BJP's great UP farm loan waiver promise - moral hazard or necessity?

Crop loans in UP have increased from Rs 319 billion in FY' 2013 to Rs 556 billion in FY' 2015

After the Bharatiya Janata Party’s (BJP) decisive victory in the Uttar Pradesh (UP) state elections, alarm bells have started tolling in the capital market. The primary cause for concern is the BJP’s promise to the UP electorate to waive off all farm loans and provide fresh loans at zero percent interest. Capital market analysts and prominent bankers have jumped on the bandwagon of moral hazard, saying that the loan payment discipline amongst farmers will be ruined and that the sacrosanct fiscal deficit maybe breached as a consequence of such ‘populist’ ...