Farm Loan Waivers and Tax Payers Morale: A Dilemma

Abstract

Pressure has been mounting on central government for announcement of farm loan waivers before the Lok Sabha election due in first half of 2019 inasmuch; three state governments of Hindi heartland viz. Rajasthan, Madhya Pradesh and Chhattisgarh in December, 2018 have announced the same for executing their pre-poll commitments. The interest rate subventions and excessive subsidized fertilizers have not so far been yielded the desired outcomes hence for viable and sustainable farming government should come out with alternative ways for supporting them rather simply banking upon blanket waivers without analyzing the associated pros and cons and impact analysis. The repetitions of such waivers in long run would likely to demotivate the taxpayers and the cases of tax evasions probably to increase in leaps and bounds, inasmuch even after seven decades of independence the Indian tax system has not been reached to such a level of full proof as well as fraud proof. The economists have categorically warned about the adverse consequences of such blanket waivers along with taxpayers reservations have been highlighted on such political gimmicks at the costs of economic growth and development; the alternative ways for addressing farmers’ plight have also been indicated.

Keywords: Farm Loan Waiver, Economic Growth, Taxpayers, Informal Credit, Political Gimmick, MSP

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