Udaipur: Debt waiver schemes of central and state governments have not benefited farmers as they restricted credit flow subsequently, Reserve Bank of India (RBI) Governor Raghuram Rajan said yesterday.
“Studies have shown that debt waiver programmes have been ineffective, constraining credit flow to farmers after their loans were waived off,” Rajan said at the 97th annual conference of the Indian Economic Association organised by the economics department of Mohanlal Sukhadia University in Udaipur, about 420km from Jaipur.
Concerned over farmers’ suicides, arising partly out of their inability to pay back loans, Rajan said there was a need to study the sensitive issue to find out if they were caused by indebtedness.
“It is worth examining to ascertain if farmers’ suicides are caused by indebtedness in the farm sector or other factors,” Rajan said.
He recalled that loan waivers were declared for farmers in Andhra Pradesh after cyclone Phailin made landfall in October 2013.
Banks had a combined exposure of Rs1.3tr to the farm sector in Andhra Pradesh and Telangana.
Though the Telangana government, which came into being in June 2014, paid 25 percent of the waived amount to the affected banks, the Andhra Pradesh government has not remitted its due amount so far.
The first UPA government announced in early 2008 an agricultural debt waiver and debt relief scheme under which Rs525.16bn due from 36.9 million small and marginal and six million big farmers across the country were waived off.
The comptroller and auditor general, however, found out later that several ineligible farmers benefited from the central government’s debt waiver scheme while many deserving farmers were left out.
Referring to subsidies in the agriculture sector, the central bank governor said it would be worth studying if they (subsidies) have actually helped farmers.
IANS
