How bankruptcy code can help fix India's agrarian crisis -Aishwarya Satija

-The Economic Times

The IBC’s ‘fresh start’ process provides a systematic manner of waiving debts overseen by a judicial body.

Historically, farm loan waivers have been used as a quick-fix solution to agrarian distress in India. Commonly used by political parties before elections, they have a long history at both central & state levels. However, the efficiency of waivers in actually resolving the debt burden of farmers is questionable.

Waivers may work as a temporary remedy to provide relief from debts in times of extreme economic distress. But they don’t go far in providing any structural relief to resolve problems of the agricultural sector. In August 2017, RBI’s Monetary Policy Committee (MPC) noted that the implementation of farm loan waivers could hurt the finances of states, undermine the quality of public spending, and stoke inflation. Apart from burdening the public exchequer, waivers have also been criticised for having limited benefits in practice.

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The Economic Times, 5 March, 2019,

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