Thumbs down for farm loan waiver from ex-RBI Governors

New Delhi, December 11 

With the farm loan waiver pitch getting shriller by the day, former RBI Governor YV Reddy today said the practice is not good for “economic or credit culture” and insisted that ultimately it is a political decision and cannot be justified in the longer run.

Even former RBI Governor C Rangarajan took a similar line, saying the alternative is to offer farmers a longer window to pay off. Reddy noted that every political party in India has offered such waiver in some state or the other or at an all-India level.

“Loan waiver is not good for economic or credit culture. Every political party in India has given farm loan waiver in some state or the other or at all-India level. So, ultimately it is a political decision, it cannot be justified in the longer run,” he said on the sidelines of the Inclusive Finance India Summit 2017.

Rangarajan observed that instead of waiving farm loans, the government should give longer time to farmers to repay loan or perhaps waive the payment of instalment and rate of interest in that particular year. — PTI