The quantum of the Janata Dal (Secular)–Congress coalition government’s much-discussed farm loan waiver is now about ₹40,000 crore — a jump from ₹34,000 crore announced in the State Budget.
On Thursday, Chief Minister H.D. Kumaraswamy announced that all crop loans in cooperative institutions to the tune of ₹1 lakh availed till July 10, 2018 would be waived under the scheme.
- Loan waiver quantum: About ₹40,000 crore
- Loan period: Till July 10, 2018
- Total beneficiaries: About 45 lakh families
- Size of crop loan in Karnataka (coop. and nationalised banks): ₹48,091 crore
- Number of accounts:
- 43.56 lakh
While the budget announcement had set the eligibility of crop loans taken between April 1, 2009 and December 31, 2017, the Chief Minister extended the date of eligibility till July 10, which is expected to benefit about 45 lakh families. The announcement, according to Mr. Kumaraswamy, would have a net benefit for farmers of about ₹8,500 crore in the cooperative sector alone.
Currently, in Karnataka, the size of crop loan in both cooperative institutions and nationalised banks is to an extent of ₹48,091 crore from 43.56 lakh accounts.
Mr. Kumaraswamy announced the additional waiver during his reply to the discussion on the budget in the Legislative Assembly, even as he defended the loan-waiver scheme and provided statistics as to how it would be implemented. This was in reaction to the Opposition BJP’s charge that the loan waiver was a mere “eyewash” and that the coalition partner was shying away from its election promise.
Interest-free bonds
Meanwhile, Mr. Kumaraswamy said the State government would issue interest-free bonds to nationalised banks to takeover crop loan dues of farmers. According to him, loan overdue of ₹10,500 crore in eight nationalised banks would be covered.
“I have had three rounds of discussions with bankers so far. The scheme will be worked out before July 20. The State government has put forth condition that farmers will be issued no-objection certificate and also they will be eligible for fresh loans. The bonds will be the government’s commitment towards the loan waived,” he added.
However, Leader of the Opposition B.S. Yeddyurappa said the scheme announced by the government to waive crop loans in nationalised banks was not tenable. “How will the Reserve Bank of India (RBI) approve this? How can banks give no-objection certificate to farmers when the crop loan is to be repaid over the next four years? Will the defaulting farmers be listed out of CIBIL?”
In response, Mr. Kumaraswamy defended that the scheme need not have the RBI’s approval. “In fact, bankers felicitated me for taking up this proposal because they are getting their money. Similar schemes have been implemented in Uttar Pradeh, Maharashtra, Telangana, and Andhra Pradesh,” he added.
