If the efforts of the Indian Banks Association (IBA) and Reserve Bank of India (RBI) are any indication, large scale loan-waiver promises could soon be history in electoral politics.
According to highly-placed sources, the RBI is working on the modalities to ensure that no political party makes ‘untenable’ promises on debt-waiver, and the IBA has already moved its pawns in this regard.
“The RBI is acting tough on the present developments of debt waiver promised by the new governments in Andhra Pradesh and Telangana through its disinclination to permit issue of fresh government bonds,” a senior official told
“The main worry is that in the ensuing elections in States such as Maharashtra, parties may promise debt-waivers to lure voters and this will become a national burden. Even such an expectation among the farmers/voters can hurt the banking system as they stop all repayments,” a functionary of an apex bank body said.
Those keen on proceeding legally are being led by the State Bank of India, while others, mostly mid-sized banks, have certain reservations in taking a policy issue to the court. Whether the case is tenable or not, it would mould public opinion against loan-waivers.
As loan waiver involves huge outgo of tax-payers’ money to honour poll promises. A public interest litigation could also be moved in the apex court.
Another line of thought is to request the Election Commission to forbid populist promises such as waivers.