue
Total write offs of corporate loan bet 2012 to 2016 is 2.25 lakh crore according to RBI in TOI approximately equal to farm loan waiver for 4 years. Estimated future corporate debt write off as per the report of India Rating Report 2016 is rupees 4 lakh cr debt by 85 companies.
Total corporate loans is 28 lakh crore rupees viz a viz total farm loan is 12.6 Lakh crore but percentage of stressed farm loan is 17% which is around 2 lakh cr rupees relative to stressed corporate loan which is also a close fig of 18% around 5 lakh cr rupees. But their is always a brouhaha about the deficit cause by farm lan waiver. Are the farmers in any which way some less productive businessman of the country? Or the agriculture is something this country doesn't care about and can be replaced easily? If not, then why economists worldwide raise eyebrows on any such decision?
