How farm loan waivers can hurt

Such bailouts do not have any measurable impact on improving consumption

Let’s get a couple of things straight right at the outset. Indian farmers remain vulnerable to a host of adversities that include both crop failure and overproduction. There are chronic problems of low farm-gate prices, with farmers at times getting less than a third of the final retail price. These often result in a crippling debt burden. The question is: Is the waiver of bank loans to farmers (I estimate it at a potential 2.6 per cent of gross domestic product or GDP, adding up the states that have declared and those that are planning a waiver) the answer?

To begin