Uniform policy needed

It is high time parliamentary committee drafts loan waiver policy ensuring uniformity of conditions

Keeping with the Bharatiya Janata Party’s poll promise, its new government in Uttar Pradesh has waived Rs 36,000 crore of crop loans of up to Rs 1 lakh each, which will benefit 21.5 million small and marginal farmers. 

There have been several debates and discussions on the ramifications of such a loan waiver; there is an ostensible divide of opinion between the intelligentsia and those who support a loan waiver policy. The Centre and several states have taken such a step before even at the cost of benefiting wealthy borrowers as well. 

Looking at past trends it seems there is no way to prevent recurrences of loan waivers. Banks have to deal with such government policies and look for ways to manage. It may lead to a situation where small borrowers might presume that a loan is a non-repayable grant. 

It is high time a parliamentary committee drafts a loan waiver policy ensuring uniformity of conditions. It should define the beneficiaries of such loan waivers based on their family income and Aadhaar cards, which can be classified depending on their level of poverty. The state should limit the benefit to the needy only, not extend it to all borrowers. The ratio of farm income to total income of a farmer should also be kept in mind. Draft guidelines on a uniformly defined loan waiver policy can prevent arbitrariness in implementation.   

K Srinivasa Rao   Noida

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