On all previous occasions only penal interest or interest was waived
CHENNAI: This is the first time that a State Government has waived farm loans due to cooperative banks by agriculturists. In 1989 the then Prime Minister V.P. Singh wrote off bank loans under the Agricultural and Rural Debt Relief Scheme up to a maximum of Rs. 10,000 per borrower.
On all previous occasions only the penal interest or interest on the loans were waived by the Tamil Nadu Government. But this is the first time that both the principal and interest have been waived.
According to a Cooperative Department official out of Rs. 6,866 crore written off Rs. 4,528 crore is short-term loans, Rs. 765 crore medium-term loans and Rs. 1,573 crore long-term loans.
The Dravida Munnetra Kazhagam, immediately after coming to power in 1996, announced relief to the farmers by waiving 3 per cent penal interest, which cost the exchequer Rs. 20 crore. Subsequently it announced an incentive of 7 per cent interest relief to those who had repaid their dues within the due date for loans taken from July 1, 1999 to June 30, 2000.
The incentive, which was worked out to Rs. 36 crore, was borne by the next All-India Anna Dravida Munnetra Kazhagam Government.
The previous AIADMK Government, after it took charge in 2001, waived interest and penal interest to farmers who had paid their dues before November 30, 2001 with respect to overdue outstanding as on June 30, 2000.
The relief provided was for Rs. 256 crore. Again in May 2003, short-term loans were converted into medium term for the sums issued from April 1, 2002 to September 30, 2002, which resulted in the waiver of interest to the tune of Rs. 20 crore.
In March 2004, the Government again waived interest amounting to Rs. 61.05 crore with respect to loans outstanding between April 1, 2003 and March 31, 2004 for farmers who had remitted their outstanding on or before the due date. In September last, crop loans outstanding as on March 31, 2004 were rescheduled, which provided relief to the tune of Rs. 645 crore.
Of this, Rs. 62 crore had already been set apart and the rest has not been given to the cooperative banks.
The new government had to bear this burden also, apart from Rs. 6,866 crore announced by Chief Minister M. Karunanidhi.
Welcoming the announcement, general secretary of the All-India Cooperative Bank Employees Association P. Balakrishinan appealed to the Government to reimburse the amount to primary agricultural cooperative banks at the earliest.
He said 70 per cent of the advances were met by the banks from their own funds and therefore the entire principal and interest outstanding would have to be recouped immediately. Any partial relief, he said, would not help non-viable banks to secure necessary relief. This, in turn, would make them ineligible to further advance loans to farmers.
He wanted the relief provided to honest borrowers also who had remitted their dues before the due date.