Farm loan waiver: Why economy will have 'sleepless' nights

The RBI, in a report on state finances in July, had cautioned against the propensity of waiving off loans as they were increasing the fiscal deficits of the states, which were facing a double whammy of lower GST revenues — there has been an increase of 0.05% in the fiscal deficit as a percentage of GDP, from 0.27% to 0.32% in the last financial year.