Farm loan waiver advantage and drawbacks (4 points each)
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Answer:
Advantage :
1) In India, results of crops highly depend on monsoons. Farmers invest heavily on crops by taking loans. If the crop fails due to lack of rains or insufficient market demand, farmers will get trapped in debt. Farmer suicides are increasing in India. So, it’s a good step to waive farm loans.
2) Many farmers borrow money from unofficial moneylenders for high interest rates and get trapped in vicious cycle of debt. Farm loan waiver schemes will divert these farmers to borrow money from banks.
3) Agriculture in India is not a good career option yet. Many farmers are leave farming, if they find alternatives. If this situation continues, there will be a severe food scarcity. To prevent this situation, government need to gain the trust of farmers. Farm loan waiver scheme does that.
4) Some people argue that it is the taxpayers’ money that is bailing the farmers out, and it’s like taking someone’s money and giving it someone else. It;s true that one section of society is the bigger and consistent contributor of taxes, but we should not forget the fact that farmers are also paying indirect taxes by buying goods, equipment etc.
Disadvantage :
1) As banks will not get loan repayments, issuing of fresh loans will be stalled.
2) This scheme indirectly punishes loan repayers. Those who repaid loan before the announcement of the scheme are at loss.
3) Instead of loan waiver scheme, it will much better if government improves the crop insurance scheme, educates farmers about the market trends, increases the Minimum Support Price (MSP).
4) Rich farmers too may take loans even if there is no need, in the hope of the next loan waiver scheme. This will impact the farmers who are genuinely in need of loans.
Answer:
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