According to government sources, Prime Minister Narendra Modi's government may soon announce loan waivers worth billions of dollars to influence millions of farmers in the country prior to general election in 2019. The news comes shortly after yesterdays elections results where BJP was defeated by Congress in all the three states, where agriculture is still a mainstay.
In order to regain support among country’s 263 million farmers and their dependents, the Modi led BJP government would start working out the details of a-plan allotting money to cancel farm loans, informed government sources.
As the general election is due by May 2019, the BJP government is running short of time to announce other easy as well as popular measures like raising the support or guaranteed prices for staples (Rice and wheat).
Ashok Gulati, farm economist said, "Elections are close at hand and you know that you have failed to solve problems being faced by the farmers, so you will soon go to town promising agri-loan waivers”.
The sources added that the plan could witness as much as dollar 56.5 billion in loans written off. The officials on condition of anonymity told agri-loan waivers will be the biggest help by the government to farmers.
The previous Congress party-led coalition government had declared farm loan waivers worth nearly 720 billion rupees in 2008 to return to power with a bigger mandate in 2009.
But the financial analysts cautioned that farm loans waivers would broaden a fiscal deficit the government has aimed to cap at 3.3% of the GDP.
Even though farm loan waivers are a populist step, debt write-offs help only rich farmers with bigger land. Whereas small farmers (80 percent of the total farmers population) often are not able to take loan from banks and instead take help from local money lenders who charge excessive interest of 25 to 50%.
