Loan Waiver Research Articles

Agrarian Distress in Indian Agriculture: Causes, Socio-economic Consequences and Coping Strategies

Agrarian distress is the economic, political and social challenges faced by the farmers and rural communities due to factors such as low crop yields, fluctuating prices of agricultural produce, high input costs, indebtedness, and lack of access to credit, markets, and infrastructure. Over 8,00,000 individuals are dies by suicide each year because of various reasons. More over the suicides are happening in the families whose own land is less than 1-2 hectares, who are in debt, have been identified the most at risk for suicide. The present article aims at better understanding of the causes, consequences and possible coping strategies for the agrarian distress in India. Causes such as fluctuations in crop sales, weather and climate conditions, dependent on natural resources, etc. are discussed in detail. Consequences of agrarian stress are suicides of farmers, rural migration, food insecurity, environmental impacts and so on. Solutions such as strengthening the forward markets, comprehensive crop insurance schemes for the framers where the non-MSP (Minimum Support Price) crops also may be covered, assured price to the farmers are discussed. Many researchers argued that farmers suicides are increasing but the research is limited in the specialised area of interest. In addition to that, researchers are focussing only on the socio-economic variables rather than the psychological variables. In order to mitigate the risks out of agrarian distress, farmers should be encouraged by the government and extension service providers to take up the subsidiary occupations and secondary agricultural occupations which helps them in getting profits in the situations where the crop damages due to the extreme weather patterns. As rightly pointed out by National Bank for Agriculture and Rural Development (NABARD), distress of the framers should have a long-term potential solution such as major reforms in the existing agricultural laws rather than farm loan waivers which acts as the short-term relief to the farmers.

Social and Economic Consequences of Farmer Suicides in Karnataka: Impacts on Rural Communities and Beyond

In this research paper, an attempt has been made to overview the present scenario of farmer suicides in Karnataka, India, is given in the abstract, along with a focus on the disastrous social and economic effects of this phenomenon. In fact, there were 3,515 farmers committed suicide between 2013 and 2018, with small and marginal farmers who owned less than 5 acres of land being the bulk of these deaths. The main causes of these suicides were debt, crop failure, and limited access to institutional funding. Farmers who commit suicide have far-reaching effects on society in addition to the agricultural community. Declining agricultural output, rural-to-urban population mobility, and the breakdown of social structures are all problems facing rural communities. Reduced agricultural output, a loss of revenue for farming households, and an increase in the demand on government resources for relief operations are of the economic effects. The social consequences include a rise in domestic violence, mental health issues, and alcoholism in rural areas. The summary highlights how farmer suicides have an impact on metropolitan people who rely on agricultural goods for their sustenance, in addition to remote rural communities. The Karnataka government has launched programs including loan waivers, crop insurance policies, and irrigation projects to prevent farmer suicides. To address the root reasons of farmer suicides, further work must be done. This work should focus on supporting sustainable farming practices, increasing institutional funding availability, and offering mental health services to farming communities.

A STUDY OF AGRICULTURE CREDIT SYSTEM IN TELANGANA

This article delves into the intricate landscape of agricultural credit in Telangana, emphasizing its pivotal role in driving rural prosperity and sustainable development. Through a comprehensive analysis, it examines the eligibility criteria, components, and significance of crop loans, alongside the implementation and impact of the Crop Loan Waiver Scheme. Furthermore, it elucidates the crucial role played by the State Level Bankers Committee (SLBC) in coordinating credit allocation and fostering collaboration among stakeholders. Despite the advantages offered by agricultural credit schemes, challenges persist, including implementation effectiveness and disparities in credit access among vulnerable groups. Drawing on findings, the article proposes actionable suggestions to enhance the efficiency, inclusivity, and sustainability of agricultural credit initiatives in Telangana, emphasizing the importance of targeted interventions and farmer-centric policies for fostering holistic agricultural development and uplifting rural communities.

From Petitions to Demands, Restitution to Representation

From Petitions to Demands, Restitution to Representation

Determinants of NPLs of Self-Help Group-Bank Linkage Program in India: Empirical Evidences and Policy Implications

This article examines the major factors influencing the non-performing loans (NPLs) of the Self-Help Group-Bank Linkage Program (SHG-BLP) in India at both macro- and micro-levels. A panel regression analysis of the state-level data shows that the total outstanding loan amount, average loan size per SHG and poverty rate exert positive impacts, whereas gross state domestic product has a negative effect on gross non-performing loans (GNPLs). Analysis of primary data indicated a higher incidence of loan default by SHG members. Logit regression analysis employed on primary data suggests that the loan default by SHG members is positively associated with age and experience because of higher family responsibility and lesser incentive to repay the loan. On the other hand, self-employment, levels of income and savings show negative relations with loan default. Self-employed SHG members and those who make some savings are less likely to default on loans. Similarly, higher-income groups show less chance to default on loans. An analysis of the perceptions of the SHG members reveals that poor economic conditions, non-cooperation among members, social and medical expenses, and expectations of loan waiver from the government are the main reasons for loan defaults.

