Punjab farmers stop paying loans

Punjab farmers stop paying loans
In the hope that the new government will waive farm loans, farmers in Punjab have stopped the repayment of their loans, putting their banks in a spot.

Estimates suggest that over Rs 7,500 crore has been handed in loans to lakhs of farmers by banks in Punjab before the ongoing cropping season. The farmers have now stopped paying loan instalments hoping for a bonanza.

Punjab is closely following the footsteps of Uttar Pradesh, where Chief Minister Yogi Adityanath announced a waiver of loans to farmers soon after taking charge. Yogi took the lead by making the announcement first, even though it was the Punjab Congress that had announced a waiver on the loans given to farmers months ago in its poll manifesto.

But, unlike UP, the Punjab government is not rushing through the decision. However, this has left banks with a phenomenally high number of non-performing assets (NPA), the highest in the category in several years.

Until January this year, when farmers were paying their debt, the NPA was less than 7%, said sources, adding that the NPA is now touching nearly 95%, with the recovery of loans at an all-time low. As many as 23 government banks had lent more than half the total loan amount to farmers, which now appears unrecoverable — at least for now.

On Saturday, Chief Minister Amarinder Singh constituted a three-member expert committee to draw an action plan for farm debt waiver. The committee has been asked to submit a report in 60 days.

The arithmetic of farm debt waiver in Punjab is far more complex than in UP. That’s partly because of the dissimilarity in landholdings by farmers in UP and Punjab. Over 80% of the farmers have less than two acres of landholdings. This is not the case in Punjab, where only a little over 30% of the farmers have less than two acres of land.

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