Why is it in the news?
The Maharashtra government announced the ₹35,000 crore Punyashlok Ahilyadevi Holkar Farmers Loan Waiver Scheme.
The move revived debates on the fiscal and economic implications of repeated farm loan waivers.
Category: Economy
Important Points:
● A farm loan waiver is a government measure where the state repays farmers’ agricultural loans to banks or financial institutions.
● Maharashtra’s scheme waives overdue crop loans up to ₹2 lakh as of September 2025.
● An additional incentive of up to ₹50,000 is provided for farmers who regularly repaid loans.
● The first nationwide waiver in India was the Agriculture and Rural Debt Relief Scheme of 1990.
● The Agricultural Debt Waiver and Debt Relief Scheme of 2008 cost about ₹52,500 crore.
● Since 2014, several states have announced loan waivers totaling about ₹2.5 lakh crore.
● Over the last 35 years, governments in India have spent nearly ₹3 lakh crore on loan waivers.
● Agricultural Gross Non-Performing Assets stood at about 8.44% in March 2019.
● The RBI warned that repeated waivers weaken credit discipline and strain state finances.