Loan Waiver Schemes in Karnataka and Their Impact on Farmers

"PACS are the banks, which are situated in rural area and plays a very important role in rural credit system by performing their activities on co-operative principles and also these banks are worked under the District Credit Co-operative Banks. They provide short term and medium-term loan to rural people to meet their financial requirements. But, the rural people still depend on unorganized sources such as money lenders in village, mandies, traders etc. So , various measures taken by Government to reduce these unorganized sources through the establishment of PACS in rural areas. Present study is an attempt to know the various loan waiver schemes of PACS in Karnatak and their impact on the economic life of the farmers. Study found that government of Karnataka announced the various loan waiver schemes during the 2012-2018. Crores together amount is released and Lakhs together farmers are benefited"

Diagnosing and Overcoming Sustained Food Price Volatility: Enabling a National Market for Food

The agricultural markets in India sure from high price volatility. There may be an element of a Samuelson Cobweb Model at work, which generates a cycle of boom and bust. When food prices are high, consumers protest and in the years when food prices are low, farmers are in distress and demand loan waivers. Four policy pathways address the cobweb model: storage, national trade, international trade and futures trading. We argue that the Constitution imposes an obligation upon the Union government to achieve a national market. We work out an implementable set of steps through which the Union government can obtain a national market for agricultural produce.

Debates on agricultural loan waiver schemes in India: myths and realities

ABSTRACT The agriculture sector in India is marred with several problems, which have resulted in farmers’ distress. To address the distress of the farmers, both Central and State Governments of India implemented agricultural debt waiver schemes (ADWRSs) as major policy interventions in recent years. These schemes differ in terms of coverage of the farmers and lending agencies. However, all of them aim to benefit millions of small and marginal farmers of India. The implication and evaluation of these schemes has invited serious criticisms from both policy makers and researchers. It is true that these schemes have created fiscal pressure on the implementing governments. In addition, some degree of corruption has become an integral part of the schemes. However, given the extent of the indebtedness of the farmers, waivers may also be crucial as a temporary measure to mitigate agricultural distress. This paper explores the debate and examines the criticism of the ADWRSs from various quarters. We have found that the majority of arguments against the debt waiver schemes widely accepted amongst bankers, policy makers and even economists are based on perceptions and are not backed by sound economic logic and analysis.

Mapping development and welfare schemes with SDGs in a village in India, ICAR-Central Research Institute for Dryland Agriculture, Hyderabad-500059, India, Pp.24.

The paper examined the various development and social welfare schemes implemented in a village in India and mapping them to the Sustanable Development Goals (SDGs) to see whether these schemes are helping in achieve the SDG goals. This paper examines the actual benefits accrued to the households in a village and how they have utilized the schemes. The paper assessed share of households benefited and the extent of benefit from each scheme and also at the aggregate level. The research is conducted in Emped village of Telangana state of India by collecting information from all 287 households to get a holistic picture in year 2017. Although more than 50 schemes were implemented in the village, about 29 were active. The study examines 29 schemes from which, at least one household got benefited. The average aggregate benefit from all government schemes is about Rupees 58,095 per household. Some schemes benefit large farmers and pro-rich, while others were pro-poor. Majority of the households benefited from schemes like the Public Distribution System (PDS), direct benefit transfer based on agricultural land, MGNREGA, loan waiver, seed and fertilizer subsidy, mid-day-meal scheme but only a modest amount. But very few are benefited from the double-bed room housing scheme, the Chief Minister Relief Fund in huge sums. Schemes addressed to women like the KCR Kits (assistance to pregnant women) and Shadi Mubarak(marriage assistance) were effective. Overall, these schemes help to achieve different targets of the SDGs but need more focus on identification of target beneficiary, reduction of leakages and inordinate delays in implementation. Overall, there is inverted U shape relationship exists between household income and total benefits received, while a positive relationship exists between landholding and benefits from the government schemes. Most of the assistance recived from agricultural development schemes are spent on intended purpose, whereas welfare schemes were spent on consumption purpose.

Indian agriculture GDP and non performing assets: A regression model

Agriculture is one of India’s crucial sectors in terms of its contribution to employment and the country’s (Gross Domestic Product) GDP. It has primarily emerged as an essential - growing sector in the global economy since independence. [21]However, the non-realization of the reasonable price for agricultural crop production leads to the introduction of loan waivers, which impact the credit culture and weaken the farming economy and growth. The presented work aims to perform exploratory data analytics on the GDP data in agriculture public domain by performing feature engineering on the factors affecting the agricultural GDP using the data for the period 1961 to 2019. It further builds a multi-linear prediction model to forecast the Agriculture Sector’s economic performance in terms of GDP and NPAs generated by the Agricultural Sector using Machine Learning Techniques. Keywords: Multiple Linear Regression, Ordinary least Squared, Agricultural GDP, Non-Performing assets, Indian Economy.

