Working Papers

The farm loan waivers which seem to have become quite popular with the governments, political parties and farmersa?? associations in the recent past have come to be criticised on two main grounds. One, the loan waivers are likely to have a debilitating effect on the health and vitality of the rural credit system through vitiation of the loan repayment discipline. Two, the main beneficiaries of such schemes are going to be the rich as well as the intentional defaulters. The paper attempts to examine the above two issues with regard to the biggest ever loan waiver scheme implemented in the country, namely, the Agricultural and Rural Debt Relief Scheme, 1990 (ARDRS). The study carried out in the Dharwad district of Karnataka with reference to 88 sample households supports to a great extent the above two arguments. The better-off households who had received bulk of the institutional credit earlier are also found to have garnered major share of the debt relief benefits including borrowing of fresh loans envisaged under the scheme. At the same time, a significant proportion of the beneficiaries were found to be intentional defaulters which was attributable to more generalised determination of non-willful default. A negative trail of impact left by the scheme on the repayment behaviour of the borrowers also could be discerned. ??