1.In the backdrop of loan waiver scheme announced by various government, analyse the issue involved with loan waiver scheme? What should be the way to reduce such populist measures(12.5)
Loan Waiver Schemes are announced by government to waive off the loan interest to be paid by farmers considering the grim situation of the farmers. But it's more of a populist measure for vote bank politics which has following issue
1.Loan waiver really reduce the tendency of farmer paying their future loan as well, as they expect similar scheme in the future
2.It is a disincentive for the genuine loan payers, thus discouraging them as well.
3.It distort the banking system as it effect their financial conditions at present by delay of such payment by government as well future by increasing defaults of loan
4.Encourages such populist measures as a habits
5.against the democracy, as people don't vote their representative with full consideration of other qualities but vote only on getting benefit of loan being waive
6.By having the loan waive, it also discourage farmer as well as government to make genuine improvement of the agriculture sector.
This populist measure can be reduce by following ways
1.Improving agriculture sector issues like providing irrigation facilities, linking with market etc
2.improving vote bank politics by improving education of the people
3 .making such populist measures unacceptable by making changes in the law
4.improving the professional working of banks by giving them more autonomy and if needed privatisation of banks so that bank can work on sound business principle and reducing government interference.
Farmers need solution of their miseries for long term not as a short term relief. For that loan waiver scheme should be used as minimally as possible and that too on genuine ground not as part of politics. This way not just agriculture but also working of politics in the country would improve.
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