Former NITI Aayog Vice Chairman Arvind Panagariya has criticised the politics of loan waivers calling it a sad race to the bottom. Responding to the news, in which Congress President Rahul Gandhi was quoted as saying that he won’t let the Prime Minister sleep until all farm loans are waived, Panagariya tweeted: A sad race to the bottom has begun. If loan waivers would fundamentally alleviate farmers’ plight, waivers would be a welcome step.

“But if after 70 years of independence, farmers remain in distress, we need to seek different solutions,” he added.

According to a report by PTI, Rahul  Gandhi, under whose leadership, the Congress won three crucial assembly elections, on Tuesday said, “We will not let Prime Minister Narendra Modi sleep until loans of all farmers are waived.”

Issuing a challenge to the prime minister, Gandhi said, “If the Modi government does not waive farm loans, we guarantee to waive farm loans if voted to power in 2019.”

Meanwhile, state governments under the BJP — Gujarat and Assam — have also announced a slew of waivers from farm loans to electricity bill, sparking debate on Twitter. Many economists have taken a prudent stance that loan waivers do not serve the purpose.

Former RBI governors Raghuram Rajan and Urjit Patel had warned against farm loan waivers.

Earlier, a report by SBI Chief  Economist  Soumya Kanti Ghosh also said that loan waivers are worst solution to farm distress. “…waivers are not the solution as they are a drag on credit discipline,” he said, adding that income support for farm households may be a worse solution than freeing up agri trade and marketing, but it should work much better than loan waivers.