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India's Loan Waiver Culture: Is it Bad Economics? |
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INTRODUCTION |
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On June 01, 2017, farmers in two of India’s largest states – Madhya Pradesh (MP) and Maharashtra – (Refer to Exhibit I for Map Of India) began protests over a wide range of issues concerning their livelihood. Both these states were ruled by the Bharatiya Janata Party (BJP), considered to be a pro-farmer party. Among other things, the farmers in MP were demanding a minimum support price (MSP) for their farm produce. The agitated farmers dumped produce and milk on the streets and blocked highways, leading to a shutdown of wholesale markets. As a result, vegetable prices shot up. The protests turned violent when six farmers were killed by the state police in MP and, subsequently, curfew was imposed in some cities. The protest crippled both the states. This protest was believed to be inspired by a bold step taken by the Uttar Pradesh (UP) Chief Minister in April 2017 to waive farm loans for farmers in the state. Therefore, farmers in Maharashtra and Madhya Pradesh also raised similar demands...
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