PM Modi has reservations on farm loan waiver trend

Prime Minister Narendra Modi has strong reservation about agriculture loan waivers, which, he believes, work against the long-term interest of farmers. He told some ministers at a meeting recently that such waivers bring only trouble to farmers, rather than help them.

This comes at a time when BJP-ruled states such as Maharashtra and Haryana are under pressure for loan-waivers on the lines of the Yogi Adityanath government’s decision to waive ₹36,000 crore agriculture loans in keeping with the BJP’s pre-election promise in Uttar Pradesh.

India’s chief economic advisor Arvind Subramanian, too, has red flagged the concept of farm loan waiver — he said on Tuesday that if implemented nationally, this could cost the country about 2% of its GDP. His remarks came a day before NiTi Aayog member Bibek Debroy’s suggestion that agriculture income be taxed, which outraged opposition parties and brought an unequivocal denial from the Centre.

One union minister said, “It took more than one and a half years after the announcement for the Chandrababu Naidu government to formulate rules for loan waiver in Andhra Pradesh. In the meantime, farmers stopped repayment, further aggravated the situation.”

It was in this context that the Centre remained indifferent to Tamil Nadu farmers’ agitation in the national capital for a Central loan-waiver scheme.

“We are walking the extra mile to drive home the point that if any state wants a loan waiver, it has to do it with its own resources. We told this to the Maharashtra chief minister. But we realise this argument has political implications,” said an official involved in negotiation with the states.