Small farmers can't be forced to repay loans

The state Cabinet on Friday decided to come out with an ordinance to provide complete relief from debt to small farmers, landless agricultural labourers and those from the economically weaker sections.

Addressing a press conference after a marathon meeting of the state Cabinet, Chief Minister H D Kumaraswamy said the state government will soon write to President Ram Nath Kovind to promulgate the Karnataka Debt Relief Ordinance, 2018 to provide relief from debt from loans procured from private money lenders.

The debt relief will be applicable to landless agricultural labourers, small farmers who own less than two hectares of agricultural land and whose annual income is less than Rs 1.25 lakh per annum.

Once the ordinance is in place, money lenders cannot coerce the beneficiaries of the ordinance to repay loans irrespective of the amount. Immovable property pledged by the beneficiary for the loan needs to be returned. There is no count on the number of beneficiaries or the number of loans procured by them.

Forcing the beneficiary to repay loans will attract a fine of Rs 1.25 lakh, a jail term of one year or both, for the money lender.

The ordinance and the subsequent Act cannot be challenged in the court of law.

Kumaraswamy said the beneficiaries will have to apply with the jurisdictional assistant commissioner to claim debt relief. However, the debt relief ordinance will not be applicable for loans procured from registered institutions.

The chief minister said a similar ordinance was promulgated by the Devaraj Urs government in 1976.

In another decision, the state Cabinet decided to issue a Government Order giving effect the to waiver of crop loans worth Rs 30,163 crore availed by farmers from nationalised banks.

Kumaraswamy said the banks will be reimbursed the loan amount in four instalments. The government will repay Rs 6,500 crore to the banks for the financial year 2018-19.

Kumaraswamy, who holds the finance portfolio, had announced in his reply to the budget proposals 2018-19 that crop loans up to Rs 2 lakh borrowed from nationalised banks will be waived.