Maharashtra Farmer Crisis: Are Loan Waivers Sustainable?
Maharashtra Chief Minister Devendra Fadnavis announced a farm loan waiver, following which farmers in the state ended their protest. A farm loan waiver was their main demand apart from getting fair price for agricultural produce. Finance Minister Arun Jaitley, however, said states have to raise their own funds to reimburse the farm loan-givers, mostly banks, since they will not get their money back from farmers. Banks are also grappling with mounting non-performing assets or NPAs. Forgoing interest and even the principal on disbursed loan will only add to the bad debt. Can Maharashtra raise the emergency funds on its own without putting pressure on the state's planned budget? Is 'populist' loan-waiver sustainable at all?
