Farm loan waiver to be staggered over four years

Farmers may have to wait a little longer to have their crop loans waived as the Karnataka government plans to stagger the implementation of its landmark decision over a four-year period.

Karnataka Agriculture Minister N H Shivashankara Reddy said the farm loan waiver announced immediately after the formation of the Congress-JD(S) coalition government in May was expected to benefit nearly 50 lakh farmers.

The total size of the farm loan waiver works up to Rs 45,000 crore, which includes Rs 10,000 crore from cooperative banks and Rs 35,000 crore from commercial and scheduled banks which, according to Reddy, would be difficult to implement at one go.

“Now, our chief minister wants to spread it over a period of four years. That is his plan,” Reddy told DH here on the sidelines of the Jaivik India Awards and a roadshow to promote the international trade fair ‘Organics and Millets’ planned in Bengaluru next month.

Reddy said the state government will guarantee repayment to banks spread over a four-year period.

“So, when we spread it out over a period of four years, it should not be a burden because every year, it will take care of Rs 10,000 crore,” Reddy said when asked whether the loan waiver would put a burden on the state exchequer.

The minister said the state government was in talks with commercial and scheduled banks for implementation of the loan waiver initiative. “We have fixed a limit of Rs 2 lakh worth crop loans that are due since 2009. Farmers may owe Rs 3-4 lakh to banks, but the government will reimburse only up to Rs 2 lakh,” he said.

The farm loan waiver initiative would cover 90% of the distressed farmers, Reddy said, adding that a section of the farmers was demanding a waiver of their entire loans.

“The government cannot take on such a huge burden. We are reducing the burden on the farmer to some extent,” the minister said.

Reddy also wanted the Union government to extend a helping hand to the state government in the implementation of the farm loan waiver initiative.

“Commercial and scheduled banks come under the control of the Union government. It would be better if the Union government also extends its hand in waiving these commercial and scheduled banks’ loans. That would be a good development,” Reddy said.

Earlier, the Karnataka government had requested the Centre to waive 50% of the agricultural loans availed by the farmers from commercial banks/RRBs/cooperative banks.

DH News Service