Leave the farmers alone

An excerpt from the article - "Loan waivers, though full of good intentions, are even worse though they helped win elections in the short run. The problem with loan waivers is that it works only for farmers with their own land who have also managed to access bank loans. For cultivators who have taken land on rent, it does not work - they typically borrow from moneylenders, not banks. Worse, loan waivers create a moral hazard - a farmer who has seen his loan waived once would tend to wait and delay repayment if he thought the government would announce a waiver again. Similarly, those who have managed to pay off their loans on time would feel cheated."



Link: Barking up the wrong tree in solving farmers' distress



Photo source: Business Today


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