Farm loan waivers will significantly impact State economy: Fitch Ratings
One of the leading credit rating agencies, Fitch Ratings has warned that there is a risk that farm loan waiver schemes, which are being discussed and implemented across a number of Indian states will result in further fiscal slippage at the state level or will curtail the funds available for public investment.
The farm loan waiver schemes could have a significant impact on the finances of the state government, and might undermine efforts to bring down general government debt, it added.
“The central government has the authority to block states from borrowing to finance persistently large deficits, but it could be reluctant ahead of approaching elections in some states and with the 2019 Lok Sabha election drawing nearer,” it said.
The impact on India’s debt dynamics and capital spending will rely on the total size of the loans waived, how the scheme is financed, and whether there are possible offsets from cuts to other forms of spending, including capital projects, the agency added.
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Via:: Stock – India Infoline