Loan waivers not best solutions, says Niti Aayog

New Delhi: Niti Aayog member Ramesh Chand on Friday said that there are more effective ways to deal with problems of farmers than loan waivers which benefit only a tiny fraction of agriculturists.

States including UP and Maharashtra have announced farm loan waivers adding up to Rs 1.3 lakh crore or 0.8 per cent of GDP this fiscal.

“If you look at institutional loan, then there is a very tiny percentage of farmers who take loan.

“...Niti Aayog has taken this position. There are much more effective ways to address problems of farmers rather than going for this loan waiver... very small fraction of farmers get benefit of loan waiver,” Mr Chand said at a press conference here.

Terming farm loan waivers a “quick-fix”, the RBI had again voiced its concern, saying they will lead to a lasting adverse impact on farm productivity. “In the absence of coordinated and sustained efforts to put in place elements of a virtuous cycle of uplift of farmers' income, loan waivers have periodically emerged as a quick fix to ease their distress,” RBI had said in a statement quoting Urjit Patel.