Farm Loan Waivers: A Distributional and Impact Analysis of the Agricultural and Rural Debt Relief Scheme, 1990

The frequently announced farm loan waivers with the ostensible reason of reducing the farm debt burden have drawn criticisms both on grounds of equity as well as their likely harmful effects on the functioning of the rural credit system. The present paper is an attempt to evaluate the biggest ever loan waiver scheme to far implemented in the country, namely, the Agricultural and Rural Debt Relief Scheme, 1990. The household level distributional and impact analysis carried out in the Dharwad district of Karnataka reveals that the scheme besides benefiting mainly the relatively better-off households, also had a negative impact on the repayment behaviour of the borrowers.