India’s northern Punjab state will waive more than $1.5 billion in loans to farmers, becoming the third state to do so in response to growing rural distress caused by food oversupply and weak prices. Punjab will waive loans to farmers with holdings of up to 5 acres and debts of up to Rs200,000, state finance minister Manpreet Singh Badal said. Punjab, a major producer of wheat and rice, will settle farmers’ debts to the banks through annual budget provisions, he said. To pay off the loans, Punjab is banking on a 14% rise in state revenues after the July 1 launch of a new national Goods and Services Tax (GST). Economists at Merrill Lynch estimate that states will end up writing off debts equivalent to 2% of GDP, the bulk of all outstanding loans to farmers.

Source: Dhaka Tribune June 20, 2017 12:45 UTC