Farm loan waivers equivalent to 2 % of Indian GDP

New Delhi, June 6: Bank of America Merill Lynch has published a report regarding the economy of Indian states. The Main highlights of the report are

* Farm loan waivers, if implemented by states, will be equivalent to 2 percent of Indian GDP.

* By 2019 all other states may follow Maharashtra and UP governments in waiving farm loans.

* Almost all States to write off about $40 billion of farm loans in the run up to the 2019 general elections.

* Ministry of Finance should finance farm loan waivers scheme using innovative techniques such as UDAY-type bonds.

The Maharashtra government on Saturday waived loans of Rs 30,000 crore/0.2 per cent of GDP owed by farmers with up to 5 acres of land.

Earlier, in April, the UP government had announced a Rs 36,000 crore /0.3 per cent of GDP farm loan waiver to the farmers of the states. In 2014 Telangana government has also waived of farm loans.

Finally, the report cautioned that when farm loans are implemented care should be taken that the states don't borrow excess money from the market and maintain fiscal discipline.