A study on farm loan waivers in India and way ahead!

Abstract

Agriculture sector plays an important role in emerging economies. For India, we have the agricultural contribution of 17% to the GDP. Thus, farmers have an important role in the growth of our country. But in last few years we have seen that the agriculture sector has been going through the irregular crop production. Nearly 70% of our agriculture is based on monsoon. But once in every two or three years, nature has been unkind to our country. Also, many of the farmers are from poor economic background. They have to find a source of money to finance the production from their farm. Thus, financing becomes an integral part of agriculture society in India. For last several years, Government has provided these farmers with different financing resources. NABARD is one of such a great example whose main motive is agricultural development by helping poor farmers providing an easy way of financing. Different forms of Agricultural Loans, Insurance policies across a variety of crops have been introduced in several yearly annual budgets by Govt. of India. But having these policies in place, many farmers still are suffering from a loan default. To address the farmer distress, the government came up with loan waiver idea. But nowadays loan waiver has become anticipated in case of distress and indebtedness. Over the years, we have seen that many agricultural economists, news sources, media have criticised this move by the government, giving n number of reasons including that it would lead to the higher deficit to our country, additional burden on taxpayers. But there are very few studies that explore the point of view that is in favour of loan waivers. In this project, we would like to address and analyse both sides of farm loan waiver