India erases $5.6 billion in debt for farmers

Millions of Indian farmers who took out bank loans to grow crops will not have to repay the money they borrowed.

More than 21 million small farmers, who own less than 2 hectares of land, will benefit from this debt relief program.

CNN Money reported that India's largest state, Uttar Pradesh, recently announced it would write off about $5.6 billion in debt for farmers.

More than 21 million small farmers, who own less than 2 hectares of land, will benefit from the debt relief program. Among them are about 700,000 farmers whose debts have been classified as bad debts by banks.

The debt relief is a key election promise made by Prime Minister Narendra Modi’s Bharatiya Janata Party and is also aimed at helping poor farmers ease financial pressures.

Bad debt among farmers is a big problem in India and the government has regularly launched bailouts for the agricultural sector, most notably in 2008, when India wrote off about $17 billion in debt for about 70 million farmers nationwide.

However, the latest round of write-offs has drawn criticism from the Reserve Bank of India (RBI). Last week, an RBI official told Indian media that the government’s approach could encourage a culture of “credit indiscipline.”

However, for now, millions of Indian farmers can breathe a sigh of relief as they do not have to repay bank loans.

According to Vneconomy