Thread by @Bankers_United

In six years to 2019-20, 10 states have announced farm loan waivers totaling Rs 2.4 lakh crore--which amounts to four times the 2019-20 budget for the Rural Jobs Programme or 9% of the 2019-20 Union budget--as per a Sep 2019 report on Agri credit by RBI.
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In these 6 years, 2017-18 saw most waivers, reaching 12% of gross fiscal deficit (total Exp in excess of income) 7States- Andhra Pradesh, Telangana,Tamil Nadu, Maharashtra, UP, Punjab & Karnataka. Altogether, they provided nearly ₹49K Cr budgets for loan waivers during 17-18.

Surprisingly 2017-18 happenes to be the year for various state assembly elections also & Parties used debt waiver as Vote Bank Tools
Andhra Pradesh- 4/2019
Telangana- 12/2018
Tamilnadu - 6/2016
Uttar Pradesh- 2/2017
Punjab - 2/2017
Karnaraka- 5/2018
Maharashtra- 10/2019
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As a result, NPA levels in those states showed steep increase, while most other states either showed a decrease or no change. Despite proven records & rapidly increasing Agri NPAs in PSBs, neither RBI nor Govt bothered to work for a concrete solution & let political ball rolled

Its Expected that Centre & State Govt must evaluate the “Effectiveness of current subsidy policies” for agri inputs & credit to make agriculture a viable & sustainable sector, but rather they put a Gun of Banks to fire their political Gun to ensure their Vote Bank won't hamper!!

The loan waivers in the 6 years are 24 times the Rs 10,000 crore waived Centre in 1990 (₹50,600 crore at 2016-17) & nearly 5 times (₹52,500 crore) the loans waived in 2007-08 or ₹81,200 crore at 2016-17).

In the six years to 2019-20, nearly 64% or Rs 1.5 lakh crore has been allocated in the 10 state Govt's budgets for waivers. In 2017-18, this accounted for nearly 12% of 7 state Govt's gross fiscal deficit. The deficit dropped by 4.2 and 5.3 percentage points in 2018-19 & 2019-20

The increase in the share of farm loan waiver in a state’s expenditure depressing state Govt’s capital expenditure in Agri” & “the deferment of budgetary provisions to meet expenditure towards announced loan waivers result in increase in NPA levels”, financialexpress.com/opinion/loan-w…

Nearly 70% of rural households depends mainly on agriculture & nearly 86% of farmers categorized as Small/Marginal!! This this the segment that looks upon PSBs/RRBs to get agri credit unlike Pvt Sector Banks who goes always for Big Farmers!
#PvtLtdSarkar indiaspend.com/cover-story/70…

While most states that did not announce farm loan waivers have “shown either no change in their NPA level or have actually registered a decline b/w 2016-17 & 17-18” the NPA levels of most states that announced farm loan waivers in 2017-18 & 18-19 went up
businesstoday.in/current/econom…

The entire Agri sector owed banking system the same amount (₹7.7 lakh crore) as borrowed by the top 10 Corporate borrowers, “NPAs may have increased because the states have written off farmer loans, but surprisingly RBI is mute spectator at both Fronts, Why???
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