India: Rural revival at a fiscal cost

One of the first steps that the Bharatiya Janata Party took after assuming office in the southern state of Karnataka earlier in May was to waive farm loans up to Rs100,000 (US$1,500) each. The state government that introduced this measure lasted only two days, but its successor is under pressure to continue with the estimated Rs530 billion write-off. All parties are wooing the rural voter in the run-up to India’s 2019 general elections. Below we examine how India’s troubled rural economy will shape the economics and politics of the country in the next 12 months.

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