Telangana asks banks to keep Rs 60 billion cash ready for farmers scheme

Telangana government has asked banks to ensure that sufficient cash is kept for farmers ahead of the massive distribution of cheques under the farm investment support scheme being launched from the ensuing Kharif season.

After a spell of cash crunch, Reserve Bank of India(RBI) had increased the currency supply to the state at the request of the state government especially to facilitate cash withdrawals by farmers as they needed money for Kharif season, which starts in the month of June.

Last year, chief minister K Chandrasekhara Rao had announced Rythu Bandhu Scheme with a commitment to provide financial assistance of Rs 8,000 per acre to farmers towards farm operations during the Kharif and Rabi seasons every year. 

The government has made arrangements to distribute cheques for half of that money in the first phase to 5.8 million farmers from May 10, 2018. The government has kept the required funds with SBI, Telangana Grameena Vikas Bank, Canara Bank, Indian Overseas Bank, Corporation Bank, Andhra Bank and Syndicate Bank.

The chief minister was informed that as on May 1, cash amounting to  Rs 41.14 billion was kept ready in various banks while the finance secretary was in consultations with the RBI officials for another Rs 20 billion cash as the total outgo would be Rs 60 billion. Arrangements are being made in such a way that the farmers will have cash in their hands as and when they present the cheques to the banks. 

"These are not the account payee cheques or the bearer cheques. The government is giving pay to order cheques to farmers who can encash them by producing valid proof of their identity at the bank branches," C Parthasarathi, principal secretary, agriculture department, told Business Standard.

The officials will be handing over cheques directly to the beneficiaries in gram sabhas as these cheques were prepared in the name of individual farmers using the updated land records.

Depositing the money directly into the bank accounts of farmers could have made the whole exercise far more simple. However, the government has chosen this route as it wanted to ensure that the money was used for purchase of inputs and other costs related to the agriculture operations, according to Parthasarathi. 

Farmers also did not want the account payee cheques as they were afraid that banks will adjust the amount towards repayment of loan outstandings, according to the senior official.

Apart from these reasons, the government also intends to take full political mileage out of this massive payout to farmers by writing cheques and giving them in person through gram sabhas twice a year. In the last Kharif season, close to 4 million hectares of land was cultivated in Telangana state.