Economic Survey argues against debt waivers, food subsidies

Government interventions like debt waiver or food subsidies end up creating distortions in the functioning of the free market.

The Survey says that debt waiver schemes disrupt credit culture and disrupt formal credit flow to the very farmers it aims to benefit.

"An analysis of the debt waivers given by States/Centre shows that full waiver beneficiaries consume less, save less, invest less and are less productive after the waiver when compared to the partial beneficiaries," the Survey says.


The Economic Survey tabled by the finance minister Nirmala Sitharaman today in the Parliament cautions against excessive intervention by the government especially when the market can do the job of enhancing citizens welfare perfectly well.

For instance, the Survey calls for abolition of archaic laws like the Essential Commodities Act as it imposes stock limits which acts as disincentive for the private sector for creation of storage capacity. The survey said that the act should be let go of for more economic freedom to the market and to spur wealth creation.

The survey also calls for rationalisation of government intervention in the food grain market. It says that the government's role as largest procurer and hoarder of rice and wheat, which has led to burgeoning food subsidy burden and inefficiencies in the markets.