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India’s largest state has announced it will forgive Rs364bn – around $5.6bn – worth of loans to nearly 10m farmers, fulfilling one of its key election promises.

The new Bharatiya Janata Party administration in Uttar Pradesh, home to over 200m people, has said it will waive the loans, which are worth around 2.8 per cent of the state’s predicted output for 2017-18, according to a calculation by analysts at Nomura.

The loans will be forgiven for 9.6m small and marginal farmers, 700,000 of whom have already been judged to have non-performing loans by their lending banks. India’s banks have been struggling under the weight of high levels of bad debt for many years.

The move marks the latest intervention by Yogi Adityanath (pictured above, right), the controversial hardline Hindu cleric, who was chosen as UP’s first minister last month by Narendra Modi, the prime minister, following his party’s landslide victory.

Mr Adityanath has also recently announced the mass closure of slaughterhouses and meat shops, as well as instructing police to form “anti-Romeo squads” to stop young people loitering in public.

Copyright The Financial Times Limited 2017. All rights reserved.
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