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Microeconomics Case Study

Case Title:

Farm Loan Waiver Remedy or Malady?

Publication Year : 2010

Authors: D John, A Lakshmi and C Chatterjee

Industry: Banking, Insurance and Financial Services


Case Code: MBM0024IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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Indian agriculture flourished under the phenomenal success of the Green Revolution during the 1980s. But now rural indebtedness is the single biggest challenge facing India, as the farmers of India are suffering under the burden of debt and penury. In order to arrest the increasing number of farmers' suicides, the government of India implemented the Agricultural Debt Waiver and Debt Relief Scheme, 2008. The cost of the scheme worked out to be INR71,680 crore. It was widely criticised to be a populist measure proposed by the government, paying least regard to the root-cause of the problem. The case study gives an insight into the agricultural history of India and touches upon the role of liberalisation in aggravating the agrarian crisis experienced by the country. A critical appraisal of the Farm Loan Waiver scheme as well as the implications of a blanket waiver of loans has been attempted.

Pedagogical Objectives:

  • To understand the challenges faced by the Indian agricultural sector.
  • To investigate the root-cause of rural indebtedness in India.
  • To understand the impact of the liberalisation policy on Indian agriculture.
  • To critically evaluate the Agricultural Debt Waiver and Debt Relief Scheme, 2008.

Keywords :  Indian agriculture, Rural indebtedness, Farmers' suicides, Farm Loan Waiver, Liberalisation, Green Revolution, Institutional credit, Money lenders, Small and marginal farmers, Other farmers, Debt trap, Dr Radhakrishna Committee, High cost of inputs, Five year plans

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