“The policy of loan waiver is a populist decision, rather than being a prudent economic policy measure and for future it should be barred by law.” Give arguments For and Against this view.
Whether it is the free power for a particular section or the waiver of loans, the elections become the immediate causes for such policy measures. The parties try to draw two benefits—one at the time of elections to make populist promises and the second at the end of term and before the next elections to win over the voters. One such recent example is the decision of the UPA government to waive the farm loans amounting to over Rs 65,000 crores. Considering the adverse economic impact of such decisions, many people are of the view that such measures should be barred by enacting suitable laws.
Arguments For the View
(a) The loan waiver amounts to rewarding the default on repayment of loans and may encourage such tendency among the farmers in future. Such a practice must be curbed.
(b) A waiver scheme for the small and marginal farmers is understandable but there is no logic in extending its benefits to medium and large farmers. Taxpayers’ money can not be squandered like this.
(c) Loan waivers have disastrous effect on economy, as the fiscal discipline of the government as well as that of the public sector banks is shaken badly.
(d) The Election Commission of India must put restrictions on such populist announcements in the manifestos of the political parties, so that the evil is nipped in the bud.
Arguments Against the View
(a) Other than the agriculture, other sectors of the economy are doing extremely well and the fruits of economic development are not trickling down to the rural economy. Many farmers have committed suicides. In such a scenario, loan waiver has come as a great relief to the poor farmers.
(b) Bad debt caused by non-payment by the industrial houses and other well to do persons of the country is quite huge every year. When we are not in a position to recover all the loans from well to do people of the economy, extension of this benefit to lakhs of poor and needy farmers should be welcomed.
(c) In a democracy, it would be wrong to restrict the right of the political parties. The manifestos are the pre-election policy indications and if the people of the country choose a particular set of such indications and vote for a particular political party, there is nothing wrong. It rather strengthens the democracy in the country.