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Farm loan waivers against economic principles: ADB India chief

Press Trust of India  |  New Delhi 

Joining the debate on farm loan waivers, (ADB) Friday said such write-offs were against economic principles and cannot effectively address the agrarian distress.

Yokoyama also advocated for direct transfer of funds to targeted beneficiaries as it would cut down leakages.

On farm loan waiver, he said most of the people are sceptical about it as an economic principle and has moral hazards.

"There is a need to address agriculture sector distress...but economic principle wise, farm is not an effective means to address farm distress," he said.

Earlier this week, said any generalised farm adversely impacts the credit culture and the behaviour of borrowers, amid various states announcing waivers. He said is related to the fiscal space that a particular state government has.

About Rs 1.47 lakh crore of agricultural are outstanding in Madhya Pradesh, and Chhattisgarh, which announced waivers recently.

Appreciating the fact that has a platform to provide Direct Benefit Transfer through Aadhaar, Yokoyama said analysis has to be done on how government can launch universal basic income (UBI) scheme in the most efficient way.

Asked if there was a stress on fiscal deficit, Yokoyama said ADB has no doubt about the government meeting the target.

"I think a clear framework is there and mandate given under the Fiscal Responsibility and Budget Management Act. We don't have any doubt over it," he said.

The Centre has budgeted to contain fiscal deficit at 3.3 per cent of the GDP in the current fiscal, lower than 3.5 per cent in 2017-18.

Last month, Minister had exuded confidence of meeting the fiscal deficit target of 3.3 per cent for the current fiscal.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 11 2019. 18:10 IST