Mumbai: Reserve Bank of India governor Raghuram Rajan on Tuesday cautioned politicians against talking about loan waivers.
“Talking about a loan waiver is dangerous. We have some assurances that whatever schemes may be there, the government will not award non-payers. So far there have been no schemes on the table, only statements and discussions,” Dr Rajan said, answering a query about farmers not repaying their loans in anticipation of loan waivers in Andhra Pradesh and Telangana.
The TRS in Telangana and the Telugu Desam in Andhra Pradesh have promised to waive loans taking by farmers, if they come to power. After being elected, both the TRS and the TD have announced the loan waiver and approached the RBI for the same.
Dr Rajan, however, claims that RBI policy allows loan restructuring only if an area had weather that had a catastrophic impact on food production. “If yields fall below 50 per cent, the district collector can decide that there is an emergency, which will trigger loan reconstruction,” said the RBI governor.
He said that there was no such emergency that has been declared nor has a request been made in the two states. “They had a full harvest. So we have asked them for those numbers and will look into them,” he said.
“As we see it, the 50 per cent criteria has not been met. We are in discussion with the governments to find out where the distress is so we can take a view. From information available, the cyclone effect was not widespread. There is a need for more focus on assessment,” the RBI governor said.
