 "RBI Deputy Governors, S S Mundra (left) and Viral V Acharya (Centre) with RBI Governor Urjit Patel during a press conference of RBI monetary policy in Mumbai on Wednesday. Photo: Kamlesh Pednekar")
The Reserve Bank of India (RBI) on Wednesday warned that large-scale farm loan waivers by state governments will severely harm the country’s fiscal health and may spur inflation.
RBI Governor Urjit Patel said unless state governments’ budgets allow that fiscal space to go in for a loan waiver, it would be risky to tread on that path.
The risk of fiscal slippages, which by and large can lead to inflation, has risen with the announcements of large farm loan waivers. The risk of going down the "slippery path" of waiver could dissipate the important gains that the states made in
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