The income of the farmers is too low, which cannot support the debt, says SBI Chief Rajnish Kumar.
The latest push by the Congress, after winning three assembly election, to give loan waivers to farmers has opened a Pandora’s box, with more states joining the bandwagon even as almost every economist and expert has denounced such a move as mere poll populism.
Even State Bank of India (SBI) Chairman Rajnish Kumar has said that loan waivers are not a permanent solution and that it does not help farmers with the past or the future. In an interview with CNBC-TV18, the SBI chief said that governments can opt for something that focuses on helping farmers boost their productivity and thus, income.
“Loan waivers are not a permanent solution. It’s not helping the past or the future. The income of the farmers is too low, which cannot support the debt. Whether we can focus on augmenting the income or waiving loans,” he told the news channel.
“It would preferable to boost investment, helping farmers to be more productive,” he said, adding that the policy adopted by Telangana, the model of direct income support is a much better option. “It does put fiscal pressure but I think it is the much better option to help farmers,” he added.
In August this year, Telangana government launched ‘Rythu Bandhu’ investment support scheme for farmers. Under the scheme, the government provides Rs 8,000 per acre for two crops to every farmer as investment support.
Earlier, chief economist of SBI, Soumya Kanti Ghosh also argued that loan waivers are worst solution to farm distress. He said that income support for farm households would work in a better way.
On Tuesday, former NITI Aayog Vice Chairman Arvind Panagariya also criticised loan waivers. He tweeted: A sad race to the bottom has begun. If loan waivers would fundamentally alleviate farmers’ plight, waivers would be a welcome step.
While Congress President Rahul Gandhi promised to waive farm loans if voted to power in 2019, BJP governments in Gujarat and Assam also announced a slew of waivers from farm loans to the electricity bill.