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4) Farm loan waivers have become a popular demand and a politically attractive option. Discuss in light of the recent decision of Karnataka state government to waive off farmers loans. (250 words)

Topic–  Indian Economy : Issues

4) Farm loan waivers have become a popular demand and a politically attractive option. Discuss in light of the recent decision of Karnataka state government to waive off farmers loans. (250 words)

Financial express

Why this question

The issue of loan waivers, comes in news repeatedly because most of the state governments see it as a low hanging fruit. The overall impact of the loan waivers is not judged. The article discusses these issues and indicates why waiving off farmers loans may not be the best idea in helping them.

Key demand of the question

The question expects us to discuss the pros and cons of loan waivers, examine the reasons why loan waivers are resorted to by state governments, and the impact that it has.

Directive word

Discuss – This is an all-encompassing directive – you have to debate on paper by going through the details of the issues concerned by examining each one of them. You have to give reasons for both for and against arguments.

Structure of the answer

Introduction – Highlight the instances in recent times where loan waivers have been given to farmers.

Body

  • Discuss the reasons behind loan waivers – political, agriculture in distress, environmental challenges for the farmers etc
  • Discuss the pros and cons of loan waivers. Examine the challenges that it causes for the banking sector. Mention the view of Swaminathan committee etc on loan waivers.
  • Discuss alternatives to loan waivers – more constructive solution to farmers distress.

Conclusion – Give your view on the penchant of state government to give loan waivers and discuss the way forward.