HYDERABAD:  The Economic Survey felt that the unconditional and blanket debt waiver was a bad idea.  The Telangana government spent 13 per cent of its 2014 Budget on farm loan waiver. In the same year, AP spent 21 per cent of the Budget on farm loan waiver, according to the Economic Survey.However, it may be mentioned here that the State government has not repaid the farm debts in single Budget year. The amount waived for farmers were paid to bankers in four-yearly instalments starting 2014. 

However, the Economic Survey which dealt extensively on farm loan waivers, stated that: “an unconditional and blanket debt waiver is a bad idea. It does not achieve any meaningful real outcome for the intended beneficiaries while costs to the exchequer are significant. Most importantly, debt waivers disrupt the credit culture and end up reducing formal credit flow to the very same farmers it intends to help. There is a case for a limited relief only when distress can be identified credibly. In other words, a waiver can at best be an emergency medicine to be given in rare cases after a thorough diagnosis and identification of illness and not a staple diet. In most cases, its side effects, the unintended consequences, far outweigh any plausible short term benefits,’’ it said. 

The survey stated that the waiver helps only when the beneficiaries are genuinely distressed but fuels even greater default when relief is not made conditional on genuine distress. The survey extensively quoted various researches on farm loan waivers.“The consequences of government intervention in credit markets in India havebeen examined by several carefully crafted research studies (Kanz (2016), Gin´e and Kanz (2017), Mukherjee, Subramanian, and Tantri (2018),’’ the  survey stated. 

Rythu Bandhu a new concept
Hyderabad: Terming the State government’s prestigious programme Rythu Bandhu, an investment support scheme to farmers, as a new concept, the Economic Survey 2019-20 released by the Centre on Friday, highlighted the scheme.  Apart from Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), the Economic Survey specially mentioned Rythu Bandhu.  The survey said: “The government of Telangana has come up with a new concept of providing investment support at the rate of `4,000 per acre per season to all the farmers towards purchase of seeds, fertilisers before the crop season. The scheme is being implemented from Kharif 2018 onwards. During Kharif 2018-19, 51.50 lakh farmers were benefited to the tune of `5,260.94 crore. During Rabi 2018-19, the government has decided to transfer it to farmers’ accounts.