RBI Governor Urjit Patel, answering a media query, said on June 9 that loan waivers for farmers, if implemented by states, present “the risk of fiscal slippages which by and large can entail inflationary spillovers.”
The question was on whether the states would be able to bear the burden of such large farm loan waivers, if allowed.
Said Patel: “…past episodes in our country have shown that when there are significant fiscal slippages they do permeate through to inflation sooner or later. So it is a path that we need to tread very carefully and before it gets out of hand.”
The following is the full transcript of the RBI’s second bi-monthly press conference in Delhi on June 9. Read here