Earlier in the day, Andhra Pradesh Chief Minister Chandra Babu Naidu has called RBI Governor Raghuram Rajan on phone and explained him the reason behind the loan waiver. He reportedly told him that loan waiver is offered more to curb the problems of the farming community than the political reasons. He clearly explained him how farmers performed very badly in the last 10 years due to natural calamities, no proper minimum support price etc.
It is known that the Reserve Bank recently wrote a letter to Andhra Pradesh government that it is not favourable to loan waiver as it will disturb the banking economy. RBI even went on to say it will not allow issuing of security bonds for the loan waiver and instructed government to issue cash for the loans. This option will not be viable to Andhra Pradesh which is having deficit budget.
