Should states offer debt relief to their poor farmers?

A new paper from Martin Kanz tries to test the long run impact of the debt relief program in India for small and marginal farmers- and the results offer a cautionary tale. Here’s a sneak peek into the findings:

Debt relief leads to short run improvements for the recipient households, however they tend to accumulate new debt fairly quickly after the settlement.

It doesn’t lead to investment and productivity gains for the recipient households.

Finally, the debt relief doesn’t improve recipient households’ access to bank credit lines.

The full paper is here.

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