FM makes U-turn on farm loan waiver, PSBs rally on D-Street

Keeping in mind the ailing health of the public sector banks (PSBs) and mounting NPAs exposed in their balance-sheets, the government in the Centre on Thursday clarified that in spite of surging political demand  for  waiving of loans of the farmers in Uttar Pradesh, Finance Ministry is not going to honour those poll promises denting the banks' both top line and bottom line further.
 
Much cheer for a host of PSBs, led by State Bank of India. Analysts believe that this sudden U-turn of the government on this issue is clearly driven by numbers. Implementation of the farm loan waiver scheme at this stage could stress the state’s fiscal arithmetic alerts, a survey.
   
A research report tabled by SBI states that the state is burdened with an outstanding farm credit of Rs 86,241.20 crore. Most of the loans are disbursed to small and marginal farmers. As per the Socioeconomic and Caste census of 2011, more than 35 percent of the UP households are engaged in cultivation.
  
Political experts believe that this retraction of government might harm the sentiments of the millions of the farmers and it could give Congress more fodder for the upcoming state assembly elections due in several other states, but it will surely aid the state economically and will give the government fuel to boost development which is due in the state.