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Farm Loan Waivers May Result in Inflation: RBI
June 15, 2017
The Reserve Bank of India has claimed that given the way how states are waiving off the farm loans lately, not only it could result in inflation but also make the fiscal situation slip out of control.
According to Monetary Policy Committee (MPC) resolution, the recent announcements of farm loan waivers have increased the risk of inflationary spillovers. Moreover, the states could lose a large chunk of the financial gains they made in the last 2-3 years in the process.
RBI Governor Urjit Patel said that the loan waiver schemes are undermining an honest credit culture and encouraging a moral hazard.
