New Delhi: Since April, when the Uttar Pradesh government first announced a farm loan waiver for small and marginal farmers amounting more than Rs36,000 crore, the Reserve Bank of India (RBI) has cautioned states and the central government thrice on its imminent fallout and risks associated with the move.
RBI governor Urjit Patel warned that governments borrowing to pay for loan waivers could eventually affect the national balance sheet.
“(Farm loan) waivers undermine an honest credit culture... It leads to crowding-out of private borrowers as high government borrowing tend to (impose) an increasing cost of borrowing for others,” Patel said after the April monetary policy announcement. Read More
RBI governor Urjit Patel warned that governments borrowing to pay for loan waivers could eventually affect the national balance sheet.
“(Farm loan) waivers undermine an honest credit culture... It leads to crowding-out of private borrowers as high government borrowing tend to (impose) an increasing cost of borrowing for others,” Patel said after the April monetary policy announcement. Read More