Fadnavis announces ₹34,000 crore farm loan waiver

Farm loans of up to ₹1.5 lakh each will be waived; 89 lakh farmers to benefit.

Updated - June 24, 2017 10:41 pm IST

Published - June 24, 2017 05:00 pm IST - Mumbai

Maharashtra Chief Minister Devendra Fadnavis in Mumbai on June 17, 2017.

Maharashtra Chief Minister Devendra Fadnavis in Mumbai on June 17, 2017.

Maharashtra Chief Minister Devendra Fadnavis announced a ₹34,000-crore loan waiver on Saturday, with an emphasis on marginal farmers.

The measure will wipe out loans of up to ₹1.5 lakh outstanding against agriculturists.

One-time settlement

Mr. Fadnavis told the media: “This farm loan waiver approved by the State Cabinet will clear up the 7/12 (property cards mortgaged for loans) of 40 lakh farmers. For the remaining farmers (an estimated 49 lakh whose outstandings are over ₹1.5 lakh), the government would pay up ₹1.5 lakh of their loan, with the agriculturists being offered a one-time settlement facility for the remaining portion of their loan. The waiver will include both short-term and medium-term loans.”

Mr. Fadnavis also announced a cash incentive for those farmers who had a good track record of loan repayments. “Those farmers repaying their loans regularly will get 25 per cent (of their loan component, up to a maximum of ₹25,000) directly credited into their bank accounts as an incentive for their prudent fiscal management. Those making their payments in June 2017 would receive their incentive into their accounts.”

Emphasising the need for a balanced approach, Mr. Fadnavis, who faces a consolidated debt burden that has crossed ₹4 lakh crore, also announced that certain segments of agriculturists would be left out. “Government employees (except class IV staff), members of the Legislative Assembly and Council and traders with an annual turnover of ₹10 lakh would not be eligible for the loan waiver scheme. Moreover, all Ministers and MLAs of the Bharatiya Janata Party would donate one month’s emoluments that they receive to finance the loan waiver.”

State governments have been told by Union Finance Minister Arun Jaitley to foot loan waiver bills from their own coffers.

Complete waiver

Former Chief Minister Prithviraj Chavan asked, “What happens to the remaining 49 lakh farmers? They will continue to remain indebted. The ₹1.5 lakh benchmark is not an adequate threshold limit. We demand a complete loan waiver for all farmers.”

A well-placed BJP leader, who preferred anonymity, said: “Earlier the limit of the loan waiver being talked about was in the range of ₹1 lakh. After further study it was realised that around 80% of mortgaged properties of marginal farmers (with small land holdings) would be freed if the limit was raised to ₹1.5 lakh. Now the State government will have to find the funds for this unprecedented waiver, or it will have adverse impact on other welfare schemes of the State.”

Critical aspects

“The government is simultaneously also trying to target critical aspects of the agricultural industry for reforms. There are serious problems on the marketing side for agricultural produce in the State, as the cooperative sector’s management has almost collapsed. Even the recent agitations were orchestrated by operators of the several APMC-administered markets,” he added.

Transport Minister Diwakar Raote, who belongs to the Shiv Sena, said: “We had originally sought the limit to be pegged at ₹two lakh. However, the cost implications on the State exchequer have to be borne in mind. We are satisfied with the loan waiver.”

A press release stated: “The loan waiver scheme announced by the Maharashtra government has been called the Chatrapati Shivaji Maharaj Sanman Scheme and includes farmers having outstanding loans between April and June 30, 2016. Those having loans outstanding between April 1, 2012 and June 30, 2016 would be entitled for the waiver. Those agriculturists with outstanding loans over ₹1.5 lakh during this period would be offered an OTS (one-time settlement) as per which eligible farmers would benefit by a State government assistance of ₹1.5 lakh or 25 per cent of their outstanding loan, whichever is lower. The scheme will benefit those farmers who availed of restructuring of their existing loans, but as of June 30, 2016 had unpaid loan arrears.”

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