Pattern and Levels of Income among Loan Waiver Beneficiary Households in Punjab

After a major change of 1991 in the Indian economy, there is a significant structural change not only in India but also in Punjab. Productivity in agriculture has reached its peak in Punjab and now the whole agriculture sector is burdened with the crisis of stagnation, overcapitalization, indebtedness, etc. Now it would be interesting to know the pattern and levels of income. This paper is an attempt to analyze the pattern and levels of income among loan waiver beneficiary households in Punjab using primary data of 318 households. The average household income of loan waiver beneficiary households was `229072.38, while it was the highest in Mansa district, followed by Ludhiana district and Hoshiarpur district. The study found that nearly 81 percent of the total income of households comes from agricultural sources and remaining from non-agricultural sources. Further huge inequalities of income were observed among beneficiary households. Inter-district inequalities showed that the Hoshiarpur district had minimum inequalities of income.

THE SAGA OF FOOD SECURITY IN WEST BENGAL

Undivided Bengal in India was struck by series of famines during the pre-colonial and colonial periods. In post partition era though there is no record of famine, starvation and malnutrition are not unknown in West Bengal among the people lying below the poverty line. Lacunae in the public distribution system might be one major hurdle. Implementation of several welfare programs and National Food Security Act, 2013 seems to be conducive to control the menace of starvation. But the concept of food security has been deduced to food grain security only without any provision of protein, minerals and vitamins, the essential ingredients of nutrition. Nutrition of mothers, children and senior citizens along with male bias of nutrition—all are in question now. Throughout India while farmers are living in debt from hand to mouth, agriculture is no more a lucrative occupation. Several measures have been introduced to combat such a disastrous situation viz. efficient storage and marketing system, loan waiver, bank transfer of grant-in-aid, minimum support price and efficient public distribution system, apart from targeted nutrition schemes. But no one can be considered as effective action so far to break the ice.

Role of Banks in Money Laundering through Fake Bank Accounts and Writing off Loan in Pakistan: An Analytical Study

Purpose: Recent media reports of money laundering through fake bank accounts implicate the involvement of banks in money laundering through "managed bank accounts". Further the waivers of loan of apparently sound institutions also give rise to specific questions and reservations on the role of banks. This paper attempts to explore the answer to those fundamental questions.
 Design/Methodology/Approach: The research follows qualitative content analysis methods to critically analyze the role of banks in money laundering and loan waiver policies.
 Findings: The research finds that despite of heavy banking regulations and laws the banking accounts are being used for money laundering. Further, the research concludes that the act of waiving off loans allegedly has provided a channel to misuse the public earned money, resulting in gross loss to the public exchequer.
 Implications/Originality/Value: The research concludes that the role of bank in maintaining the fake/idle accounts and the loan waiver policy and its malafide usage in the banking sector resulted in financial frauds and money laundering in Pakistan

Loan Waivers and Bank Credit: Reflections on the Evidence and the Way Forward

Executive Summary In the past decade, farm loan waivers have become a policy instrument to alleviate the financial distress of farmers. Despite agreement on the theoretical rationale for such debt forgiveness and its deep contextual relevance, many fear that in the long run, loan waivers might vitiate the repayment culture in the farm sector and undermine the financial status of banks. At present, critiques of large-scale loan waivers rest on limited evidence. This article reviews and synthesizes existing research and available data on the implications of loan waivers, especially for the flow of credit to farmers from banks. On most of the issues, such as farmer well-being and repayment culture, there seems to be mixed evidence on the consequences of debt waivers. Credible evidence on macroeconomic implications is limited, mainly on account of methodological challenges. This article concludes that even if loan waivers are an inappropriate strategy to support farm incomes in sustainable ways, the wide-ranging negative impacts on the formal banking sector are perhaps overstated. A more fruitful approach would be to focus on whether loan waivers can be designed to reduce the possible negative consequences for the formal banking system as well as for macroeconomic system. The article identifies three possible instruments—loan insurance products that will help banks cope with the consequences of large-scale defaults. Second, to explore the creation of a distress fund that will cushion state finances, should there be a need for debt waivers. Third, it would be useful to consider the operation of debt relief commissions to have an ongoing process for debt waivers.

