Farm loan waiver: What are experts saying?

Finance Minister P Chidambaram has said that generally, there is tremendous enthusiasm among the party workers, and they reflect the views of the people that the loan waiver for small and marginal farmers has received extraordinary support among the farming community. But what do experts feel about the issue?

Pratap Bhanu Mehta, President, Center for Policy Research said, "I think all that the Budget has done is stem the internal decline within the party, the demoralization that had begin to set in which is what do we go to what is with. It gives it at least one lakh to stand on. By itself it is not going to be sufficient to propel them to par or for them to gain momentum but I think its most immediate effect has been to stem their internal sense of demoralization."

M Govindra Rao, Director of NIPFP said, "It is not really a cash transfer, as many people seem to think. It is an untargeted transfer and untargeted transfers are as bad as untargeted subsidies. More than that it creates-there is a serious moral hazard-it creates a culture of default as we go along and everybody will want to take money from the organized financial sector but then nobody wants to do it. Every government coming five years will think that this is the way to go about."