In its annual report for 2016-17, the Reserve Bank of India has rung the warning bell about the management of state finances during 2017-18 owing to farm-loan waivers, expected implementation of the recommendations of their Pay Commissions, high level of guarantees given by them, and rising interest liabilities on account of restructuring of state-run power utilities. Referring to farm-loan waivers by four State governments (so far in 2017-18) and the potential announcement by several others, the report said the decision poses a major fiscal risk over the medium term. "Besides impacting credit discipline, vitiating credit culture and dis-incentivizing borrowers from repayment, they may have a destabilizing impact on yields of State development loans, thereby posing a higher interest burden for the States in future," the report added.