Political Economy of Farm Loan Waivers in India

Political leadership of various states in India is under tremendous pressure to provide instant relief to the farmers reeling under debt trap, resulting in suicides in several cases. Often, suicides by peasants are widely covered in the media which in turn sway the people’s perception about apparent indifference of the government towards the farming communities of the country. This certainly brings in concerns related to political economy revolving around judicious distribution of wealth and national income of the country. State governments of India are generally reluctant to waive off the farm loans as a matter of routine due to concomitant burden on exchequer that might adversely affect their fiscal balances. However, political parties tend to use farm loan waiver as tactics to come to power in spite of the fact that such populist measures are not good for the economy, nor do they offer a long-term solution to the age-old problem of higher degree of incidence of indebtedness among the farming communities. This article explores the antecedents and consequences of farm loan waivers and the way forward. Besides, it also reconnoitres whether the state takes such decisions as farm loan waiver purely on the basis of economics or any hidden political agenda.

Credit Subsidy Policy and the Moral Hazard of Loan Waivers in the Non-Traded Agriculture Sector in Presence of Credit Market Dualism: A Three- Sector General Equilibrium Model

The paper is an attempt to unveil the growth-development tradeoff in the Indian agriculture sector in light of some selected recent policy measures in presence of dualism in both agriculture sector and credit market. Segmentation of the agriculture sector is addressed as traded export agriculture and non-traded agriculture sector. The dualism in the credit market is the coexistence of the formal and informal credit market. In this paper, we construct a three-sector general equilibrium model which may apply to a large class of emerging market economies. The results of the paper reflect contradictions of an emerging economy which is essentially hybrid economics in which capitalist nucleus has a conditional-conditioning relationship with an archaic structure.

Economics of Subsidies in a Welfare State: Dynamics of Populist Policies and Farm Profitability

Economic gains from subsidies provided by welfare states have remained contentious in the literature due to their inherent paradoxical consequences in promoting competition, economic growth and equitable distribution in developing economies. State largesse on farm subsidies has increasingly become a populist tool for political gains. The politics involved with subsides have immense emotional appeal than fulfilling the objective of social and economic justice. Despite international consensus of removal of farm subsidies, its magnitude has grown in recent years. In India, the arguments in favour of farm subsidies have gained larger acceptance due to sudden spurts in farmer suicides during last two decades. Since electoral fortunes are hugely dependent on populist policies on subsidies, Minimum Support Prices (MSPs) and farm loan waivers, policymakers have not been able to introduce necessary reforms to make Indian agriculture competitive. The agricultural sector has become excessively dependent on government grants and remained unprofitable for most of the small and marginal farmers. The results of this study find that subsidies are poorly correlated with cost of cultivation and farm profitability with collateral interactions with other sectors of Indian economy.

Impact of the agriculture debt waiver debt relief scheme on the consumption expenditure of smallholder farmers

The frequent announcements of loan waivers have drawn attention to their impact on various aspects of rural livelihoods. Using a difference-in-difference approach, this paper investigates the impact of the agriculture debt waiver debt relief scheme (2008) on the consumption expenditure of smallholder farmers on food and non-food items. We do not find any significant difference in the consumption expenditure on food or non-food items, both categories showed increased consumption expenditure over time without the loan waiver.

Socio-Economic Profile of Loan Waiver Beneficiary Households in Punjab

Asociety is a composition of various social, economic and political institutions. Any evaluation of the status of particular section of the society can be done on the basis of social framework, social structure, cultural norms, religious beliefs and value judgments. Thus, socio-economic status is a measure of an individual's and society's social and economic position based on education, income, occupation etc. The present study is an attempt to analyse the demographic and socio-economic status of loan waiver beneficiary households in Punjab using primary data collected from three districts of Punjab using a detailed schedule from 318 households. Majority of the households belong to the Sikh religion (92.45 per cent), living in a joint family (58.49 per cent), illiterate (29.59 per cent) and are self-employed in agriculture (61.65 per cent). It is observed that marginal and small farmers are leaving agriculture and giving their land to other farmers on the rent due to the increased cost of cultivation.

Social Security Schemes and Their Reach: The Case of Kunkudupamula Village in Telangana State, India

The paper examined different welfare schemes implemented by central, state and local governments in a village in Telangana, India. The entire households in the village were surveyed on census basis. The benefits accrued to the villagers were assessed and policy suggestions were made to improve the schemes. The Kunkudupamula village was taken as case study. On average about Rs. 45516( 650 US$) per annum per household. The schemes that are popular among the village households are about seven, viz., free electricity, loan waiver, fertiliser subsidy, MGNREGA, PDS, ‘aasara’ pensions, and gas subsidy. Free power scheme benefited all the three caste groups equally, with over two-thirds of the households in each group. Another popular programme is the loan waiver. It came to benefit the FCs more than the other two caste groups. Next, fertilizer subsidy benefited the three groups uniformly – two-third households in each group got benefited from the scheme. PDS and MGNREGA benefited almost the whole of BCs and SCs. FCs lag a little in securing benefits from the two schemes. Gas subsidy is another scheme that has almost universal coverage. Pensions came to benefit the SCs more than the other two caste groups.