Only 50% farmers benefited from farm loan waivers, finds study

Source: The post is based on the article “Only 50% farmers benefited from farm loan waivers, finds study” published in The Hindu on 18th July 2022.

What is the News?

State Bank of India’s researchers have conducted a study on the Farm Loan Waivers Scheme announced by different states.

What are the key findings of the study?

Implementation of Farm Loan Waiver Scheme by States: Only about half of the intended beneficiaries of farm loan waivers announced by nine States since 2014 have actually received debt write-offs.

– The poorest implementation of farm loan waiver schemes in terms of proportion of eligible farmers who had received the announced benefits were in Telangana (5%), Madhya Pradesh (12%), Jharkhand(13%), Punjab(24%), Karnataka(38%) and Uttar Pradesh (52%).

– On the other hand, farm loan waivers implemented by Chhattisgarh in 2018 and Maharashtra in 2020 were received by 100% and 91% of the eligible farmers respectively.

Reasons for Poor Implementation of Farm Loan Waiver Scheme: The report identified rejection of farmers’ claims by State Governments, limited or low fiscal space to meet promises and change in Governments in subsequent years as the possible reasons for the low implementation rate of these loan waivers.

Concerns with Loan Waiver Scheme: According to the report, loan waivers destroy the credit culture which may harm the farmers’ interest in the medium to long term and also squeeze the fiscal space of governments to increase productive investment in agriculture infrastructure.