Farm loan waivers in India: Bad economics, poor politics

Waiving off agricultural loans by state governments has assumed great political appeal in India. During the last year, several states in India have cancelled such loans. Political parties are displaying rare unity in striking off loans for appeasing distressed farmers.

This lecture will argue that farm loan waivers are not a solution to the long-term objective of raising farmer incomes and alleviating rural distress. On the contrary, the populist race-to-the-bottom set off by waivers can have adverse implications including affecting balance sheets of banks and reducing credit flow to farmers. The lecture would identify and characterise the issue as a governance problem and point to the imperative of institutions and markets working together for enhancing economic prospects of farmers in India.

About the Speaker:

Amitendu Palit is Senior Research Fellow and Research Lead (trade and economic policy) at the Institute of South Asian Studies in the National University of Singapore. He is also a member of the World Economic Forum's Global Future Council on Trade and Investment, Senior Research Fellow (Honorary) at Wong Centre for Study of MNCs and Adviser for Athena Infonomics.

Amitendu is an economist specialising in international trade and investment policies, Asian connectivity, political economy and Indian economy. He worked for several years in the Ministry of Finance, India, and in the Ministries of Industry and Civil Supplies. He handled macroeconomic policies, including trade, investment, industrial development, SMEs, entrepreneurship and futures trading. He wrote Annual Economic Surveys and participated in annual budgetary consultations. He was on Advisory Committees of the Planning Commission and the ILO.

Amitendu’s latest books include ‘Seven Decades of Independent India’ (2018, Penguin; co-edited) and 'Employment Policy in Emerging Economies' (2017, Routledge; co-edited). His other books include 'The Trans Pacific Partnership, China and India: Economic and Political Implications' (2014; Routledge), 'China India Economics: Challenges, Competition and Collaboration' (2011; Routledge) and 'Special Economic Zones in India: Myths and Realities' (2008; Anthem Press; Co-authored). He has published in several peer-reviewed academic journals. He is a columnist for 'Financial Express' and writes for East Asia Forum and China Daily. He is an expert for BBC, Bloomberg News, Channel News Asia, CNBC, ABC, CGTN, Doordarshan (India) and All-India Radio. He is a visiting faculty for several management and business schools and consultant for Commonwealth Secretariat, ILO, UNDP, Copenhagen Consensus and IIFT India. An Indian national, he is married to Parama Sinha Palit and is based in Singapore.