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Should loan waivers by political parties be banned?

Monday - May 6, 2019 10:24 am , Category : WTN SPECIAL

In the election heat and the craze to score brownie points over the other, parties forget the economic implications of such random loan waiver schemes. Where would the money come from? 


WTN- The loan waiver system of political parties has become a very potent election gimmick. Whichever government comes to power or tries to win elections, announces long and grand loan waiver schemes to woo farmers and other deprived classes who wait expectantly for such doles.

Leaders know such promises sell and people vote such parties to power which announce loan waivers. In the election heat and the craze to score brownie points over the other, parties forget the economic implications of such random loan waiver schemes. Where would the money come from?

It is like robbing from one pocket and putting the money back into another pocket. This doesn’t make our country any prosperous – this only leaves another section of people deprived for the benefit of one section. It is largely the hard working middle class taxpayers’ money that will eventually go into assuaging the perceived problems of potential ‘vote banks’.

The fiscal indiscipline robs the country of a long term sustainable economic model and loans and borrowings increase. Economists have repeatedly said that such short-term measures like loan waivers not only weaken the economy but also weaken the farmers’ resilience and self-sustainability, as instead of using prudence and devising ways, they get dependent on government assistance for any downtrend they face.

The demand for government doles starts rising from different other classes too and it becomes all the more difficult to assuage everyone’s problems. The economy bleeds. The whole traditional system of government subsidies and loan waivers is a detrimental trend that is not suitable to the present economic scenario.

Governments across the world are ending this system because it is no longer economically viable and doesn’t lead to the ultimate betterment of society or a country, leading to deep long-term losses. The need is instead to use the money in social engineering and bolster the fundamental coordinates like research and education, innovation, investment in the right technologies etc.

The results may not be immediately visible and may not be the right approach to garner votes but if the betterment of the country is the goal, then it is essential to put the money to better use than pacifying resentments.

The governments must bring a law or the courts may intervene to end this myopic and populist system and fix stringent criteria for loan waivers and subsidies so that only the poorest of the poor get it, while others don’t get their undue advantage. The rest of the money must be used in improving school education and college infrastructure, in expanding healthcare, in setting up power stations and investing in industries which can give jobs to thousands.

These are constructive and progressive steps which the Indian leadership must mull and adopt for a more holistic and sustainable development of the country, and strengthening of her economy. -Window To News