yogi adityanath

  1. In it’s first cabinet meeting on April 4, the newly elected BJP government of UP under Chief Minister Yogi Adityanath fulfilled the election promise by waiving farm loans totalling Rs 36,359 crore. The decision is expected to benefit at least 2.15 crore small and marginal farmers in the state.
  2. Since there is no central government assistance for this waiver, Uttar Pradesh will have to find own resources to compensate the banks. The cash strapped UP government would now float farmer relief bonds, called Kisan Rahat Bond, to generate funds to implement the massive loan waiver.
  3. The decision may not directly impact the banks’ balance sheets as the state government will compensate them on the defaulted payments, however, public sector banks are not happy due to various reasons.
  4. The populist loan waiver scheme disturbs the credit discipline of the borrowers. They borrow and do not repay the loan with a hope to be waived off later. This increases NPAs of the banks.
  5. Further, not all loans taken in the name of farm loans are used for farming purposes. Poor farmers, workers etc. take such loans but for consumption needs. Thus neither the agriculture is benefitted nor the government or the farmer. Rather is a mad rush to borrow, use and not pay.
  6. More than the economics, the loan waiver adversely impacts the politics and the democratic process. The votes are sought on the promise of giving subsidies, waiving loans, disbursing cash and not on the agenda of development. Poor are therefore not empowered but left to remain perennially poor. Year after year, election after election the agenda of populism is followed and not the development and empowerment.
  7. The opposition is still not happy. They want higher amount of loans to be waived!
  8. As per a data, the total outstanding credit by all commercial banks in 2016 towards the agriculture sector is Rs 86,240 crore in Uttar Pradesh. Opposition demand is to waive the total agriculture loan without any condition. Thus what they want is that this total 86,240 crores should have been waived and the UP CM has cheated the farmers by a partial waiver!
  9. This is the irony of the democracy. Good politics usually never go along with good economics. Had it been so, in many former regimes, RBI governors and the Finance ministers would not often have divergent views.Winston Churchill was right when he once famously said, Democracy is the worst form of government, but the best available!