Farm loan waivers may reduce demand by 0.7pc of GDP: Economic Survey

The Economic Survey 2016-17 Volume 2, laid in the Parliament today has cautioned that farm loan waivers could reduce aggregate demand by as much as 0.7 percent of GDP, imparting a significant deflationary shock to an economy. It also cautions that anxiety reigns because a series of deflationary impulses are weighing on an economy, yet to gather its full momentum and still away from its potential.

These include: stressed farm revenues, as non-cereal food prices have declined; farm loan waivers and the fiscal tightening they will entail; and declining profitability in the power and telecommunication sectors, further exacerbating the TBS problem.
The Survey notices a rekindled optimism on structural reforms in Indian economy.