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Loan waivers not a long term solution to agriculture sector: RBI

Farm loan waivers cannot be a long-term solution to resolve the problems faced by country’s agriculture sector, said Viral Acharya, Reserve Bank of India’s (RBI) deputy governor.  He said that it can be a short-term remedy for the distress faced by farmers.

He was speaking at a seminar on “Agricultural Debt Waiver – Efficacy and Limitations” organised by the RBI.

“A sustainable and long-term resolution of our farmer community requires concerted and urgent reforms in the areas of agricultural marketing, pricing, credit and extension systems, and an open trading regime,” he said.  

While speaking at the same occasion, RBI governor Urjit Patel highlighted that loan waivers impact the state of public finances higher than budgeted revenue expenditure. This, in turn, has to be financed by additional market borrowings which push up interest rates, not just for the states but for the entire economy, he added.



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