Credit for farm loan waiver
Finance Minister, in his budget presented in Lok sabha today, proposed to waive agricultural loans given by scheduled commercial banks, regional rural banks and cooperative credit institutions to small and marginal farmers up to March 31, 2007 and due for December 31. This announcement has weakened the market. Sensex dropped by over 200 points.
A reader has commented – “Loan waiver will certainly vitiate the recovery environment in the country.The impact would go beyond two to three years. Whom it was who tremendously increased the debt burden of the farmers by doubling the farm credit in three years. It was this govt. only. Is it prudent? First load them with such a heavy burden then waive and create a heavy burden for the exchequer.”
This announcement has been made keeping next year’s general elections in mind. There has been a competition between political parties to claim credit for this, as it is expected to result in farmers” votes.