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REVANTH REDDY’S LOAN WAIVERS TO MOSTLY BENEFIT LARGE FARMERS.



I have for long been saying that loan waivers are a huge fraud. They dont reduce rural distress. As much as 70% of rural credit is by moneylenders, who play a more critical and even vital role in the rural economy. Most of rural indebtedness is not due to farm losses but due to other reasons for borrowing., such a healthcare and religious and social functions. 

Moneylenders cause the "unnoticed" debt crisis by usurious interest rates. Instead of doing foolish things like banning money lending, the government should be regulating "informal banking" interest rates. As it has done with microfinance companies.

Marginal and small farmers accounted for 82% of all indebted households and 56% of the outstanding loans by value. However, only a small proportion of the indebted marginal and small farmers had taken loans from institutional sources such as banks and cooperatives. Informal sources such as moneylenders, family and friends accounted for 62% of indebted households among marginal farmers. Such farmers would not benefit from any scheme that restructures debt taken from banks and cooperatives.

So our politicians should stop conning us with debt waivers, like their predecessor. It is only for their vocal support bases.

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