BJP Farmer Loan Waiver Scheme in UP and SBI
After the historic win of the BJP in the recent Uttar Pradesh elections, the farmers of the state are looking up to the Modi’s poll-promise to waive offs the farm loan. However, the SBI chief do not share the same views with the BJP as it has pointed out the ill effects of farm loan waiver and may affect the credit discipline in long run. The Uttar Pradesh will soon experience its newly formed BJP Govt. and the farmers are looking forward to the poll-promise of farm loan waiver which was made during election campaigns. The SBI Chairperson strongly believes that if the BJP Govt. stands in its poll promise, then it will be a big setback for the credit culture of the country. However, she has full support for the govt. that it wants to help the farmers with their credits.
No such proposal yet received by SBI
The SBI is one of the frontrunners in providing the farmers’ loans not only in Uttar Pradesh, but also throughout the country. But as per the SBI Chairperson, it has not received any such notification from the BJP Govt. yet on the issue of farm credit waiver. But, it is certain that such circular is going to come any time soon as Modi has promised to waive off all the farm credit of farmers of Uttar Pradesh and relieve them from their loans.
Ill effects of the farm credit loan waiver schemes
Whenever a bank provides loan to an individual or organization, it expects returns over some period of time along with the accumulated interest. This is how, the whole credit system works. Breaking the credit cycle in between is harmful for both the banks and the borrowers in long run. Below are some of the ill effects of waiver policies on credit loans:
- The main ill effect of farm loan waiver is the disruption of credit discipline. This means the entire credit system will get affected and the farmers will always expect for future loan waiver schemes by the govt. This will promote an unhealthy credit culture in the country.
- The Govt. funds will get affected as the loan amounts will be paid through those funds. This will have direct effect on the country’s economy.
- The present loans will have no such effect as the Govt. will pay up the dues. But the future farm credit culture will get adversely affected with this loan waive policy as the farmers will always keep expecting to similar scheme.
Supporting farmers without disturbing credit discipline
The SBI chief has indicated that the farmers need to be supported totally by the govt. But this does not mean that the country’s credit discipline to be disturbed. The SBI has recently declared a one-time settlement plan of loans. Under this scheme, the farmers can pay off their farm loans taken for purchasing tractors or farm mechanisms. This scheme is worth Rs. 6 thousand crore.