Abstract

The populist welfare model in India has led to various debt waiver schemes aimed at easing farmers’ financial burdens. However, these programs often fail due to logistical challenges and intermediaries. Digital technology, especially ICT4D, offers promise for improving efficiency and ensuring benefits reach recipients directly. Amidst this backdrop, the failure of Punjab’s digitally-enabled Debt Waiver scheme (2017-18) presents a theoretical and empirical puzzle. Using difference-in-differences (DiD) analysis, we explore the borrowing and repayment behaviors of marginal and small farmers. Notably, small farmers who narrowly missed the waiver saw significant declines in borrowing and repayment during the “reaction period,” indicating unintended consequences. Next steps involve further analysis of the scheme’s effects across different farm sizes and loan amounts, with policy implications aimed at designing more equitable debt relief initiatives.

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