The Karnataka budget has waived all defaulted crop loans of the farmers made upto December 31, 2017, which is termed as Phase I of the loan waiver scheme.
However, the budget has imposed several conditions for the waiver scheme and fixed the maximum principal of the loans to be waived off at ₹2 lakh and ear marks ₹34,000 crore for the same.
The budget further said families of co-operative and government officials, farmers who have paid income tax for the past three years will not be eligible for the waiver scheme.
Not just waiver of defaulted loans, the government has also announced that it will repay ₹25,000 or the full loan amount, whichever is lower, to all farmers who have repaid the loan, as an encouragement for non-defaulting farmers.
To facilitate farmers to avail new loans, government will issue clearance certificate by waiving off arrears from the defaulting account and the budget ear marks ₹6,500 crore for the same. This adds to paying ₹4,000 crore to co-operative banks, towards the waiving co-operative loans to the tune of ₹8,165 crore by the previous Congress government led by Siddaramaiah.