Farm loan waivers risk fiscal slippages: RBI

RBI Governor Urjit Patel said the risk of going down the tricky path of waiver could dissipate the important gains that states made in fiscal rectitude over the last 2-3 years.

The Reserve Bank of India (RBI) has warned that the fiscal situation can get out of control if states unabatedly continue to waive farm loans. 
 
Moreover, if the situation remains the same, it would also result in spurring inflation.
 
Unless state governments’ budgets allow that fiscal space to go in for a loan waiver, it would be risky to tread on that path, the RBI said in its second bi-monthly monetary policy review for 2017-18.
 
RBI Governor Urjit Patel said the risk of going down the risky path of waiver could dissipate the important gains that states made in fiscal rectitude over the last 2-3 years.
 
In the past some states have announced a loan waiver for farmers. 
 
(Source: Agency) 

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