New Delhi: A report has stated that while farm loan waivers reduce the quality of expenditure by implementing states, it also negatively affects institutional incentives to disburse agricultural credit.
The research report on farm loan waivers in India, released by Chairman NABARD on Friday, also noted that there does not appear to have a statistically significant inflationary impact.
Using secondary and primary data, the study addressed key questions like how states funded the farm loan waivers and if diversion of funds towards the waivers crowded out capital expenditures (CapEx) in the states while farmers' behaviour and attitudes towards these waivers were studied through a primary survey of about 3,000 farmers from three states -- Punjab, Uttar Pradesh, and Maharashtra.
The report argued that the strategy to support distressed farmers in a sustainable manner that empowers them in short and long run requires a rethink. This report makes a case for a deeper analysis and the need to address the structural factors that consistently cause distress to farmers.
"Loan waivers are considered a one-time solution to farmer distress. Farmers in India are plagued by several distortions that make the farming business unviable. The production cycle makes it impossible for farmers not to be indebted and the income instability makes it difficult for them to come out of the cycle of debt. Thus, the loan waivers offer temporary solace without addressing the underlying issues and, hence, within a few years farmers need another waiver," the report stated.
The report claimed that its valuable source of data-backed evidence on farm loan waiver programmes can be beneficial for different stakeholders, ranging from policymakers in the states and the Centre, to academia and researchers. Ideally, the policymakers and governments may like to refer to the study before designing and implementing distress alleviating policy relief measures for farmers, it added.
Funded by NABARD, the study was conducted by Dr Sweta Saini, Siraj Hussain and Dr Pulkit Khatri under the aegis of Bharat Krishak Samaj (BKS). (ANI)
