Loan Waivers  

Targeting and recovery are just two problematic aspects; solutions could lie in  direct benefit transfers
 

The Kerala government decided to waive loans of endosulfan victims between Rs 50,000 and Rs 3 lakh
 

In yet another conversation with the press, Prime Minister Narendra Modi on Tuesday spoke to ANI, taking several tough questions and answering them with confidence. On the issue of farm loan waivers, the PM said the leniency was of little use to farmers who continue to face the same distress year after year.

The act of waiving off loans affects not only the banks and taxpayers but also the farmers who are the intended beneficiaries of the populist dole. Once the farmers are told not to pay back the money they had borrowed, the banks wait for the government to reimburse the money that has been forsaken. This money arrives after many years. Until then, banks are reluctant to disburse further loans to farmers, with the apprehension of not being able to recover the amount. Finally, when the banks get the money from the government, it is taken from the tax collections: that is, from people who had not taken the loan in the first place!

As the Karnataka government broke its promise on farm loan waivers mentioned by chief minister HD Kumaraswamy on waiving farm loans in 24 hours as soon as he takes the oath, Karnataka farmers especially in drought-hit districts of North Karnataka, accused HD Kumaraswamy, calling him an anti-farmer for coming up with lame excuses.

Karnataka chief minister HD Kumaraswamy is likely to announce education loan waiver, to lessen the burden on students belonging to the scheduled castes and scheduled tribes. It looks like Kumaraswamy is trying to win over the youth of the state through this scheme, but at the cost of taxpayer's money.