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Loan waiver not a solution to farm distress: Niti Aayog

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Dion Global

19 Dec 2018

Joining the debate on farm loan waivers, government think-tank Niti Aayog Wednesday said such a move helps only a fraction of farmers and is no solution to mitigate agrarian distress.

Congress chief Rahul Gandhi has been pressing the government on the issue, saying he will not let Prime Minister Narendra Modi sleep until a loan waiver is given to all farmers.

"Farm loan waiver is not a solution to farm sector distress. It is not a solution but is palliative," Niti Aayog Vice Chairman Rajiv Kumar said at a press conference after the release of its 'Strategy for New India @ 75' document.

Niti Aayog Member and agriculture policy expert Ramesh Chand also echoed Kumar's opinion, saying the biggest problem with loan waiver is that it will benefit only a small fraction of farmers.

"In poorer states, only 10-15 per cent of farmers are benefited from loan waiver as few number of farmers get institutional loans in such states. In many states, not even 25 per cent of farmers avail institutional credit," Chand pointed out.

He noted that when you have this kind of variations in states in terms of farmers' access to institutional credit, it is not worth spending so much money on farm loan waivers.

"Even CAG report says that farm loan waivers does not help. Loan waivers is no solution to address distress in farm sector," Chand said.

Both Kumar and Chand said the Aayog will suggest to the Ministry of Agriculture to link allocations to states to reform measures undertaken by them in the farm sector.

Replying to a query on GST, Kumar said the average rate will gravitate towards 15 per cent with increased resources and widening of the tax base.

To a question on job creation, the Niti Aayog vice chairman said, "On the employment front, I am not sure crisis is appropriate word to use."

"We are concerned with the employment situation. In fact, I am one of those economists who has said our policy targets could well be in terms of employment maximisation and growth will come out of that," he added.

Kumar also noted that aspirational levels are much higher today among the youth than what it was earlier.

Noting that the government wants to look at regional inequality, Kumar said, "We are not following Washington Consensus."

He also said after the release of 'Strategy for New India @ 75', the Aayog will now start working on the 15-year vision document.