Former Reserve Bank of India (RBI) Governor Raghuram Rajan on Friday said that farm loan waivers should not form part of election promises.

Addressing a press briefing organised by the University of Chicago Center in Delhi, Rajan said that loan waivers of the farmers go to the best connected rather than the poor.

Rajan had previously written a letter to the election commission seeking the abolition of farm loan waivers from election manifestos.

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“Certainly, there is a reason to discuss farm distress but the question of whether the flows to farmers is best affected by waiving loans, after all this only a subset of farmers who get those loans and it often goes to the best connected rather than the most poorly off. It obviously creates enormous problems for the fiscal of the state once those waivers are done,” Rajan said.

“To the question of whether there are fiscal transfers needed for farmers, is certainly an issue that needs to be debated but also investment is needed in that. You can see the set of policies that we recommend is about how to make agriculture itself a vibrant industry as opposed to an industry which needs to propped up through transfers,” he added.

Furthermore, he added he said that our farmers deserve no less. Thus, we need to create an environment in which the farmers can be a vibrant force.

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Farm loan waivers have been an integral part of the 2018 assembly election manifestos of most of the political parties. The Congress, which won elections in the states of Rajasthan, Madhya Pradesh and Chhattisgarh, had included loan waivers in their manifesto.

Moreover, Union Minister of State for Agriculture Parshottam Rupala said that the government is not considering any loan waiver scheme for farmers before the general elections, even as pressure mounts on the Central government to roll out a common loan waiver scheme nationally for farmers.

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